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UnitedHealthcare Reconsiders Drug Rebate System for Some Employee Customers

UnitedHealthcare’s decision to pass drug rebates to certain customers is a step in the right direction, though there’s plenty left to do to fix the nation’s problem of rising prescription drug prices.

UnitedHealthcare announced on Tuesday, March 6, that starting January 1, 2019, it will pass along drug rebates to customers who have fully insured coverage through their employer. This move will impact 7 million of the total 49 million people the major health insurer covers, according to The New York Times.

“People use their pharmacy benefit more frequently than any other type of benefit, which means pharmacy provides the greatest opportunity for us to understand and meet their needs,” said Dan Schumacher, president and chief operating officer of UnitedHealthcare in a statement. “We believe our efforts to enhance value for our customers will not only benefit our members, but the health care system as a whole.”

“We think this is the right thing to do and we applaud UnitedHealthcare,” said Steve Wojcik, vice president of public policy at the National Business Group on Health, or NBGH. Although there is a large part of UnitedHealthcare’s customer base that will not be impacted, it’s a huge win for certain patients.

“It’s solving an immediate problem for people who need medication and where the rebates can help them out directly,” said Wojcik. “But there are still other issues related to how we price medications and the lack of clarity and straightforward pricing of medications.”

The sickest patients generate rebates, which go to the employer rather than the employee. Employers use those rebates to lower premiums for everyone or to offset some of the administrative expenses associated with running the plan, said Wojcik. If the money goes directly to the patients as a rebate, then it will not be available for employers to offset those costs.

[Also read: “Contracting a Cure for Prescription Drug Costs”]

For HR, it’s an issue of balancing out-of-pocket costs with overall premiums for the entire population that has coverage through the company, Wojcik added.

“As a plan administrator, [you’re] trying to weigh the balance,” he said. “In this case with the very high prescription drug costs, it’s a good thing that the patients who need the medications are going to benefit from the rebates upfront rather than not benefitting at all.”

It’s not surprising that UnitedHealthcare made this announcement, said Nathan Cassin, assistant vice president in Aon’s pharmacy group.

It’s an idea that a lot of people are talking about because they understand that some of the sickest members are generating rebates that are helping to lower premiums for everybody. “Members who potentially are in high-deductible health plans or subject to co-insurance, in taking some of these medications that are highly rebatable, could potentially be overpaying at the point of sale,” Cassin said.

[Also read: “Policies to Curb Specialty Drug Costs”]

Members who generate rebates shouldn’t have to pay higher list prices just because they’re in a plan that’s supposed to promote and support consumerism, he added. “Promoting consumerism is good, but at the same time we can’t have a system where we’re going to promote consumerism but then there’s not price transparency,” Cassin said.

The NBGH expects more plans and pharmacy benefits managers will be able to offer this solution to employer plans in the future, Wojcik said. “Ultimately, this is a signal that the way prescription drugs are priced and move through the system to get to patients is broken. It’s unsustainable for patients as well as employer plans.”

Ideally, manufacturers would price more reasonably from the beginning, and PBMs and other companies in the supply chain would have a more straightforward, transparent process that doesn’t rely on rebates, Wojcik added.

Andie Burjek is a Workforce associate editor. Comment below or email editors@workforce.com.