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What UHC’s Expanded Rebate Program Will Mean

Nine in 10 NBGH members would like to see an alternative to the rebate-driven model.
By: | March 15, 2019 • 2 min read
Three open bottles of prescription medication.

The move earlier this week by UnitedHealthcare and its pharmacy-benefits-manager unit, OptumRx, to make point-of-sale prescription drug discount programs mandatory for all new employer-sponsored plans is sure to bring a dose of financial relief to consumers of prescription drugs. But while some in the employer community view the change as a step in the right direction, they also are quick to add that much more is needed to rein in rising prescription-drug costs.

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Under the new program, beginning in January 2020, UnitedHealthcare will only support new employer clients that incorporate POS discounts to consumers as part of their plan design. In early 2018, the company introduced a discount program for those covered by fully insured employer health plans. That plan went into effect on Jan. 1, 2019. During its first two months, UnitedHealthcare reports that the existing program has already lowered prescription-drug costs for consumers by an average of $130 per eligible prescription.

“OptumRx is uniquely able to deploy the broadest range of tools to rein in high drug prices, and this expanded point-of-sale discount program demonstrates our commitment to delivering better prices for consumers,” according to OptumRx CEO John Prince.

Existing clients, including those currently in the sales cycle for Jan. 1, 2020, would not be required to participate.

Brain Marcotte, president and CEO of the National Business Group on Health, isn’t surprised by the move, given the attention rising drug costs are getting on Capitol Hill. “When you look at the hearings with pharma in Washington a couple of weeks ago and the upcoming PBM testimony in Congress, I think this is a preemptive move by UnitedHealthcare to avoid [regulatory action].”

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Marcotte notes that employers have been moving in this direction for the past several years. A 2019 NBGH survey found that 27 percent of large employers have implemented point-of-sale rebates, and another 31 percent are considering adding them by the end of 2020.

But, that said, 91 percent of NBGH members would like to see an alternative to the rebate-driven contract model. “Most employers don’t view rebates as an effective tool for managing drug costs,” Marcotte says. “They don’t solve the back-end contracting problem of drug pricing. Simply stated, when a drug manufacturer raises prices in today’s supply chain, every supply-chain stakeholder benefits from it except patients and employers—and that needs to change.”

In January, Health and Human Services Secretary Alex Azar and Inspector General Daniel Levinson proposed a rule to lower prescription-drug prices and out-of-pocket costs by encouraging manufacturers to pass discounts directly on to patients and bringing new transparency to the prescription-drug marketplace. The rule would apply to Medicare drug plans and Medicaid managed-care plans.

David Shadovitz is editor emeritus and former editor and co-publisher for HRE.

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