Drug Rebate Head Fake

  • by: Robert Goldberg |
  • 03/12/2019
Today United HealthCare announced that they will be passing rebates directly to patients.  But the impact is not as impactful as may seem. 

United noted that “all new employer-sponsored health plan customers that use UnitedHealthcare must give discounts they get for including certain drugs in their lists of covered medications directly to consumers at the point of sale… UnitedHealthcare said Tuesday that its expanded requirement does not apply to existing employer customers that do not already give rebates directly to the consumer.”

As Drug Channels notes: “PBMI found that only 4% of employers reported that rebates were used to reduce member out-of-pocket costs at the point of sale.”

Indeed, despite the announcement of these offering, Drug Channels demonstrates (see chart below) that employers really don’t want to use rebates to cut out of pocket drug costs.

 

So much for sharing the savings.  

But even passing rebates on to patients is not enough.  In fact, it could make things worse in a perverse fashion.  For example, a pass-through model would reward the most rebated drugs but lead to even more step therapy or greater formulary restrictions in an effort by PBMs to make money on contracts that still reward them for lowest net cost of medicines.   Even drugs that offer zero copay but do little to affect overall net cost of medicines could be excluded.  

Another question:  Will insurers and PBMs increase the use of (illegal) co-pay accumulators – programs that intercept money designated by drug companies to reduce out of pocket costs is confiscated by insurers and NOT used to reduce cost sharing -- and then pass that cash to employers.  Can we say racketeering?  (You can read my colleague Peter Pitts article on the wholesale thievery called copay accumulators here. 

To be sure, many business health groups claim they want to optimize the use of medicines.  However, they lack the data and bandwidth to do so.  Some individual companies do make an effort to support value-based design, but most of these offerings are designed to drive people to more generic drug use.  

Absent these insights, the well-intentioned effort to reduce out of pocket costs by shifting rebates will help some but likely hurt others. Which is why at some point, large employers will be asked to explain why they aren’t doing more through smarter changes to benefit design to help their employees stay health – and alive. 

 
CMPI

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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