UnitedHealth Group to Provide Rebates to Consumers

From RADAR on Drug Benefits

Industry experts question whether UnitedHealth Group's strategy to upfront rebates directly to consumers would have a significant effect.

UnitedHealth Group, which operates its own PBM, OptumRx, announced it would launch a program applying savings from manufacturers' rebates upfront, at the time of sale, to lower out-of-pocket costs for eligible plan enrollees. The insurer said they would increase transparency in the process, offering varied channels for eligible enrollees to see their drugs' discounted cost.

"I would say this is a direct response to the CVS/Aetna and Amazon entries to the pharmacy arena," Bill DeMarco at Pendulum HealthCare in Rockford, Ill. tells AIS Health. He describes it as "a very big deal when the big guy in the market goes on the defensive proving competition is good."

Yet Chris Sloan at Avalere Health questioned its potential impact, given that the insurer did not specify the percentage of rebates that will be actually passed through or provide enough details on member premiums.

Evercore ISI's Michael Newshel viewed UnitedHealth's announcement as "a response to the public and political scrutiny without any financial or significant competitive impact."

He said his firm has confirmed with the insurer "that it plans to fully offset the lost rebate dollars with premium increases, which will be 'de minimis' when spread across all members. In the self-insured commercial business, it's the employer's choice what to do with rebates;...[UnitedHealth] expects more to make the move to POS."

Meanwhile, states are working on legislation related to pharmaceutical pricing and increased transparency in the drug supply chain, in an attempt to eliminate so-called "gag clauses" and "clawbacks" in ways that allow the market to stay competitive.

For instance, Virginia Gov. Ralph Northam (D) has signed legislation that would bar PBMs from penalizing pharmacists for sharing drug pricing information with consumers on March 9.

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