UnitedHealth extends Trump proposal, requires drug rebates to flow to patients

UnitedHealth will require employer clients to pass along rebates from drugmakers directly to consumers, the insurer said on Tuesday, an announcement that expands upon a move by the Trump administration to ban the discounts in the Medicare and Medicaid programs.

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Historically, those rebates have flowed to the pharmacy benefit managers (PBMs), a system that elicited intense criticism from lawmakers and drug companies who put the blame for high treatment costs on the middleman price negotiators.

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UNHUNITEDHEALTH GROUP INCORPORATED285.48+1.87+0.66%

The move by UnitedHealth now puts pressure on pharmaceutical firms that pledged to lower treatment costs should the White House proposal be extended to the commercial market. While companies can voluntarily take that step, mandating it would require approval from Congress.

“UnitedHealthcare has taken innovative action, bringing real value to consumers while mitigating the impact of persistent drug price inflation brought on by drug manufacturers affecting consumers’ ability to afford medications and comply with their physician’s treatment plans,” COO Daniel Schumacher said in a statement.

The shift will occur on all new employer-sponsored plans with UnitedHealth’s OptumRx beginning January 2020, but prior clients will eventually be grandfathered in. Previously, UnitedHealth launched a smaller point-of-sale discount program within its UnitedHealthcare sector that it says lowered costs by $130 per prescription.

While the Minnetonka, Minnesota-based insurer builds on Trump’s proposals, other PBMs claim it will raise costs for seniors.

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“We see the rebate rule taking us backwards, not forwards,” CVS Health CEO Larry Merlo recently told investors. “A small percentage of seniors may net out favorably … but as many as 70 percent of beneficiaries are going to be worse off.”

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CVSCVS HEALTH CORPORATION73.59-0.67-0.90%

CVS Health says roughly 12 million clients are enrolled in plans that provide point-of-sale rebates at the pharmacy counter. Express Scripts also offers similar options, but clients in both programs have reportedly been slow to share rebates directly with patients.