March 30, 2018

Aetna will pass on drug rebates to medication consumers

Daily Briefing

    Health insurer Aetna announced on Tuesday that beginning in 2019 it will pass on the rebates it gets from drugmakers to the consumers who take those drugs.

    How pharmacy can help reduce employee benefit costs

    About drug rebates

    Drugmakers regularly issue rebates to insurers and pharmacy benefit managers (PBMs) on brand-name drugs to offset the drugs' full list price. Rebates can vary substantially depending on the drug.

    Insurers and PBMs have traditionally used the rebates to curb costs and lower premiums for all customers. However, amid increasing pressure to reduce drug prices and boost transparency, critics—including some drug manufacturers—say more of the rebate savings should go directly to the consumers who take a rebated medication.

    The Trump administration recently said it was considering requiring private drug plans offered through Medicare to pass on rebate savings to consumers of the specific medications involved. UnitedHealthcare earlier this month also announced that beginning in 2019, it would pass along the "overwhelming majority" of the rebates it gets from drugmakers to beneficiaries who take the rebated medications.

    Aetna's plan

    Aetna said that beginning in 2019 rebates will be automatically applied at the point of sale. Aetna said the change will affect its employer-sponsored group health plans, particularly for individuals enrolled in high-deductible health plans, which often require individuals to pay the full price of a prescription up to their deductible amount.

    Aetna estimated that the change will affect roughly three million members.

    An Aetna spokesperson said the company currently allows self-insured employers to apply drug rebates at the point of sale. The spokesperson said that policy will continue.

    Aetna Chair and CEO Mark Bertolini said, "We have always believed that consumers should benefit from discounts and rebates that we negotiate with drug manufacturers," adding, "Going forward, we hope this additional transparency will encourage [drugmakers] to rationalize their pricing and end the practice of annual double-digit price increases."

    However, Aetna spokesperson T.J. Crawford noted that the change could result in higher premiums, since Aetna previously passed the majority of the rebates to employers and employees via lower premiums. "Given the fact that the majority of rebates are currently passed on to plan sponsors and their employees through lower premiums, yes—this decision could result in higher premiums," he said (Hellmann, The Hill, 3/27; Baker, Axios, "Vitals," 3/28; Court, MarketWatch, 3/28).

    Editor's note: The Daily Briefing is published by Advisory Board, a wholly owned subsidiary of Optum, which is owned by UnitedHealth Group, which separately owns UnitedHealthcare.

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