POV written by Cedric de Saint Hilaire, MS, MPS, Account Director for Maxcess Managed Markets


Analysis:

It is common knowledge by now that drug prices are increasing at an unsustainable rate, affecting every customer along the script flow. Per-person Rx drug spend increased over the last 5 to 10 years and has created challenges in patient adherence, outcomes, and overall population health management.In an effort to control Rx cost increases incurred by patients, stakeholders have started to implement a point-of-sale (POS) rebate strategy aimed at reducing the patient cost impact.

Beginning in 2013, CVS Health has been using a rebate program that passes savings from drug rebates directly on to its 12 million commercial members at POS, rather than using the funds to reduce premiums for all members.

More recently, both UnitedHealthcare and Aetna announced in March 2018 that they would roll out a POS rebate program beginning in 2019 (for UnitedHealthcare’s 7 million commercial members and Aetna’s 3 million commercial members).

These initiatives are in alignment with the government’s plan to increase transparency on drug costs. Health and Human Services secretary Alex Azar had a positive response: this is “a prime example of the type of movement toward transparency and lower drug prices for millions of patients that the Trump Administration is championing.”

However, Ben Johnson, director of Plan Pharmacy Services for Union Pacific Health Systems, said Azar may not be seeing the holistic impact. Johnson believes that in the current system, POS discounts do a disservice to the healthier members of a health plan.

Giving a rebate to the consumer at POS provides no relief for the plan’s healthier members, who are footing the bill for everyone else. “The whole concept of a health plan is to spread the risk and the costs of care over a large population,” says Johnson. “Those who are sick benefit from the healthier members in the plan. The premium that is not used by healthier members subsidizes or helps pay for the care of the sicker members.”

 

“Patients shouldn’t face exorbitant out-of-pocket costs, and pay money where the primary purpose is to help subsidize rebates paid to a long list of supply chain intermediaries, or is used to buy down the premium costs for everyone else.”

– Scott Gottlieb, Food and Drug Administration commissioner

Implications:

Drug cost management is a primary concern for all stakeholders (eg, payers, pharmacy benefit managers [PMBs], government, health systems, healthcare providers, patients), who demand a clearer and more transparent presentation of drug cost and pricing.

  1. An increasing number of PBMs are utilizing POS rebates. Initially, patients benefit from these rebates. But patient savings can be offset by PBMs’ willingness to increase deductibles, co-pays, and other cost-share terms to sustain profit margins.
  2. Manufacturers are well familiar with the pricing strategy of offering the highest rebates to medications with a larger price tag. Nonetheless, this provides manufacturers with a favorable formulary placement and greater product utilization while avoiding challenging discussions on the net price.
  3. Payers may not be as forthright as they think regarding drug costs. They often communicate cost-sharing liabilities of members based on public prices rather than net prices. They appear to overlook the fact that net prices account for discounts and rebates.

 

Conclusion:

There may not be a single solution that all stakeholders can agree with, but organizations are trying to best address drug cost management through initiatives that honor transparency.

So will payers and other stakeholders look differently into the inherent differences between public and net pricing? What will this mean to patient adherence and outcomes? Do patients and providers ultimately benefit from this evolving landscape?

Maxcess believes that when healthcare players establish cost contracting strategies, they must take into account the holistic picture and the strategies’ impact on all other customers. It is also critical that these strategies be clearly communicated to ensure the initial objective is appropriately understood without misinterpretation – this is a BIG area of opportunity.  Patients and providers should be able to benefit from this evolving landscape, because the ultimate objective is to ensure that patients have access to medications with the most “value”, right?

 

Sources:

Aetna: Aetna to provide pharmacy rebates at time of sale, encourages transparency from drug manufacturers [news release]. https://news.aetna.com/news-releases/aetna-to-provide-pharmacy-rebates-at-time-of-sale-encourages-transparency-from-drug-manufacturers/. Published March 27, 2018.

CVS Health: CVS Health details programs and pricing transparency solutions addressing high cost drug issue at AHIP National Policy Conference [news release]. https://www.prnewswire.com/news-releases/cvs-health-details-programs-and-pricing-transparency-solutions-addressing-high-cost-drug-issue-at-ahip-national-policy-conference-300611028.html [news release]. Published March 8, 2018.

Morse S; Healthcare Finance. HHS secretary Alex Azar backs point-of-sale drug rebates by UnitedHealthcare, CVS Health [news release]. http://www.healthcarefinancenews.com/news/hhs-secretary-alex-azar-backs-point-sale-drug-rebates-unitedhealthcare-cvs-health. Published March 9, 2018.

UnitedHealth Group. UnitedHealthcare launches expansion of direct-to-consumer pharmacy discounts to millions of Americans [news release]. http://www.unitedhealthgroup.com/Newsroom/Articles/Feed/UnitedHealthcare/2018/0306DirecttoConsumerPharmacyDiscounts.aspx?r=1?cid=SM:Twitter:OA:3.6.18:standard:NAT:Newsroom. Published March 6, 2018.