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As Drug Prices Rise, Aetna Plans to Use Rebates to Offer Discounts to Customers

by Precise Leads

April 5, 2018

Following other health insurers, Aetna will pass along the rebates it receives from drug manufacturers directly to its members.

Ongoing controversy over skyrocketing prices for prescription drugs has prompted Aetna, Inc. to pass the rebates it negotiates with drug manufacturers on to its members. Starting next year, approximately 3 million of Aetna’s 22.2 million medical insurance enrollees are expected to see discounted drug prices.

Although the company said that it’s used the drug rebates in the past to lower member premiums, Aetna CEO Mark Bertolini said that it decided to apply the rebates to the drug prices in an effort to be more transparent regarding drug prices. He added in a statement that he hopes the move “will encourage [drug] companies to rationalize their prices and end the practice of annual double-digit price increases.”

Who’s to Blame for Rising Drug Prices?

Aetna isn’t the only major health insurer planning to apply manufacturer rebates to its members’ drug costs. UnitedHealthcare also said that it would offer discounted medications to some 7 million of its customers covered under its fully insured plans next year.

With this new approach to lowering drug prices, both Aetna and UnitedHealthcare are apparently taking steps to address their members’ concerns over the alarming surge in prescription medication expenses — a trend documented by the Government Accountability Office (GAO). The GAO’s 2017 report found that 12% of all personal healthcare spending went for drug prescriptions in 2015. During the 1990s, the percentage hovered around 7%.

That upward movement is projected to continue, as the GAO expects drug spending to accelerate by nearly 8% this year. The agency pointed to increased use of pricey brand-name medications for the rise, but noted an uptick in generic drug prices, as well.

As the prices rise, insurers like Aetna and UnitedHealthCare, the drug companies, and middlemen such as the pharmacy benefit managers squabble over who is to blame. The insurers and PBMs point to frequent price hikes by drug manufacturers. In response, the drug companies attribute the rising prices to insurers’ charging high copays as well as their failure to pass along the negotiated rebates to their members.

In an interview with Bloomberg, Bertolini seemed to acknowledge that by shifting the rebates to the company’s members, the public would get a clearer view of which party is at fault. “We want people to see the truth, and now they see it,” he said. “When drug prices keep going up, and drug costs keep going up, they’ll have one place to look.”

Cutting Out the Standalone PBMs?

UnitedHealthcare’s decision earned the praise of Health and Human Services Secretary Alex Azar, who called it “a prime example of the type of movement toward transparency and lower drug prices for millions of patients that the Trump Administration is championing.” According to the New York Times, the Trump Administration is also considering a similar measure that would require private drug plans to pass on their savings to Medicare enrollees.

Another tactic to lower drug prices might be to cut out the independent drug middleman — the PBMs — altogether. Recent announcements of mergers within the healthcare provider network hint that standalone PBMs may soon be extinct. If the merger between Aetna and CVS Health Corp. is approved, for example, CVS’s PBM business would be folded into the combined entity. Likewise, Cigna agreed in mid-March to acquire pharmacy benefit manager Express Scripts for $52 billion. Uniting insurers and PBMs under one roof could result in lower prices as the merged company will have the upper hand in negotiating with manufacturers.

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