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Aetna Will Pass Along Discounts as Drug Price Scrutiny Increases

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Aetna Inc. will pass on the discounts it negotiates on prescription drugs to about 3 million of its members, the latest move by a health insurer to address Americans’ complaints about the cost of medicine.

The discounts, which can amount to more than half a drug’s list price, will be passed on at the pharmacy counter for many people starting next year, Aetna Chief Executive Officer Mark Bertolini said in a telephone interview. The move by the No. 3 U.S. health insurer follows a similar decision earlier this month by its larger peer, UnitedHealth Group Inc.

Over the last year, drugmakers, insurers and pharmacy benefit managers, or PBMs, have blamed one another for the cost of prescription drugs in the U.S. PBMs and insurers have said it’s the fault of the pharmaceutical companies that frequently raise their list prices. Drugmakers blame insurers and pharmacy benefit plans for high copays, and for not passing on to patients the discounts they negotiate. People with high deductibles or co-pays are often hurt the most.

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“We want people to see the truth, and now they see it,” Bertolini said. “When drug prices keep going up, and drug costs keep going up, they’ll have one place to look.”

Changing Industry

Aetna’s decision also reflects the consolidating U.S. health care supply chain. Drug plans, pharmacies and insurers are merging, lessening the need for each player to hang on to its own slice of fees and rebates. Aetna last year agreed to be bought by the pharmacy benefit manager and drugstore chain CVS Health Corp., and insurer Cigna Corp. is buying the PBM Express Scripts Holding Co.

“There’s a whole lot in the chain of control of drugs in the way of middlemen that drive up these costs,” Bertolini said. “That’s why you’re seeing the standalone PBM model disappear.”

The moves by Aetna and UnitedHealth address a complaint by the drug industry, that the discounts pharmaceutical companies offer on their treatments don’t reach consumers, distorting the price patients pay. Industry groups for drugmakers have supported passing on the discounts.

More on this topic

Insurers and pharmacy benefit plans have received scrutiny for their role in drug spending. Top Trump administration officials have said insurers and pharmacy benefit managers bear some of the blame for high drug costs and that making the system more transparent can help bring down prices. The government is also weighing whether to make a change in Medicare’s prescription-drug program similar to what UnitedHealth and Aetna are doing, which would help lower out-of-pocket costs for seniors.

Alex Azar, the Trump administration’s Health and Human Services secretary, praised UnitedHealth’s decision in a statement earlier this month, calling 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.”

Aetna had already allowed large employers who use the company to manage their health insurance but pay their own claims to pass along drugmaker rebates to consumers. The change announced Tuesday applies to companies that pay premiums to Aetna to take on the insurance risk as well as manage claims.

The three largest PBMs — CVS, Express Scripts, and UnitedHealth’s OptumRx unit — let employers decide whether to keep pharmaceutical rebates or give them to patients. CVS has been allowing commercial clients to pass on the rebates since 2013, and has said that 12 million individuals are covered under plans that have chosen to do so.

Insurers have said that when they hold on to the rebates, they use them to reduce the total premiums they charge to workers and companies. That arrangement can leave the sickest patients exposed to the highest out-of-pocket drug costs, particularly in plans with high deductibles where people pay the full cost of products and services before coverage kicks in.

—With assistance from Anna Edney.

— Read Privacy Concerns Hang Over the Amazon and Aetna-CVS Health Deals on ThinkAdvisor.

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