Some major health insurers plan to take a little sting out of prescription drug prices by giving customers rebates at the pharmacy counter.
Aetna and UnitedHealthcare both say they will begin passing rebates they get from drugmakers along to some customers starting next year. They could spark a trend: The idea has been championed by President Donald Trump, and it's something other bill-payers like major employers might consider.
Rebates are a key cog in the largely secretive pricing agreements ironed out between drugmakers and pharmacy benefit managers, the companies that manage prescriptions for insurers and large employers. Rebates have become more common in recent years, and some critics point to them as a factor behind soaring drug costs. Aetna and UnitedHealthcare say they want to make prescription drug pricing more transparent and simplify the process for customers.
Here's a look at the issue.
WHO GETS REBATES NOW?
Pharmaceutical companies offer rebates to benefits managers as a carrot to get their drugs included in formularies, or lists of covered drugs. These concessions are usually a percentage of the initial price set by the drugmaker, or the list price.
Pharmacy benefit managers typically pass rebates on to the insurers and large employers that hire them. Those clients often use the money to reduce their plan's spending on drugs or the cost of coverage. Only 4 percent said they passed rebates directly to customers at the point of sale, or when they buy the drug, the Pharmacy Benefit Management Institute found in a 2017 report.
WILL YOU START RECEIVING THEM SOON?
Aetna estimates that 3 million customers could receive rebates when it starts offering them next year, while UnitedHelathcare's plan will initially apply to over 7 million people. Those are big numbers but small slices of the more than 67 million U.S. customers these companies cover in total.
In addition, CVS Health's pharmacy benefits business offers point-of-sale rebates through plans that cover about 10 million of its 94 million customers.
More insurers or benefits managers could follow these examples, and big employers that pay their own health care bills also might start passing the rebates to people on their health plans, said Ana Gupte, an insurance industry analyst with Leerink.
Plus Trump has proposed giving rebates directly to Medicare prescription drug customers.
Rebates delivered directly to the consumer may be attractive to insurers and pharmacy benefit managers because they can help polish their image. Rebates give the companies a tangible benefit they can show consumers instead of saying generally that these refunds help keep overall coverage costs in check, noted Benedic Ippolito, an economist with the American Enterprise Institute.
"At a minimum, it sounds like insurers are trying to do something for consumers with high drug costs," he said.
ARE WE TALKING BIG MONEY?
It's hard to forecast how big the rebates will be. Experts say they could knock anywhere from a few bucks off your prescription bill to more than $100.
The rebates are generally not disclosed by companies, and their size depends on factors like competition and the amount of the drug sold.
Treatments that have competition may deliver the biggest rebates because pharmaceutical companies are jockeying to have their medicines included in formularies.
Discounts and rebates for high-cost specialty medicines usually are lower than those for more traditional drugs, according to the IQVIA Institute for Human Data Science, which studies prescription drug spending.
The consumers who will benefit most are those who take prescription drugs regularly and pay a lot for their medicines out of pocket, or before insurance coverage starts.
"It reduces the cost of having a chronic illness somewhat," said Dan Mendelson, president of the consulting firm Avalere Health.
But there may be a price to pay: The cost of coverage could rise for everyone on a given health plan if rebates are no longer being used to keep overall plan expenses in check.