Dive Brief:
- UnitedHealth-owned Optum Rx, one of the biggest pharmacy benefit managers in the U.S., is launching a new drug pricing model next year meant to make payers’ spending on pharmaceuticals more predictable.
- The model, called Clear Trend Guarantee, combines costs that used to be separated out, including retail pharmacy, home delivery, specialty drug and rebates, into one single per-member price, according to a Monday release.
- Clear Trend is value-based, meaning Optum Rx will share in any savings tied to patient outcomes created in the model.
Dive Insight:
Pharmacy benefit managers, or PBMs, are middlemen in the drug supply chain that negotiate rebates and fees with drugmakers, create drug formularies for payers and reimburse pharmacies for prescriptions. The companies maintain they save their health plan clients money by negotiating down steep drug prices.
However, major PBMs are facing intense criticism — and losing clients — for how their opaque and allegedly anticompetitive business practices could be contributing to ballooning healthcare costs.
PBMs are currently facing an investigation by the Federal Trade Commission, lawsuits and scrutiny from states and the threat of potential legislation from Congress.
In light of the public pressure, major PBMs are introducing new pricing programs they say are simpler and more cost-effective.
Optum Rx — the third largest PBM in the country, managing more than 1.5 billion prescriptions each year — rolled out an initiative it’s calling Cost Made Clear last year. The program includes pass-through models, when the PBM transfers any discounts it received when purchasing drugs directly to clients, and cost-plus pricing, when the PBM charges for drugs based on their cost of acquisition plus a flat markup.
Now, the UnitedHealth subsidiary is building on Cost Made Clear with the Clear Trend model announced Monday.
The program is meant to allow plan sponsors, including employers and health insurers, to more easily manage their spending, while creating more predictability for patients around costs, according to the release.
Optum Rx manages about 80% of the PBM market with rivals Express Scripts, which is owned by health insurer Cigna, and Caremark, which is owned by retail pharmacy chain CVS. Express Scripts and Caremark have also rolled out novel pricing models to placate regulators and keep clients, intrigued by pharmacy upstarts like billionaire Mark Cuban’s Cost Plus Drug Company, onboard.
Late last year, Express Scripts said it was launching a cost-based pricing method for prescription drugs, while Caremark unveiled a transparent model based on the net cost of drugs, called TrueCost.
During the Bank of America healthcare conference earlier this month, CVS CFO Tom Cowhey said market interest in TrueCost — and another CVS model changing how reimburses pharmacies for drugs — is high.
“There has been a tremendous amount of interest in TrueCost from our PBM clients,” Cowhey said.
