UHA says ‘no’
to drug discountsThe local insurer believes such programs
ultimately increase the cost of medicines
Local health insurer University Health Alliance is kicking its addiction to drug company rebates.
UHA, like many insurers, has participated in the rebate program offered by its pharmacy benefit management company -- in its case, Rx America.
Drug companies offer rebates to the benefit managers as an enticement to keep more profitable drugs on a health insurer's preferred drug list. The rebates are then shared with the health insurers.
But to maximize rebates, increasingly pharmacy managers require that an insurer's preferred drug list conform almost completely with its own, said UHA's Medical Director, Todd Kubo.
"If an insurer takes the whole range of drugs offered by one company they'll get the best price," he said.
That can cause problems for insurers and UHA has found itself in a difficult position at various times, Kubo said.
"When we wanted to make preferred drug changes that we thought were in the best interest of our members, we would have to take into account the loss of rebates to do so. We don't think this was fair to our members and their physicians, who should be prescribing drugs that are the most effective at the lowest price," he said.
Rx America will continue to be UHA's pharmacy benefit manager, Kubo said. In that capacity, it processes claims for the insurer and negotiates directly with drug companies on its behalf.
Getting out of the rebate program may initially increase some costs, but it will save money in the long run because the net effect of rebates is to raise the cost of drugs by promoting the use of the more expensive drugs whether they are more effective or not, Kubo said.
Under the new system, a physician may prescribe any drug rather than being restricted to certain drugs. But as with the current three-tier price system, the patient co-payment will continue to differ depending on the class of drug prescribed, Kubo said.