Optum Rx will pass 100% of the rebates it negotiates for drugs onto its consumers by the end of 2028, UnitedHealth Group CEO Andrew Witty told investors.
On the company's fourth-quarter earnings call on Jan. 16, Mr. Witty told investors most of the pharmaceutical benefit manager's clients choose plans where they receive the full amount of rebates. A few choose other models.
"We are committed to fully phasing out those arrangements so that 100% of rebates will go to customers by 2028 at the latest. We will continue to encourage all of our clients to fully pass these savings directly to patients at the point of sale, as we already do for all of the people we serve in our fully insured offerings," Mr. Witty said.
Here are five things to know:
- The move to phase out the models comes after the Federal Trade Commission published a report alleging OptumRx, Express Scripts and CVS Caremark inflated the prices of generic drugs, generating over $7.3 billion in excess payments between 2017 and 2022.
- The report, published in January, was the second FTC report on PBMs in the past year. In July, the FTC issued a report that found PBMs hold "enormous power" over drug pricing.
- In September, the FTC sued the three largest PBMs, including OptumRx, alleging the companies inflated insulin prices.
- Recent legislation aimed at reforming PBM practices, including transparency and decoupling their compensation from drug rebates was scrapped after opposition from President-elect Donald Trump's allies.
- Mr. Witty told investors PBMs are "really the only effective mechanism" to keep drug prices in check.
OptumRx already passes 98% of rebates onto clients, but retains a small portion because some clients prefer to pay that way, Mr. Witty said.
"Unfortunately, even that small residual that we retain because those clients want to pay us that way is enough to give people an excuse to argue that the system is not working properly," Mr. Witty said. "We are taking that excuse off the table today. We are committed to full transparency."