UnitedHealth Group Uses Clout to Negotiate Drug Prices
UnitedHealth Group plans to use its market strength to negotiate prices to help consumers purchase expensive specialty drugs, adding to a growing press from doctors, patient advocates and lawmakers to rein in costs.
According to UnitedHealth, the acquisition of rival Catamaran by its Optum-Rx pharmacy-benefits business will give the insurer a new competitive edge in seeking payments or refunds based on whether drugs help patients.
The announcement — which underscores payers’ growing use of patient outcomes to determine drug pricing — comes on the heels of a report claiming Medicare pays 73 percent more than Medicaid and 80 percent more than the Veterans Administration for brandname drugs.
The report, by Public Citizen and Carleton University, claims $69.3 billion was spent on prescription drugs through Medicare Part D in 2013. The report points to research from Avalere Health showing roughly 58 percent of Part D spending in 2011 went to brandname manufacturers.
The report urges Congress to pass legislation allowing Medicare to reduce brandname drug prices to at least the level of Medicaid or the Veterans Health Administration and to introduce mandatory generic substitution for all plans under Part D. Currently, the federal government is prohibited from leveraging its Part D purchasing power even though private plans obtain substantial rebates from drugmakers and pharmacies.
Critics of high drug costs have singled out the price of Gilead Sciences’ hepatitis C drug Sovaldi (sofosbuvir) as being particularly egregious. At $1,000 a day, the Veterans Administration has already exceeded the more than $400 million budgeted for hep C treatment in fiscal 2015, according to Sen. Bernie Sanders (I-Vt.), who recently called for wartime powers to break the patents on the drug.
But it’s unclear whether the anger over drug prices is sufficient to fuel real change in the form of legislation.
Peter Pitts, president of the Center for Medicine in the Public Interest, says it’s artificial to compare drug prices with what the VA pays, since the agency gets the lowest possible prices by law. He also points to a 2014 Congressional Budget Office study that showed drug prices would be higher if the government negotiated Part D pricing.
Separately, more than 100 oncology doctors called for cutting the prices of cancer drugs. All new cancer drugs approved by the FDA in 2014 were priced above $120,000 per year of use, according to their article in Thursday’s Mayo Clinic Proceedings.
PhRMA was quick to respond to both reports, saying proposals to fundamentally alter the structure of the Medicare Part D program would hurt taxpayers and beneficiaries.
Read the Public Citizen, Carleton University report here www.fdanews.com/7-15-PricingReport.pdf. — Jonathon Shacat