Darwin's Our Take 5.18.26: UnitedHealth’s Optum Rx PBM to shift to transparent, fee-based model

Optum Rx, one of the country’s three largest pharmacy benefit managers, unveiled a new model last Monday that will replace the customary practices of linking pharmacy benefits to manufacturers’ prices or prescription volume with a transparent, fee-based structure.

The company said it will offer the new model to all of its PBM clients by the end of 2027, claiming it will bring “greater clarity, predictability, and affordability to pharmacy care.”

Optum Rx clients won’t have to participate in the model right away, Ben Eklo, Optum’s chief financial officer, said last week at the Bank of America Securities Health Care Conference.

The new pricing structure will feature monthly, clearly defined fees per member, a move designed to eliminate spread pricing “and similar practices,” the company noted in the announcement.

Clients will have transparency into the fees — including those associated with its group purchasing organization, Emisar, Optum Rx said, and payments received from pharmaceutical manufacturers will be disclosed.

To support the model, Optum Rx said it would launch two digital tools to help patients compare prices and know what their costs will be before going to the pharmacy.

One of the tools, called Shop MyScript, will notify patients as soon as a prescription is written, offering “real-time visibility into pricing, pharmacy options, and delivery choices” before filling the prescription.

The other tool, called Price Wise, will provide a breakdown of all costs associated with prescriptions at Optum Rx’s partner pharmacies, including the drug’s price and any service fees. Patients who get their prescriptions filled without using their benefits will be able to see the total cost up front, so they don’t have to worry about unexpected charges at the pharmacy counter.

Optum Rx’s announcement followed the release of survey results on May 8 showing employers want simpler, more predictable pharmacy benefits.

Penta Group conducted the survey in February on behalf of Cigna subsidiary Evernorth Health Services. Express Scripts, another of the top three PBMs, is part of Evernorth.

The vast majority of employers responding to the survey preferred rebate-free pharmacy benefit models, agreeing that such models improve transparency of drug pricing (cited by 92% of respondents); are easier to understand than traditional models (91%); would improve employee satisfaction with their benefits and their ability to afford medications (90%); align with employers’ organizational needs better than current PBM models do (87%); and are expected to improve employers’ spending predictability (86%).

Evernorth introduced its fee-based, rebate-free pharmacy benefit model last October and has since dubbed it Signature Pharmacy Benefit Services.

Cigna Healthcare will roll out the new model for its fully insured commercial clients starting in 2027, and it will be the standard offering for all Evernorth pharmacy benefit clients beginning in 2028.

OUR TAKE: We’ve been covering the growing dissatisfaction with and criticism of PBMs for several years now, and even though Congress has threatened to pass reform legislation for a considerable portion of that time, the bills that have been introduced keep getting pushed back to the next session of Congress. And then the next. And so on.

Reform measures have been implemented at the state level.

For instance, most states have banned so-called “gag clauses” that prevent pharmacists from advising patients about less-expensive alternatives to the drugs they’ve been prescribed or telling them about available discounts for paying cash.

A few states have banned PBMs from the practice of spread pricing — charging health plans more for a drug than the amount they reimburse the pharmacy — and some states now require PBMs to pass manufacturer rebates on to health plans or to consumers when they fill their prescriptions.

California and Colorado have adopted laws delinking PBM compensation from drug prices and instead basing it on flat fees — similar to Optum Rx’s new model.

Meanwhile, it’s become clear to PBMs — the worst offenders, at least — that the days of operating within a largely unregulated, obfuscated system are over and they need to implement reforms on their own.

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What else you need to know

Bristol Myers Squibb entered into a partnership with Shanghai-based Hengrui Pharma that could be worth as much as $15.2 billion. The companies will collaborate to advance 13 early-stage drug programs in oncology, hematology, and immunology, according to the announcement.

Four of the assets are Hengrui’s; the deal gives BMS the rights to these assets outside of China, Hong Kong, and Macau (referred to in the agreement as “Hengrui Territory”). Another four belong to BMS; under the agreement, Hengrui gains the rights to these assets in Hengrui Territory and will be fully responsible for early development of the assets in humans to accelerate clinical proof of concept. The two companies will jointly discover and develop the remaining five assets.

Initially, BMS will pay $600 million, with another $175 million to be paid on the first anniversary of the agreement and a contingent payment of $175 million on the second anniversary. The deal also includes option fees for the joint discovery programs and various milestone payments for all of the programs.

The transaction, which is subject to customary closing conditions, is expected to close during the third quarter. Last year, Hengrui entered into a similar collaboration with GSK involving 12 drugs.

An AI model developed at Mayo Clinic can help detect pancreatic cancer on CT scans up to three years before clinical diagnosis, identifying signs of the disease before tumors are visible, according to a study published in the journal Gut. In the study, researchers used an automated AI framework called the Radiomics-based Early Detection Model, or REDMOD, to analyze nearly 2,000 CT scans, including scans from patients who later received a pancreatic cancer diagnosis.

REDMOD identified 73% of the prediagnostic cancers at a median of approximately 16 months before diagnosis, Mayo Clinic noted in a news release, which was almost twice the rate radiologists were able to detect when reviewing the same scans without AI. In scans taken more than two years prior to diagnosis, REDMOD performed even better, identifying almost three times as many early cancers, according to Mayo Clinic.

Separately, Dr. Gianrico Farrugia plans to step down as president and CEO of Mayo Clinic at the end of the year. Dr. Farrugia has held the role since January 2019 and has been a physician at Mayo Clinic for more than 30 years. The board of trustees has begun a formal leadership transition process and anticipates electing his successor in November, the announcement stated.

Greater consolidation among corporate health systems is fueling the increase in the cost of care, according to an analysis by Families USA. In 2023, the report noted, five or fewer health systems per state controlled at least half of all hospital care in 42 states and Washington, D.C. Further, in nearly half of all states, three health systems controlled the majority of care that year.

This market dominance allowed the nation’s 15 largest health systems to charge, on average, more than 2.82 times what Medicare charged for the same services, according to the report.  Average commercial prices in each state ranged from 157% to 365% of the Medicare rate. Independent hospitals charged a lower average commercial price relative to hospitals owned by health systems (221% of the Medicare rate vs. 277%) and generated a much lower average annual net income ($3 million vs. $27.7 million).

Families USA said in the report that hospital consolidation has increased hospital prices by more than 220% in the past 25 years, which in turn has driven up health insurance premiums by 320% since 2000, but the increase in spending “has no relationship to the quality of care or health outcomes.”    

The American Medical Association introduced a policy framework to contend with augmented AI-generated deepfake “doctors.” The framework specifies seven key policy principles aimed at updating physician-identity protections and closing legal gaps. The organization’s CEO, Dr. John Whyte, said in a news release: “AI deepfakes that impersonate physicians are not just scams — they are a public health and safety crisis. … We need strong action by federal and state lawmakers to protect physicians’ identities, ensure transparency, and stop this fraud.”

Meanwhile, OpenAI issued a what it calls a blueprint for the use of AI in healthcare. The policy guide centers on three overarching themes: patient-directed data portability, clinician-supervised AI deployment (which touches upon prohibiting AI from impersonating healthcare professionals), and the modernization of regulations to enable “safe and scalable AI-supported care.”

In separate news, the parents of a 19-year-old are suing OpenAI, claiming their son died of an overdose a year ago after ChatGPT “encouraged” him to consume a combination of Xanax and kratom, an herbal supplement that can have opioid-like effects at high doses. They stated in the lawsuit that any licensed medical professional would have recognized this combination as deadly.

Along with seeking monetary damages, the plaintiffs are asking the court to “pause the operation of healthcare-related products directly to consumers, including ChatGPT Health, until and unless independent third parties determine the product to be safe through comprehensive safety audits.”  

DC developments

Dr. Marty Makary resigned as commissioner of the FDA last Tuesday after several days of rumors that his firing was imminent. Various news outlets reported on potential reasons for his resignation, including disagreements over the approval of flavored vaping products, criticism from abortion rights groups over the drug mifepristone, and the high rate of turnover among leadership at subagencies within the FDA. According to The Associated Press, an administration official said Health Secretary Robert Kennedy Jr. made the decision that Dr. Makary should be relieved of his position and the White House subsequently approved.

Kyle Diamantas, an attorney who previously served as the FDA’s deputy commissioner for food, is now the acting FDA commissioner.

On Friday, Dr. Tracy Beth Hoeg, acting director of the Center for Drug Evaluation and Research and an ally of Dr. Makary, was fired. She was the fifth person to serve in that role in the past 16 months. CDER’s deputy director, Dr. Mike Davis, will take over as acting director.  

What we’re reading

The Decade Window: A Strategic Read of the LEAD Model. Values Edge, 5/26 (Registration required)

The Future of Healthcare is About Giving Back Attention. Fast Company, 5.6.26

Trump Promised Cheaper Drugs. Some Prices Dropped. Many Others Shot Up. KFF, 5.7.26

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