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UnitedHealth Exec Blames Drug Companies, Not Pharmacy Benefit Managers, For High Prices

Image: Prescription drugs by Nick YoungsonCC BY-SA 3.0Pix4free

“Drug companies themselves,” not pharmacy benefit managers (PBMs) like UnitedHealth Group’s (UHG) Optum brand, are responsible for high drug prices in the U.S., declared UHG CEO Andrew Witty as the beleaguered company released its full-year 2024 earnings results. 

Speaking to the analyst community for the first time since UHG cancelled its annual investor conference last month after the high-profile murder of Brian Thompson, CEO of its UnitedHealthCare insurance brand, Witty kicked off Thursday morning’s earnings call with an impassioned 10-minute overview of UHG’s mission: “to continue improving quality and health outcomes for individuals and their families, while lowering costs for everyone.”

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And he began that overview by expressing gratitude ”for the overwhelming expressions of condolence and support following the murder of our friend Brian Thompson….He devoted his time to helping make the health system work better for all of the people we're privileged to serve. He would dive in with passion and caring to find solutions to improve experiences, whether for an individual consumer, an employer, or a public health agency. “

Witty’s remarks came as USA Today released results of a Suffolk University poll showing two-thirds of Americans think Thompson’s suspected killer should be prosecuted to the full extent of the law. Most of the other third agreed the murder was wrong, but said “they understood the anger the alleged shooter felt toward America's health care system.”

A lot of that anger lately has been coming not only against the insurance side of the business, but against the PBMs, of which Optum is one of the three leading players. PBMs serve as the price-setting intermediary between health insurance companies and pharmacies

Yet, Witty said during the conference call, “the PBMs are really the only effective mechanism across the system which holds the pharmaceutical company to account once it chooses to set its price and… to inflate that price every single year.

“The PDM is there to… negotiate on behalf of employers, unions, states and others to try and bring down those prices."

Noting that Americans pay disproportionally more for drugs than people in other countries, Witty gave as an example a GLP-1 medication that “costs $900 in the U.S.,” but “about a tenth of that in Europe.” 

“OptumRx alone delivers many tens of billions of dollars in savings annually versus the pricing set by the manufacturers, including on the GLP-1s,” Witty said. “That sharply reduces the gap versus other countries.  But even then, prices in the U.S.  are still multiples of what the rest of the world is. the world pays for the same drugs.

“Pharmacy benefit managers play a vital role in holding those prices down,” he continued, “which is why drug companies and their allies have spent the past several years attacking them.

Optum, Witty said, passes on “more than 98% of the rebate discounts we negotiate with drug companies to our clients,” but the 2% of its clients who refuse to pass on the rebates “is enough to give people the excuse to argue that the system is not working properly.”

“We're taking that excuse of who’s really setting the price off the table today,” he declared, announcing that Optum is now “committed to fully phasing out those remaining arrangements so that 100% of rebates that we negotiate will go to customers by 2028 at the latest.” 

Overall, Witty said, health care costs more in the U.S. because “there are participants in the system who benefit” from higher prices not only for prescriptions, but for medical procedures and doctor visits. “Lower cost equivalent quality sites of service, for example, can be good for consumers…but threaten revenue streams for organizations that depend on charging more for care. “

Critics might say UnitedHealth Group is one of those organizations "charging more for care." On the earnings side, UnitedHealth Group reported revenues of $400.3 billion in 2024, an 8% increase over 2023. Guidance for 2025 puts revenues at $450 billion to $455 billion.

1 comment about "UnitedHealth Exec Blames Drug Companies, Not Pharmacy Benefit Managers, For High Prices".
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  1. L M from agency, January 17, 2025 at 2:43 p.m.

    Be defesive.
    Defend your own interest.
    Deflect any responsibility.
    Pretend that ONLY 1 entity is reponsible for the spaghetti mess that is big pharma/Rx.
    "Drug companies themselves,” not Optum brand, are responsible for high drug prices in the U.S."
    100% LOSS of credibilty as a company leader.
    Gee, will this breed MORE or less hatred from the consumer public.

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