Some of the hottest political debates in Washington DC these days involve using big data to monitor people’s habits. This is usually attributed to powerful companies like Google and Meta. But across the economy, dominant companies are copying the business methods of big tech companies, and causing similar, if not more pervasive, damage through predatory practices. In fact, if you want to know the dangers of big data and the power of dominant companies, just ask your local pharmacist.
Recently, clients of a local pharmacist received letters of invitation from a competitive specialized pharmacy called Genoa. They received these letters the day before UnitedHealthcare – one of the largest health insurance companies in the country – stopped letting its customers get the drug from this independent pharmacist. Here is the puncture line: Genoa owned by UnitedHealthcare, after it was purchased by its subsidiary Optum in 2019. So UnitedHealthcare can use its data and power over customers to direct patients to its suppliers and kill local pharmacies, even when communities rely on it for all kinds of medical care.
Even more disturbing is that UnitedHealthcare is trying to get bigger so it can do more monitoring. Last year, UnitedHealthcare Health care purchase proposal changeIt is the largest medical claims data repository in America. Fortunately, the Justice Department’s Antitrust Division, which is trying to revive anti-merger law after 40 years of dormancy, has sued the companies to block the deal. Now it is up to District Court Judge Carl Nichols on allowing this dominant company to become even more powerful.
Although they are important providers, local pharmacists are under attack from huge vertically and horizontally merged companies.
The fate of America’s local pharmacists may hang in the balance. Independently owned community pharmacies are small businesses that account for more than a third of all retail pharmacies. In both urban and rural areas, they are some of the most accessible healthcare providers. In addition to dispensing prescription medications and supplements, independent community pharmacies provide vaccines, health assessment services, and education in diabetes self-management. They are usually less expensive than chains and more connected to local communities.
Although they are important providers, they are under attack from both vertically and horizontally amalgamated huge companies. In the past five years, every dominant pharmacist benefit manager — brokers that pharmacists handle for their compensation — has merged with a dominant insurer: Aetna/CVS, UnitedHealthcare/Optum, and Cigna/Express Scripts. For too long, these mergers remained unchecked, giving these companies increased power over independent pharmacies.
So what is the specific problem with incorporating change? On the pharmaceutical side of integration, Change Healthcare’s eRx network contains a massive amount of data that has both medical and pharmaceutical implications for insurance potential and healthcare use. It also contains sensitive information about UnitedHealthcare competitors. In pharmacy parlance, an eRx is “key”: it has data that provides a comprehensive view of patient healthcare claims, billing, payments, and pharmacy interactions across nearly all insurance companies. It also contains competitive information about pharmacy benefit managers, insurers, patients and pharmacies that compete at various levels with the united healthcare sector. Change’s eRx system connects approximately 59,000 pharmacies and processes more than 1.5 billion claim transactions annually. It also handles millions of e-prescription transactions per month, and connects pharmacy management services vendors to pharmacy benefits managers.
History has shown that UnitedHealthcare/Optum will use this information against its competitors to create unequal negotiating positions, guide patients, reduce access, and increase consumer price points. Acquisitions like this should be opportunities to lower final prices for consumers. But as we’ve seen in healthcare acquisitions time and time again, merged companies miss opportunities and reduce competition, and consumer price points suffer as a result. Ask yourself: Are you now on a high deductible plan? Does your employer pay more each year for your insurance? Are your prescribed medications becoming less expensive? Do you have fewer choices about where to get your care or medications? Do you have to fill your prescription at the pharmacy of your insurance company’s choice? For most of us, unfortunately, the answers are “yes” to all of the above.
All this because of the merger and not considering the non-price implications of mergers. With eRx access, UnitedHealthcare will be able to access: the data of its insured competitors Aetna, Cigna, Anthem, Humana and Blue Cross Blue Shield; Competitor data for PBM CVS Caremark, Express Scripts, Ingenio, Humana Pharmacy Solutions, and Prime Therapeutics; and data from retail and mail order pharmacies, including independent pharmacies. The market view will be 360 degrees, which will enable them to target the patients who will earn them the most money while excluding others.
UnitedHealthcare responded to the DOJ’s lawsuit by saying that it is Xten . ready to sell claimsClaims payment solution for businesses. UnitedHealthcare also insists it has not actually misused competitor data from OptumInsight, its existing claims payment solution. While the sale of Xten claims makes sense at first, what will prevent UnitedHealth from buying it again after a few years, such as what happens in many transactions where a joint entity is required to liquidate an asset? And what do you say to Optum independent community pharmacies not to misuse data? Just trusting UnitedHealthcare to “help people live healthier lives” doesn’t take away from that when the company’s practices lead to the persuasiveness of a system designed to keep people healthy.
We’ve heard promises from large, vertically integrated, dominant companies such as UnitedHealthcare that are seeking to buy out competitors many times over. However, health care appears to be getting more expensive and more difficult to obtain every year. The Department of Justice’s Antitrust Division, after many years, is finally doing the right thing by saying no more. We hope Judge Nichols will follow suit.