Patients, payers, and manufacturers’ drug coupons
The view from the other side of the street
Nothing in life is free. That aptly applies to manufacturers' drug coupons, which can entice consumers into using high-cost medications over equally effective generics and lower-cost brands. These coupons sound good on paper for both manufacturers who sell more products and for patients who pay less for a high-priced new product. But payers and pharmacy benefits managers are not impressed.
How coupons work
Manufacturers use drug coupons, often referred to as copay coupons, to reimburse insured patients for copayment costs associated with new, high-priced drugs. Coupons enable manufacturers to gain additional consumers, create brand loyalty, promote products, and develop a competitive edge.
At the same time, manufacturers can assert that consumers are saving money, receiving access to an innovative drug, and improving adherence.
Coupons are distributed to physician offices and also are available through online, TV and print ads, at pharmacies and through direct mail campaigns. Coupons were available for 395 indications in 2012, up from only 86 in 2009, according to IMS Health.
A 2013 analysis reported in the New England Journal of Medicine estimated that 62% of coupons studied were for branded drugs for which lower cost alternatives were available.
Medicare and Medicaid beneficiaries cannot use copay coupons; they are considered to be remuneration to consumers to induce purchases, which implies violation of an anti-kickback statute.
Patients readily use coupons, which cover their copayments for drugs that their insurers have placed on high formulary tiers to dissuade use. Little do consumers know that insurers are picking up the tab beyond the copay.
Unfortunately, once the coupons
expire, generally after three months to a year, patients are stuck paying more out of pocket for the same drug, and payers might be hard-pressed to rein patients in and convince them to start a regimen on a lower cost equivalent medication. The result is often higher premiums or copayments to compensate for the higher costs incurred by payers for specialty drugs offering a coupon.
"A coupon is just a subsidy; once it runs out, patients will be paying more for the drug than if they were taking a less costly equivalent from the beginning," said David Friend, MD, chief transformation officer and managing director, at the BDO Center for Healthcare Excellence & Innovation. "A coupon could override a plan's attempt to prevent a prescription for a high-cost drug."
Coupon programs allow manufacturers to sell their products with a large margin through heavy advertising, while helping consumers overcome economic hurdles, Friend said. "They alter consumer purchasing behavior."
A 2011 study by the Pharmaceutical Care Management Association (PCMA) indicated that copay coupons would increase 10-year prescription drug costs by $32 billion for employers, unions, and other plan sponsors. Each year, $4 billion is spent marketing copayment coupons, which yield a 6:1 return on investment, according to the study.
"Copay kickback schemes increase drug costs by undermining the formularies used by employers, unions, and public programs," said Mark Merritt, BA, MA, president/CEO of PCMA, who provided testimony last February before the Committee on Oversight and Government Reform on rising drug costs.
"These [copay promotions] are not means tested or designed to help the poor or uninsured. Instead, they are designed to encourage insured patients to bypass less-expensive drugs [which typically have lower copays] when multiple options are on the formulary, raising the cost of drug coverage," he said in his testimony.
Many payers, such as employers and insurers, say the practice uses a "shadow claims system" that prevents them from knowing when the coupons are being used. They also take manufacturers to task for gaining information about coupon users by requesting personal information prior to redemption.