Industry Updates Jan 24, 2013

The Dark Side of Copay Coupons

Drug copay coupons, promoted by manufacturers of brand-name medications, may seem like a good deal for patients. But there's another side to the story.

Pharmaceutical manufacturers’ attempts to circumvent the restrictions on access that managed care and pharmacy benefit managers present for their drugs has resulted in a widely used marketing tool: the copay card or coupon.

These tools reimburse patients who have prescription-drug coverage for the cost of their copay if they choose the higher-priced brand drug instead of that preferred by their plan sponsor.

At one time, a drug’s commercial success or failure was largely driven by how well it was received by physicians. Pharma marketers primarily targeted physicians. But then drugmakers found that aggressive direct-to-consumer campaigns could more effectively influence prescription-writing, and their focus shifted to patients. But starting in the late 1990s, another transition began. Today, the commercial success of a drug is largely driven by access to patients, and controlling that access are entities such as managed-care plans and PBMs.

Pharma marketers have sought to regain that control by using the coupons to neutralize the financial incentives that plans use to encourage the use of clinically equivalent but lower-priced medications, chiefly generics.

Financial incentives are just one aspect of Health Decision Science that Express Scripts applies to encourage patients to choose the drugs, pharmacy and health behaviors that produce optimum outcomes.

How Copay Coupons Contribute to Pharmacy Waste

But to the extent that patients use them, copay coupons inject waste into the healthcare system. In 2011, the Pharmaceutical Care Management Association found that copay coupons will increase 10-year prescription-drug costs by $32 billion for employers, unions and other plan sponsors if current trends continue.

Many patients don’t consider the extra cost to the system when offered a chance to reduce their copay to zero. They don’t realize that their employer could be paying hundreds of dollars more while the patient saves $50 on a copay. And they don't realize that this temporary savings may ultimately contribute to higher premiums or fewer benefits. 

Industry Reaction and a Look Ahead

The pharma tactic is already backfiring. Faced with dramatically higher costs for drugs applying the coupon strategy, plan sponsors are imposing more stringent restrictions – or remove these drugs from coverage altogether.

When drugs are removed from coverage, patients lose choices, and pharma loses access to patients. A better solution would be for pharma to work with PBMs and managed care, gaining access due to their products’ merits and deserved role in therapy.

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