Why We All Pay for Those Prescription Drug Coupons

The Annals of Internal Medicine features a commentary from 2 leading physicians on how policy makers should take aim at prescription drug coupons, one of the pharmaceutical industry’s leading gimmicks to ease the pain of high prices.

At first blush, a coupon seems like a helpful tool—a physician prescribing a high-cost drug gets to say to the patient, “and here’s a coupon, so you’ll only pay $30.” But in reality, say Peter A. Ubel, MD, of Duke University, and Peter B. Bach, MD, MPP, of Memorial Sloan Kettering Cancer Center, this discounting tool distorts the reimbursement system in ways that cost everyone in the end.

Coupons offset the co-payment, or a portion of it, that the consumer would otherwise pay. But pharmaceutical companies are selective about coupon programs—they don’t offer them for every drug, the authors note, only for those that patients fill before insurance starts to pay. “Because insurers cannot distinguish between payments from patients and copay coupons, the coupons can be used to speed patients to their out-of-pocket maximum even when they have not paid the share their insurance plan requires," Ubel and Bach wrote.

Thus, the coupons quickly help patients blow through the deductible so the insurer picks up the rest, raising premiums the next year for everyone while masking the true cost of prescription drugs. And that, Ubel and Bach wrote, is the problem.

Coupons, like smaller deductibles and copays before them, are shielding consumers from the real issue: prescription drugs cost too much and are driving up the cost of healthcare. Instead of giving people coupons, pharmaceutical companies should find ways to charge less in the first place, according to reformers. Drug companies know that when their products are placed on higher tiers, fewer patients use them; coupons help mask this.

Of note, public programs like Medicare and Medicaid don’t allow beneficiaries to use coupons; rebates are built into their payments to drug companies. But the rebated amount is based on the full price. If drug prices were lower in the first place instead of having a coupon system, the thinking goes, government programs would be paying much less.

Ubel and Bach propose several ideas for policy makers. They say that drug companies should be required to offer similar assistance for all patients. “This means pharmaceutical companies cannot discriminate against patients who cannot document their financial need, provide assistance for some medications but not others, or limit coupons to only a few prescription fills rather than the duration the patient needs the medication.”

Coupons or not, high drug prices have caused some health plans or pharmacy benefit managers (PBMs) to refuse to cover some drugs at all. Going into 2017, both major PBMs, Express Scripts and CVS/Caremark, have excluded well-known insulins, presumably because they could not come to an agreement with the manufacturers on prices.

The authors recommend a value-based system in which insurers are required to cover drugs, but the price aligns with benefits and copays are within a consumer's reach. This would reward innovative drugmakers and give consumers access to care.

Reference

Ubel PA, Bach PB. Copay assistance for expensive drugs: a helping hand that raises costs [published online October 11, 2016]. Ann Intern Med. 2016; doi:10.7326/M16-1334.