Health Insurance Quotes
Copayment coupons for brand-name drugs could raise health insurance costs
Drugmakers have saturated the market lately with discount copayment coupons, which customers use to cover the cost of their health insurance copays at the pharmacy. These copays are often higher for brand-name drugs than for generics. Health insurers use lower copays as a way to steer patients toward more affordable generic medicine, which helps hold down claims expenses.
But pharmacy-benefit managers see a problem with the drugmakers' marketing strategy. They say that while you pay the same or less for brand-name drugs, your employer or other sponsor of your health insurance coverage pays more -- sometimes much more.
"Discount drug copay coupon programs stick insurance plan sponsors -- whether employers, unions or governments -- with an increasingly larger share of drug-coverage costs," says Mark Merritt, president and CEO of the Pharmaceutical Care Management Association (PCMA).
In November 2011, the PCMA released a study that found brand-name drug coupons could fuel a $32 billion increase in the cost of drugs over the next 10 years.
Pharmaceutical research and manufacturing representatives responded by saying that copayment assistance helps patients stay on their medications and that health care costs are reduced when patients take better care of themselves.
Karl Uhlendorf, a spokesperson for the Pharmaceutical Research and Manufacturers of America (PhRMA), says drug copayment coupons are a way for biopharmaceutical research companies to help "patients suffering from disease to access programs that can help them get the medicines they need."
How coupons affect health insurance coverage
But Michael Staab, co-CEO of Innovative Rx Strategies, says drug copayment coupons can cost plan sponsors significant amounts of money.
For example, your health insurance plan may require you to pay a $25 copayment for brand-name drugs and a $10 copayment for generics. If you have a $15 copayment coupon from the manufacturer, you can get the brand-name drug for the same $10 you would pay for the generic, Staab says.
But your plan sponsor doesn't see any benefit. Perhaps the brand-name drug costs $147. That means the plan sponsor must pay $122, which is the cost minus the $25 copay.
Meanwhile, the generic version of the drug may cost just $24. If you buy the generic, your plan only has to pay $14 -- the $24 cost of the drug minus your $10 copayment.
Multiply the extra costs for your insurer by hundreds or thousands of patients and the cost is staggering. If nothing is done to stop the proliferation of copayment drug coupons, Merritt says, consumers will pay more in the long run because their health care premiums will rise significantly to cover the increased costs to their employers. Affordable health insurance won't be possible, he adds.
Susan Pisano, spokesperson for America's Health Insurance Plans, agrees that as drugmakers use coupons to entice patients to choose expensive brand-name drugs over cheaper generics, the overall costs to insurers will rise. "Ultimately," she says, "it could lead to an increase in premiums for those who are insured by those health plans."
Problem could accelerate
Staab and Merritt expect the problem to accelerate over the next 12 to 18 months as a large number of brand-name drugs lose their patent protection and generics for them become available.
The PMCA estimates drugmakers spend $4 billion annually on copayment coupon programs and that such programs have increased by more than 260 percent over the last two years.
Merritt says it's not a health care issue but a financial one. "In terms of health care benefits, brand-name drugs have none over generics," he says. "Brand-name drugs have no extra clinical value, but sticking with the brand name could cause costs to go through the roof."
Besides, Merritt says, the drug copayment programs are only for people who have health insurance and do nothing for poor or uninsured patients who most need assistance for buying drugs.
Drug makers looking for an edge
Another reason drug manufacturers like coupons is that they require patients to provide personal information in order to redeem the discounts, Merritt says. Drug companies have long sought patient information but haven't had a way of accessing it, he says.
Some health insurance plans are fighting back by refusing to cover brand-name drugs when comparable generics are available, Merritt says. So patients who use copayment coupons could ultimately be limiting their own drug choices, too.
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