January 09, 2020
A May 2016 report released by Tufts Center for the Study of Drug Development indicates that patient copay coupons – wallet-friendly cards offered by drug manufacturers to help reduce the patient’s out-of-pocket cost burden when paying for a new medication – now exist for over 700 medications, up from about 75 in 2009.1 In 2010, nearly 60% (up from 25% in 2007) of branded drug revenue was attributed to drugs for which coupons were available (Figure 1).2 Additional data from the IMS Institute for Healthcare Informatics underscore the steady rise in utilization of prescription copay coupons. Between 2010 and 2015, coupon usage among brand name retail pharmacy top sellers climbed from 8% to over 27%. In 2015 alone, coupons were used to help pay for more than a third of the best sellers prescribed to treat autoimmune conditions, viral hepatitis, HIV and multiple sclerosis.3, 4 Drug manufacturers certainly seem to be on to something, especially with consumers eager to lower their prescription costs. So why all the fuss?
This upward trend in coupon utilization has cast major ripples, touching all corners of the industry. While often big money savers for consumers at the pharmacy check-out counter, prescription copay coupons challenge the success of value based insurance design by interfering with the employer’s ability to steer consumers toward “high value” options. Coupons essentially eliminate any financial incentive for employees to choose a lower-cost generic or preferred brand product. And the real kicker? The coupon amount often inaccurately gets applied to the deductible accumulator, making it appear as though the employee has contributed to his/her deductible when, in reality, the employer is put on the line to “pick up the tab” for the expensive, non-preferred brand or specialty product.
Not only are coupons becoming more widely available and utilized, but also more generous over time, effectively increasing brand utilization by over 60% and reducing overall generic efficiency by 3.4%. A team of researchers from Harvard, Northwestern and UCLA found that coupons were associated with faster branded price growth (12.2% yearly with coupons and 7.1% without) and slower generic price declines (-2.3% yearly with coupons and -8.8% without). Ultimately, coupons increase spending 1.2% to 4.6% over 5 years post generic entry, which equate to a spending increase of roughly $30 to $120 million per drug.2
- Talk to your Pharmacy Benefit Manager (PBM) about the possibility of adjudicating coupons in a manner that preserves plan design integrity by preventing third-party dollars from funding the accumulator. Some PBMs are able to do this now through an automated system.
- Consider implementing a narrow pharmacy network to allow for more efficient coupon management. Where vendors have indicated that there are barriers to understanding usage and/or capturing coupons, consider going directly to the specialty pharmacies that process the coupons and require that they capture and report coupon utilization.
- Check to see if your PBM would be able to gather reporting data from the pharmacies within the narrow network and apply it to the accumulator process.
- Consider implementing mandatory mail order as a way of identifying coupon utilization for retail medications.
- PBMs have begun to exclude a number of drugs with coupons attached to them where generic equivalents are available. Consider adopting this exclusion list or customizing your own.
- Talk to your PBM about the process (if any) for switching an employee who is currently on a brand product purchased via a coupon to a newly launched generic equivalent.
- Wolinsky, H (June 11, 2016). Drug companies fight generics with coupons. Modern Healthcare. http://www.modernhealthcare.com/article/20160611/MAGAZINE/306119980. Accessed March 3, 2017.
- Dafny, L, Ody, C and Schmitt, M. (October 4, 2016). When discounts raise costs: The effect of copay coupons on generic utilization. http://www.hbs.edu/faculty/Publication%20Files/DafnyOdySchmitt_CopayCoupons_32601e45849b-4280-9992-2c3e03bc8cc4.pdf. Accessed March 3, 2017.
- Aitken, M et al. (April 2015). Medicines use and spending shifts: A review of the use of medicines in the U.S. in 2014. IMS Institute for Healthcare Informatics. https://www.imshealth.com/files/web/IMSH%20Institute/Reports/Medicines_Use_and_Spending _Shifts/Medicine-Spending-and-Growth_1995-2014.pdf. Accessed March 3, 2017.
- Ornstein, C (June 30, 2016). Are copay coupons actually making drugs more expensive? Pro Publica. https://www.propublica.org/article/are-copay-coupons-actually-making-drugs-moreexpensive. Accessed March 3, 2017.