Drug Coupons: Who Is Receiving the Most from the Discounts?

Prescription drug coupons represent the latest battle in an escalating war between health insurers and the pharmaceutical industry, according to a Kaiser Health News (KHN) article. State legislatures and courts have been involved in the fray. While insurers set high co-pays for band-name drugs to steer their members to less-expensive generics, drug companies issue coupons and discount cards to cover costs of the co-pay for brand-name drugs.

When Governor Deval Patrick signed the state budget for 2013, Massachusetts became the last state in the nation to legalize the use of drug coupons on medications for which no generics are available. There were divergent opinions on whether to legalize drug coupons, according to Karen Weintraub in her article in the Commonwealth. Lobbying against the provision with insurance companies was Healthcare For All, an advocacy group concerned with health access for the poor. The group contended that allowing coupons would drive up the cost of health care by encouraging people to use brand name drugs instead of lower cost alternative. According to Alyssa Vangeli, policy analyst for Health Care for All, drug companies offer discounts to co-pays on their most expensive products, but much of the cost is born by health insurance companies. According to a letter sent to House and Senate members by coupon opponents, legalizing coupons would add an estimated $750 million to health costs over the next 10 years. On the other side, pharmaceutical companies, pharmacists and professional medical organizations joined together to promote drug coupons.

The divergence on the issue of drug coupons is not new. On March 7, 2012, three health plans in Community Catalyst’s Prescription Access Litigation coalition  filed class action lawsuits against eight major drug manufacturers for illegally subsidizing co-payments for expensive brand-name prescription drugs such as Lipitor and Nexium through the promotion of co-pay coupons. The health plans complaint alleged that “the payments are illegal under a federal statute that prohibits commercial bribery because the undisclosed payments to patients and pharmacies are made through a ‘shadow claims system’ designed to keep information about the presence or amount of these payments from health plans.” Community Catalyst, a national consumer advocacy organization, warned that “while prescription drug coupons appear to save consumers money by reducing or eliminating co-payments, in reality they dramatically increase the cost of health care by driving up health insurance premiums and potentially causing consumers to hit benefit caps or lose coverage altogether.”

In a Pharma Blog post, Ed Silverman explained that insurers and pharmacy benefit managers have used tiered co-pays to encourage consumers to use lower-cost generics or favored brand name drugs that carry lower price tags, while pharmaceutical companies use coupons or co-pay cards to preserve market share. He added that drugmakers defend the use of coupons and co-pay cards as a way to help pressed consumers afford their medication. According to a statement made by PhRMA Senior Vice President Matt Bennett co-pay coupons “address a serious problem of high cost sharing for medicines,” and “play a valuable role in increasing access to medicines and improving patient adherence to prescribed therapies, generating better health outcomes and reducing the use of avoidable costly medical care.”

KHN reported that in the “past few years, coupons and discount drugs have become nearly ubiquitous for prescription drugs.” Coupons and discount cards are available for 395 medications, according to a report from IMS Health. According to KHN, the insurance industry is concerned that drug coupons and discount cards “drive patients toward more expensive brand-name drugs, leaving insures to cover the full cost, which they then passed on to consumers in the form of higher premiums.” KHN said that some experts believe that people with Medicare, Medicaid, veterans’ benefits or other federal health insurance benefits, using a coupon or discount card to buy prescription medication may work against efforts to keep federal spending down and may be counter to federal law.

According to KHN, the effects coupons have on consumer prices was described in a Journal of the American Medical Association (JAMA) article. The article explained that researchers found that Lipitor, a cholesterol reducing drug, has an average co-pay of $30 per month compared to a $10 per month co-pay for simvastatin, a generic drug for treating high cholesterol. With a coupon from the drug manufacturer, the co-pay for Lipitor went down to $4 a month making Lipitor less expensive than the generic, simvastatin. The insurer pays $18 per month for the simvastatin and $137 per month for Lipitor. Thus, KHN said, it “is a great deal for the patient, but not for the insurer.” 

“Don’t get hooked on prescription-drug coupons,” a Consumer Report article, provided advice to people who plan to use drug coupons. The article warned that many of drugs for which coupons are available are not the best choice for many conditions and stated that the generic alternatives work as well or better. In addition, although the initial costs are low, prices go back to the original level once you are no longer eligible or the program ends. In some cases, the programs are not available to everyone. Consumer Reports article included the following tips: (1) do the math, the coupon may not offer the least expensive option; (2) ensure the coupon is from a trusted source, such as a doctor’s office or manufacturer’s website; (3) watch for limitations, coupons are available for a limited supply, compare the co-pay for the generic; and (4) consider the long-term situation.