Drug companies fight generics with coupons

Look closely at ads for most medications that appear in magazines, on TV or on the internet. Along with an extensive list of side effects and possible uses, you'll find an offer to explore options that will make it easier for patients on commercial insurance to afford the expensive meds.

They're called copayment coupons and cards, discounts and patient-assistance plans. These financial breaks for consumers are part of a $7 billion effort by pharmaceutical firms in 2015—up from $1 billion in 2010—designed to help patients access drugs they otherwise can't afford, according to IMS Health.

While the coupons have improved patient compliance, drug manufacturers are covering all or part of the copays to bypass efforts by insurers and pharmacy benefit managers to rein in the rising price of drugs. One key strategy is to put lower copays on lower-cost preferred drugs and raise copays on higher-priced medicines that may not offer additional value for their higher cost.

The patient-assistance portion of such drug company programs, designed to help patients access the most expensive meds, represents only 5% to 10% of the $7 billion, according to IMS. The rest goes for coupons.

“Coupons eliminate members' cost share for high-cost brand medicine, removing the financial incentive for them to choose a lower-cost generic or preferred brand,” said Patrick Gleason, director of health outcomes at Prime Therapeutics, a St. Paul, Minn.-based PBM. “This circumvents formulary design, putting the insurer on the line to pay for more non-preferred brand-name medicine—at a price that is often inflated to recapture manufacturer revenue lost from offering coupons in the first place.”

One example: A patient with rosacea, the common skin disorder, told Modern Healthcare how her dermatologist prescribed Monodox, an oral antibiotic that is generically known as doxycycline monohydrate. The branded version is made by Exton, Pa.-based Aqua Pharmaceuticals.

She said that the medicine would cost $1,200 a month without insurance and $800 a month through her Blue Cross plan. But the dermatologist's office gave her a one-year copay coupon that whittled her out-of-pocket cost down to $30 a month.

A generic doxycycline monohydrate would cost as little as $41 in the Chicago area, according to GoodRx.com, which conveniently links to coupon offers. Aqua did not respond to a request for an interview. The patient said her dermatologist never mentioned a generic was available. The FDA Orange Book lists over a dozen companies that have the right to manufacture doxycycline monohydrate.

Holly Campbell, senior director of communications at Pharmaceutical Research and Manufacturers of America, the Washington, D.C.-based trade group, defended copay offset coupons and patient-assistance plans.

“Today, too many patients find that they are facing very high cost-sharing that puts their ability to stay on a needed therapy at risk. Some patients face coinsurance as high as 40%, and it is becoming increasingly common that patients must meet a deductible before any prescription-drug coverage applies. In such cases, patients often are less adherent to therapy, which can lead to long-term problems for patients and the healthcare system,” she said.

Campbell noted that payers have tools, such as copays and step therapy, to prevent patients from accessing certain medicines without first meeting plan protocols. She stressed that the vast majority of all prescriptions—including those eligible for patient assistance—are filled using generics or plan-preferred brands.

Couponing is on the rise. In a report released in May, the Boston-based Tufts Center for the Study of Drug Development said that there are copay coupons for over 700 medications now, up from about 75 in 2009. IMS Health found that 10% of prescriptions used a copay card in 2015, up from 3% in 2010.

Dr. Caleb Alexander, a general internist and pharmaco-epidemiologist at Johns Hopkins Bloomberg School of Public Health in Baltimore who has studied coupons, joked that coupons are an “assistance strategy, or racket, depending on your perspective.”

His research with a team from Prime Therapeutics, which appeared in Health Affairs in October 2014, showed that coupons can offset a substantial fraction of the out-of-pocket costs. “The degree that they drive prescription-drug choice is of tremendous concern to policymakers and clinicians and patients alike. This is an important and understudied area of pharmaceutical policy,” he said.

Dr. Joseph Ross, an internist at Yale University School of Public Health, said manufacturers use coupons because they help attract patients and enhance revenue. Ross co-authored an analysis of the phenomenon titled “Prescription-drug coupons—no such thing as a free lunch” in the New England Journal of Medicine in September 2013. Researchers found 62% of coupons (231 of 374) were for brand-name medications for which lower-cost therapeutic alternatives were available.

Crestor (rosuvastatin calcium), which reduces LDL or bad cholesterol and went generic this year, will be the next coupon battleground. London-based AstraZeneca, which makes Crestor, offers coupons that enable patients to pay as little as $3 a month for a drug that retails at about $200 a month. Watson Pharmaceuticals of Parsippany, N.J., received Food and Drug Administration approval for the first generic in April and others are expected.

There's a lot at stake: Crestor had U.S. sales of $6.3 billion in 2015, ranking it fourth on IMS Health's list of top-selling medicines in the U.S. Mike Crichton, vice president of cardiovascular at AstraZeneca, offered a humanitarian motive to coupons: “We have to prioritize access and affordability so that patients who need our medicines have access to them,” he said. “We offer savings cards as an option for eligible patients to help reduce the burden of cost at the pharmacy level.”

Ross of Yale said coupons may help individual patients make ends meet, but are harmful to the overall health system and insurance plans that pick up most of the costs.

Eileen Wood, chief pharmacy officer at CDPHP, an Albany, N.Y., not-for-profit health insurance plan, said manufacturers make up every dollar spent on copay coupons and patient assistance plus 20%. “The drug companies are not giving away anything. They have to have a return to their stockholders,” she said. “So if a patient-assistance program is giving $1,000 away, they have to add $1,200 to the cost of the drug.”

To fight back against the tactic, PBMs are beginning to exclude drugs with coupons when cheaper clinically equivalent alternatives are available. “Payers are responding to rising drug costs with new, more restrictive formulary management policies,” said Joshua Cohen, a Tufts health economist. “With prescription-drug spending in the U.S. having grown more than 8.5% in 2015, and projected to continue rising, PBMs are likely to expand their exclusion lists.”

The Tufts center found that the number of drugs excluded by the two largest PBMs, St. Louis-based Express Scripts and Woonsocket, R.I.-based CVS Health, grew about 65% from 2014 to 2016. CVS excluded 124 meds in 2016, and Express Scripts excluded 80 in 2016. More than 90% of excluded drugs had coupons.

CVS said it has saved more than $6 billion for its clients since launching this approach in 2012. Express Scripts said it saved its plan sponsors more than $3 billion over the past three years through its exclusions.

Dr. Steve Miller, chief medical officer at Express Scripts, gave the example of Express Scripts banning coupons for market-leading Victoza (liraglutide), an injected non-insulin drug. Novo Nordisk, the manufacturer, promises to issue coupons that keep copays at no more than $25 for up to two years. Victoza retails at $661 a month in the Chicago area, according to GoodRx.com.

“We knew that patients don't stay on Victoza very long anyway. They churn through it,” Miller said. “So this formulary exclusion is a good example where we were able to significantly lower the overall cost of medication, while maintaining the best possible health outcomes for our patients.”

Novo Nordisk declined to comment.

The federal government, which has been financing seniors' drugs since 2006, prohibits the use of coupons. “The federal programs don't allow coupons to be used because they know for Medicare that all they do is end up with a higher bill and no better health outcome,” Miller said. “The federal government considers these coupons to be illegal kickbacks for Medicare beneficiaries, and that's really the way commercial insurance should work as well.”

In addition to exclusions, some plans use physician education to counter prescribing of expensive medicines for which there are generics.

Since 2009, CDPHP has fielded a team of five former drug reps to educate primary-care physicians on staff to change their prescription habits to get the most-effective meds for the money.

Wood said, “We fight fire with fire. We have a physician engagement team that are veteran pharmaceutical reps. We hire them, get them off the street, rehabilitate them and send them back out with the whole truth. It works out very well for us and they love doing it. Now they're doing something good for the world.”