Tuesday, November 08, 2011

PBMs Launch a New Attack on Copay Cards

In Wake-Up Call for Copay Cards, I point out that pharmaceutical brand managers should pay attention to the growing controversy over co-pay offset programs (coupons or cards).

Guess what? The Pharmaceutical Care Management Association (PCMA), which represents pharmacy benefit managers (PBMs), just released a blistering report that adds fuel to the fire. The title unambiguously sums up the report’s tone: How Copay Coupons Could Raise Prescription Drug Costs By $32 Billion Over the Next Decade.

My manufacturer clients recognize that it's becoming a payer-driven world, which is why the PBM/pharmaceutical manufacturer relationships can often be described as: The best of frenemies!

Below are four questions to help you think about the future of copay cards for manufacturers, PBMs, and pharmacies.

THE CONTROVERSY

The report summarizes many reasons why third-party payers dislike co-pay offset programs. It places the blame squarely on profit-seeking behavior by manufacturers of brand-name drugs. Here’s the key anti-manufacturer arguments put forth by Visante, the consulting firm that wrote the report for the PCMA:
"Copay coupons induce consumers to choose higher-cost brands (despite higher copays) over lower-cost competitors (despite lower copays). When consumers redeem copay coupons, the drug companies process them through a “shadow claims system” that prevents employers and other plan sponsors from knowing when enrollees have used them.

Drug companies often require consumers to submit confidential, personal information in order to redeem copay coupons. Manufacturers have long sought (but found difficult to obtain) such sensitive patient data, which enables them to identify and directly target individual patients with “brand loyalty” marketing programs."
The report wisely sidesteps attacks on copay offset for specialty pharmaceuticals, noting:
We exclude expenditures on specialty pharmaceuticals because copay offset programs on specialty products do not undermine generics and manufacturer price concessions to health plans in the same way that copay coupons on non-specialty brands do.
QUESTIONS TO PONDER

What’s next for copay offset programs? Here are four questions to help you frame the issues.
  • PBMs have powerful incentives for ever-more-rapid generic substitution, while brand manufacturers have a growing need to be creative in maintaining market access for their products. How much rockier will PBM/manufacturer relationships get as we enter the generic wave?
  • The report notes that most copay coupon programs reduce a $40–$50 copayment to $20–$30, i.e., from Tier 3 to Tier 2 per A Look at Drug Benefit Tiers in 2011. To what extent can direct-to-consumer discounts via a co-pay offset be used as an alternative to contracting for access via a PBM rebates? Hmmm.
  • The report doesn’t discuss payer and PBM counterstrategies, some of which I highlight in Wake-Up Call for Co-pay Cards. Will this report encourage payers to adopt more aggressive tactics, such as closing the formulary and setting up NDC blocks?
  • Generic drugs are more profitable for pharmacies, especially soon after a brand’s loss of exclusivity. See Pharmacy Profits from Authorized Generics. Over time, generic profitability gets eroded by Maximum Allowable Cost (MAC) lists. How should pharmacies view the net benefits or costs of copay cards?
Much more to come on this topic, assuming that Asteroid 2005 YU 55 doesn't destroy Earth later today.

15 comments:

  1. Manufacturers are tired of giving kickbacks(rebates) to PBM to be preferred brands. Those rebates don't help the customer in any way. They are running an end around PBMs to get the lower copay customers want. I say keep it up. Most PBMs business practices do nothing to lower the cost of healthcare for anyone. If they were simply a pass through that charged a fee per claim instead of awp spreading, MAC maniuplation for their own mail order pharmacies, keeping rebates on brand name drugs, then they might actually have value. As it is now they are increasing the cost of healthcare.

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  2. You hit the nail on the head, Adam. To get on top of copay cards, PBMs and plan sponsors will have to get comfortable saying what manufacturers refer to as the "C-word" and the "F-word":  Closed Formularies. 

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  3. As a payer I expect support from my PBM to deter coupon use with non-preferred drugs at retail pharmacies.  Why don't PBM network agreement restrict pharmacies from engaging in this practice?  Perhaps as a payer I should direct contract with retail pharmacies with this requirement and hire someone else to administer my rebates.  What value are PBM's providing these days?  

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  4. Again, how is it that rebating to the patient suddenly causes all these problems but the rebating to the PBMs over the last decades did not. The truth is that rebating to the patient or the PBM causes the same problems, and one of those problems is the over use of brand name drugs.
    Creating tier copays was a way for PBMs to keep branded drugs on formularies, collect rebates, and still market the appearance of saving the sponsor money.
    Now that tier game is being circumvented via consumer rebates; no new problems are being created that did not exist before, it is just that now the PBMs no longer benefit…. the patient does. However just like when the PBMs were benefiting from coupons and/or rebates………. the sponsor/payer still pays the price of over use of branded medication.

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  5. Pharma companies have and will protect their interests and the interest of their shareholders.  By using these cards they continue to develop their core relationship with physicians and patient.  Correct me if I'm wrong here but couldn't a PBM offer similar programs but utilizing the less expensive generics.  I know some plans offer discounts , how about offering them in similar fashion, right at the physician level?  

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  6. Hmm.  Hot potato here, I’ll read the report.  I get the push back when a generic is available.  However, how and why do meds get placed in the 3rd tier?  PBM’s/Health Plans say for clinical reasons, but it’s obvious some moves to 3rd tier are financially motivated, i.e., moving a class-leading med to 3rd tier, to drive down utilization.  IMHO co-pay assist should be a strategy for adherence to already-prescribed therapy, no switching.

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  7. The fact is PBMs already have a solution in place, it is called mandatory generic substitution.  This option charges the member the cost difference between brand name drugs and their generic alternatives (typically after the generic has 2 or more manufacturers).  So, if Lipitor costs $100 and the generic might eventually cost $20, the member is charged the difference, which is $80 (assuming their is no per claim or annual maximum).  With this option in place, there would be no need for a closed formulary.

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  8. Keithb you need to educate the physician that prescribes the medication so that a prescription is not generated in the first place otherwise there is a cost associated in having the medication changed by the physician, the time and hassel on the part of the physican and pharmacist. Most pharmacist that I have spoken with find these programs a pain. The have to buy an expensive drug, often > $150 to make $13 and wait the 45-60 days to get paid, great return on investment. But most also know that there is often little therapeutic advantage for the patient and when the rebates stop more times than not the patient will stop therapy!  We really need to consider health care cost in toto.

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  9. RxdisclosureNovember 09, 2011

    “PCMA’s real issue with copay cards is that they drives
    sales to brands that PBMs are not getting rebates from. If PCMA really cared
    about lowering drug costs and increasing generic use, they would not accept
    rebate money from the same manufacturers they are complaining about. PBMs take
    rebate money and in return that drug gets a preferred status and lower patient
    copay.  Copay cards are used to steer patients away from drugs the PBMs
    get (and keep) rebate money on. The truth is copay cards cost PCMA’s PBM members
    rebate money and THAT is why they are opposed to them.”

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  10. RxdisclosureNovember 09, 2011

    As pharmacy owner I hate the cards. They drive patients away from cheaper generics (See Oracea at $400 to payer vs. doxycycline at $20), and WASTE hours of my staff time with duplicate processing time and fees. PBMs are fleecing you Keith, go to www.truthrx.org for more info.

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  11. George Van AntwerpNovember 09, 2011

    One question which I haven't seen debated is the impact of copay cards on adherence. If the cards lower cost to the consumer and improve adherence, what's that worth in overall medical savings? Does the medical savings offset the increased cost?

    This may not be relevant in all conditions but I think it should be part of the debate.

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  12. Jason WallaceNovember 12, 2011

    Ah, so glad you brought up Lipitor.  Why then has Medco decided to force Lipitor to be dispensed in place of the generic?  Hmm... Anyone?  Bueller, Bueller?  Cannot wait for Mr. Feins' reply to this:

    http://www.nytimes.com/2011/11/12/health/plan-would-delay-sales-of-generic-for-lipitor.html?_r=1

    Fact is boys and girls, PCMA and PBMs could care less about employers, taxpayers, and patients.  They care about one thing and one thing only, MONEY.  Unfortunately for both, the scam has been exposed.  Game Over.  Visit www.truthrx.org

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  13. Agreed.  Also note how the PBMs spin the data collection techniques.

    'Manufacturers have long sought (but
    found difficult to obtain) such sensitive patient data, which enables
    them to identify and directly target individual patients with “brand
    loyalty” marketing programs.'

    Before HIPPA the PBMs gladly sold such information to the manufacturers and the patients got nothing for their troubles.  Now the manufacturers have figured out that the public will gladly part with the data - for a price.

    The PBMS are just angry they've been squeezed out of the middle on that one.

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  14. Why don't PBM network agreement restrict pharmacies from engaging in this practice?

    Thee possible answers

    1.  The negative publicity would be horrendous.  PBMs have done everything possible to avoid being associated with all of the restrictions in choice, but this would only be another log on the fire.

    2.  It's one more step towards an anti-trust/restraint of trade action.

    3.  The manufacturers would simply transition to a mail in rebate format.  Not their preferred method, but much better than surrendering to the PBMs.

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  15. The cards typically don't have a long enough rebate life to make adherence a top priority in most cases, so it's really not worth adding to the debate in my opinion.

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