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 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.The report wisely sidesteps attacks on copay offset for specialty pharmaceuticals, noting:
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."
“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?