Tuesday, July 12, 2011

Wake-Up Call for Co-pay Cards

The June issue of Human Resource Executive (HRE) includes Coupon Overdose, an instructive overview of how employer-sponsored pharmacy benefit plans view manufacturer co-pay offset programs, a.k.a., co-pay cards.

And guess what? Payers don't like these programs, believing that co-pay coupons boost brands at the expense of generic alternatives. PBMs are also unhappy because direct-to-consumer discounts via a co-pay offset are an alternative to contracting for access via a PBM rebate.

The countervailing argument about improved adherence and therapeutic choice was added by yours truly in the article’s sidebar How Much Is Too Much?

Brand managers at pharmaceutical companies should pay attention to the growing controversy because third-party payers and PBMs are pushing back on co-pay offset programs. See the video excerpt below for my POV from a recent speech titled "The Future of Co-Pay Discount Cards."


Here's my handy summary for distinguishing co-payment offset programs from patient assistance programs (PAP).

Cleveland Research counted 86 co-pay programs in July 2009. When they counted again in January 2011, they found 295 programs. Whoa.

Pfizer's LIPITOR $4 Co-Pay Card is a high-profile example that is raising overall awareness of co-pay cards. The program advertises "LIPITOR for Less than the Average Cost of a Generic Statin."


Payers are increasingly unhappy with co-pay programs and are reacting.

The HRE article tells the story of self-funded Capital District Physicians' Health Plan (CDPHP) and the Medicis Pharmaceutical dermatology product Solodyn.

According to the VP of Pharmacy and Quality Programs at CDPHP, the plan’s cost for a one-month's supply of Solodyn was $500 per month with a tier-three patient co-pay of $50, compared to $40 a month with a $10 co-pay for the generic version. The coupon eliminated the patient's $50 co-pay, so the brand got dispensed instead of the generic.

Hence, the article states: "...some health plans and employers believe the real intent behind these programs or coupons is to drive patients away from inexpensive generic drugs and toward higher-priced products, dumping more dollars into the vaults of pharmaceutical companies."

The article quotes me describing four of the most common strategies being used by third-party payers to counter co-pay offset programs.
  • Enlarge the co-pay amounts between drug tiers.
  • Increase the formulary rebates requested from manufacturers.
  • Implement utilization management.
  • Create a closed formulary.
Another approach (also described in the article) is greater use of mail-order pharmacies, which generally prohibit co-pay cards. This is one reason that I describe New York’s anti-mail order bill as a small positive for manufacturers in The Unexpected Losers from New York’s Anti-Mail Bill.

For your viewing pleasure, I lay out the competing visions for co-pay offset programs in the video excerpt below. Click here if you can’t see the embedded video.


  1. Anon AnonymousJuly 13, 2011

    Jim - I totally agree with your point.  I just want to sarcastically add that the reason PBMs dont like the copay programs at the patient level is that they ARE hidden from them, and THEY ARENT benefiting AND IN CONTROL of utilization or decision making (like they have in everything else in the drug channels (it seems).   The pharmacies also get a slight benefit because when we split bill, we get a fee for that from the manufacturer...a fee the PBMs ARENT getting :)!!!

  2. Rebating to the PBM is typically pushed back to the payer.  In the case of Medco ~85% of rebates are passed back to payers.  Payers have the choice to instruct the PBM to push more brands (and get the rebate) or more generics.  They are in control of teh costs that they are ultimately responsible for.

    In the case of a copay card, the member gets the rebate and the choice is taken away from the payer.