Editor's Corner: Don't be fooled by bait and switch of pharma coupons

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headshot of Leslie Small

Like most Americans who spend any amount of time watching TV, I probably have seen more ads for prescription drugs than any other product.

They never fail to capture my attention with their general weirdness (remember the one where a woman’s bladder is leading the patient around?) and the litany of awful side effects they list while the actors partake in some serene activity. “In rare cases, patients have experienced coma or death,” says the announcer, while the image of a woman happily gardening fills the screen to soften the blow.


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But as amusing as all that is, one particular line at the end of those fine-print readouts makes my “BS meter” start flashing. I can even recite one from memory: “If you’re unable to afford your medication, AstraZeneca may be able to help.”

Sounds friendly enough, right? The drug company knows it charges a hefty fee for the brand-name drug it is selling, and just wants to give you, the little guy, better access to this novel treatment through a helpful coupon to make the drug cheaper.

I’m not buying it. And it turns out, no one else should be, either.

“These are wolves in sheep’s clothing,” Leemore Dafny, a Harvard Business School and a co-author of new research on the subject, told the New York Times. The coupons promise consumers cost-savings, she says, but actually drive up spending on drugs.

To quantify just how much the trend affects healthcare spending, Dafny and other researchers looked at drugs facing competition from generics for the first time between 2007 and 2010. For the 23 drugs with coupons, they estimate that spending was $700 million to $2.7 billion higher than it would have been in the absence of coupons, according to a paper published last week in the New England Journal of Medicine.

Mylan's EpiPen
Mylan's EpiPen

Why is that? Not only do such coupons lessen public outcry about high drug prices, they can reduce consumers’ incentive to factor price into their healthcare decisions, argues a piece published last week in the Annals of Internal Medicine. A timely real-world example, it says, is manufacturer Mylan, which offered patients $300 coupons to lessen the blow of EpiPens’ price hike.

Insurers pay the price

Coupons also greatly reduce the incentive for drug manufacturers to offer price concessions to health insurers in exchange for preferred tier placement--a system that has contributed to relatively low growth in drug spending, the NEJM paper argues.

Instead, coupons let pharmaceutical companies “charge insurers the highest price possible” while keeping a drug on their formulary, the paper notes. Insurers’ only recourse might then be to remove the drug from their formulary, effectively denying patients access to it.

Of course, the best solution might not be a blanket ban on coupons, as that could put the cost burden back on patients.

"Now would be a good time to seize on the zeitgeist of drug-price outrage and disrupt these coupons’ price-distorting effects."

Massachusetts has found a solution: It bans the practice for drugs with a generic equivalent--patients can still use coupons to help them afford drugs for which there is no affordable alternative, the Times piece notes.

Or, as the Annals of Internal Medicine piece suggests, pharmaceutical companies could be required to made co-pay assistance more widely available--meaning they cannot discriminate against patients who can’t document their financial need, provide assistance for some medications but not others, or limit the number of times a coupon can be used for one medication.

Either way, now would be a good time to seize on the zeitgeist of drug-price outrage and disrupt these coupons’ price-distorting effects.

After all, just like the happy woman gardening is meant to distract from the scary side effects of a drug, the practice of offering drug coupons amounts to nothing more than big pharma’s latest attempt to fool us. -- Leslie @HealthPayer

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