Do we really want pharma to help with that co-pay?
When criticized for high drug prices, a pharmaceutical firm will commonly cite its generous co-pay and coupon assistance programs as a solution. But a new piece by experts published in the Annals of Internal Medicine suggests these discount programs are actually part of the drug pricing problem.
The article lays out five points to back up this claim of how co-pay and coupon programs raise costs for everyone. Here’s our synopsis of the points made:
- Co-pay assistance reduces public scrutiny for the drug pricing system. When consumers take advantage such programs, they’re less likely to mobilize and speak out against unfair prices. This means drug makers can continue to charge whatever they want.
- Co-pay assistance “undermines benefit designs” that allow for low-cost insurance. If someone chooses a cheaper plan with a high deductible, it’s expected he or she will not utilize as much care as someone with a lower deductible plan. Co-pay assistance negates that assumption and increases overall health care utilization (and costs).
- Co-pay assistance helps patients reach their out-of-pocket maximum sooner, which means insurance companies will be paying more for longer. Eventually, this will translate to higher premiums for consumers.
- Co-pay assistance lessens the negotiating power of insurance companies. Insurance companies place drugs in “tiers” in order to save money and reduce utilization of the most expensive medications. But when co-pays and coupons are available, this tier method loses bargaining power.
- Co-pay assistance shields consumers from the true cost of a drug. In a working market, high out of pocket expenses for drugs would result in consumers shopping around to find a lower price.
A study out this week shows that when drug companies strategically issue coupons prior to generic competitor releases, branded drug sales jump by as much as 60 percent.
The main takeaway here is that pharmaceutical companies use assistance programs as a diversionary tactic to deflect public pressure and blame, which allows them to continue to reap exorbitant profits and charge Americans the highest prices in the world for medicine.
The real question is: why don’t companies reduce prices? The answer is simple but it entails pharma giving up some of its power and profits.