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:

  1. 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.
  2. 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).
  3. 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.
  4. 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.
  5. 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.




One Comment On “Do we really want pharma to help with that co-pay?”

  1. I think the article you cite must have been written by a ghost writer for the insurance lobby. It does the consumer a great disservice for insurance companies to blame big pharma and big pharma to blame the insurance companies but it’s a great strategy for them both because the consumer is caught in the middle. It’s the provider (insurance company) who provides the formulary that contains the drugs. I don’t know anyone who claims health insurance is “low cost.” Or that health insurance companies aren’t extremely profitable, too. Each provider has its own formulary. How many of us have faced a situation like the following: you are taking several medications and you can’t find one formulary that contains them all. What do you do? Find the formulary with the best fit and devise some kind of workaround (forgo the least necessary medication; buy as much as you can afford and cut your dosage; procure through Canada). Why do we need formularies at all? Why isn’t every insurance program required to provide all drugs? They further complicate what should be the simple process of getting your medicine with their tiered pricing, their copayments, their donut holes, and their “cost sharing.” It’s all unnecessary but consumers have so little power. BUT YOU DO HAVE SOME POWER. THERE IS SOMETHING YOU CAN DO. You can call your provider’s customer support number and complain about the high price of one of your meds. Here’s how the process works: you tell the customer support representative you want to file a tier exception appeal for the drug. There is a procedure for filing a tier exception that all providers are required by law to follow. YOU MAY HAVE TO ASK TO SPEAK TO A SUPERVISOR to get the tier exception process started. The tier exception process has five levels of escalation and each level takes a couple of weeks. It’s only supposed to take a week but plan on two. When I did mine I was refused at the first level. Silver Script actually sent me a form letter stating in big block letters at the top, “NOTICE OF DENIAL OF MEDICARE PRESCRIPTION DRUG COVERAGE”. Can you imagine receiving a notification like that? It made it sound like I had been disenrolled from the drug program! This wasn’t really the case but what if somebody’s grandmother received a letter like that and thought she couldn’t get her meds any more and dropped dead of a heart attack? I appealed the decision and a few weeks later my level 2 tier exception appeal was approved. You can do it, too, and you can be as successful or more successful than I was. My monthly cost went from $158 to $41 to $8.58.

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