The use of Patient Choice (manufacturer copay assistance/coupon cards) is gaining traction.
By using these discount cards, plan members can greatly reduce or eliminate their out of pocket expenses for certain brand drugs.
Benefit plans that are structured appropriately will force the drug manufacturer to absorb the additional costs of the brand drug (often 5X to 6X the cost of an equivalent generic product).
Are drug manufacturers getting ‘off the hook’?
Unfortunately, all too often Plan Sponsors let drug manufacturers slide by failing to put adequate controls in their benefits plans; unwittingly assigning additional and unnecessary drug costs to these same plans. Costs that should be borne by the drug manufacturers facilitating the card. Sometimes these costs are dumped on an unprotected spousal plan, but most egregiously is that these higher drug costs are borne by plans that simply pay for brand drugs that have generic equivalents; leaving nothing for reimbursement by the coupon card.
The rise in popularity of these cards are a result ofthebenefit plan formulary designs that increasingly require some type of copay or lower reimbursement for non preferred brand drugs.
Designing effective drugs plans that provide a choice to the members
Patient choice/copay assistance cards can also be utilized to help reimburse plan members facing significant copays from originator drugs that in some cases would result in financial hardship to the patient. Longer term, the drug manufacturer serves to earn more by reimbursing a copay when one considers that the patients typically will be on drug for decades at a time.
If an employee requires a $50K/annum drug, with an 80% reimbursement, the employee is required to pay $10K/annum out of pocket. With this copay assistance card, the manufacture can offset the portion of the drug cost payable by the member.
The anatomy of the coupon cards
Individuals can receive coupon cards from their physician, pharmacist or by registering directly with a drug manufacturer. Once again, the intended recipient of the card is for patients using brand name maintenance drugs or drugs coming off patent, that have generic drug competitors. But, as illustrated above, these cards also function as copay assistance cards for higher cost drugs.
By eliminating or greatly reducing an employee’s coinsurance, deductible or out of pocket expense, it makes it more practical/feasible for the member to “remain” on that manufacturers drug and to continue the revenue pipeline for that drug even after the patent protection has ended.
Formularies that don’t dissuade the use of brand name drugs with generic alternatives (brand multisource drugs), pose a significant cost to plan sponsors because the plan is reimbursing 5X – 6X more for a brand drug than the generic equivalent drug, with the exact same active ingredient.
“Patients were reluctant to consume generic drugs for fear of taking inferior medications”
Today’s patients are much more sophisticated and aware, so they are starting to understand that generic drugs are equivalent in not only efficacy, but costs, over originator products.
Pharmaceutical manufacturers have recognized that it is not easy to maintain patient on these brand drugs, particularly as Insurer’s force plan sponsors to amend their plans to mandatory generic or tiered conditional/evidence based formularies that apply lower reimbursement levels to members taking these non-preferred branded drugs for which there are generic equivalents.
When benefit plans are set up appropriately, they provide “choice”. Plan members can access the brand or generic drug that they believe works best for them. Although the science confirms that the active ingredients are identical, and as such, only less than 0.05% of the population will have issues with the fillers/(binding agents), a properly structured plan will allow the member to take the brand but pay a higher out of pocket cost.
Practically speaking, the physician provides their patient with choice/copay card. The patient shows card to pharmacist. The employer sponsored drug plan is used to reimburse the cost of the drug; only to the lowest alternative generic cost. From there, the drug manufacturer or patient choice card reimburses the rest of the drug price.
In the absence of a coupon card, any amount over the generic price of the drug (the 75% to 80% cost not paid) would be the responsibility of the patient. By ‘choosing’ the brand by using the card however, the drug manufacturer pays 75% to 80% of the cost and the plan sponsor only reimburses to the lower generic cost.
In a voluntary generic plan, if the doctor writes “do not substitute” on a drug, the pharmacist may want to substitute for a lower cost “generic drug”, but since the plan allows the overwriting of the system, the plan will cover the brand cost. The employee’s plan is first payer, so the discount card pays nothing (zero) of that prescription expense. Clearly, these plans are ineffective, (but they represent a significant portion of plans by number of insured persons).
Introducing a patient choice (coupon card) in such a plan does not save money as the Physician is simply able to substitute the brand drug. Physicians rarely know the cost of the medications they prescribe. So, in the absence of this knowledge, they write a prescription for the more commonly advertised brand drug, to the detriment of the plan sponsor who pays the bills.
Coupon cards can be used effectively when paired with a mandatory generic or Conditional Formulary plan
The existence of a Voluntary generic plan immediately negates any advantage of utilizing these cards. For the coupon card to be most advantageous, any plan that is adjudicating drugs should be on a mandatory generic or conditional formulary. Even if a member splits coverage between (2) mandatory generic plans, (employer and spousal plan) the coupon card will still cover the costlier brand medication as it was intended.
It is important to note that not all brand drugs have coupon cards.
This is a specific program for just certain drug manufacturers. Themanufacturers can cancel or alter the terms of the offer at any time, impacting the ultimate costs of the drug. So, structuring a benefits program or influencing consumer behaviour by encouraging the use of higher costs brand drugs can lead to higher costs down the road as consumer behaviours are unfavourably impacted by these artificial consumption decisions.
Clearly, if plan sponsors don’t want to take responsibility for claims that should be directed to these potentially generous coupon/choice cards, they would be wise to implement a ‘mandatory generic/conditional formulary’ drug plan to promote member choice, while encouraging and benefiting from cost efficiencies.