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Report: Brand Drug 'Copay Coupons' Raise Health Costs for Employers, Unions, and State Governments by $32 Billion
Date:11/3/2011

WASHINGTON, Nov. 3, 2011 /PRNewswire-USNewswire/ -- Prescription copay coupon marketing programs, which lure insured consumers away from generics and toward more expensive brands, will increase costs by $32 billion over the next decade, according to new research from Visante and released today by the Pharmaceutical Care Management Association (PCMA).

Drug companies now offer "copay coupons" to undermine efforts by employers, unions and state governments to reduce costs by assigning higher consumer copays to expensive drugs and lower copays to more affordable drugs. The economics of brand copay coupons are simple: each time a drug company can sell a $150 product by helping cover a $50 copay, it gains $100 in revenue, which is paid by the employer, union, or state government that offers coverage.

By definition, copay promotions target those who already have prescription drug coverage (i.e., those who pay copays). These programs are not means-tested or designed to help the poor or uninsured. Considered illegal kickbacks in federal health programs, copay coupons are banned in Medicare and Medicaid but are allowed in the commercial market (except in Massachusetts).

The study also found that if Medicare's ban on these programs was not enforced, costs to the Part D program would increase by $18 billion over the next decade. Likewise, if the law in Massachusetts was repealed, prescription drug costs for employers and other plan sponsors in that state would increase by $750 million.

Click here to read the study

"Copay coupons are designed to undermine generics, increase sales of more expensive brands and stick employers with the tab," said PCMA President and CEO Mark Merritt.

Drug companies profit from coupon marketing programs in several key ways:

  • Copay coupons induce consumers to choose higher-cost brands (despite higher copays)
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SOURCE Pharmaceutical Care Management Association
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