Drug copay rebate cards and coupons

Private and public insurers use tiered drug copays to encourage patients to use cheaper medicines, including generics. Drug companies undermine these economic incentives with cards and coupons that waive or rebate the copay differential to the consumer (JAMA article here). Clever, but is it legal?

In Medicare, this is probably a violation of the Anti-Kickback Statute. But for private insurers, two recent decisions have tossed out lawsuits (h/t to Ed at Pharmalot). These cards and coupons explicitly don’t apply to federal government programs covered by AKS or state analogues.  (MA amended our statute to permit some of these coupons in 2012).

The first case is Plumbers and Pipefitters Local 572 Health and Welfare Fund v. Merck (D. NJ. April 29, 2013). The insurance payer is a union health plan, so the AKS doesn’t apply. Instead, they allege violations of RICO, mail fraud, commercial bribery, and tortious interference with contract. The case was dismissed for lack of standing, not substantive grounds. The union failed to point to any example of increased cost to the insurer due to the coupons. It shouldn’t be hard to fix this mistake and refile.

The second case is AFSCME v. BMS (S.D. NY. June 3, 2013), also brought by a union health plan. Here, the union plan failed to demonstrate that either the drug companies or the pharmacists owed the health plan any duty regarding the copay and dismissed the complaint with prejudice. The plan can refile only on the “benchmark” theory that claims that the waived copays were inaccurately reflected in certain price benchmarks like AWP.

Both cases would be easier for the health plans if their contracts with participating pharmacies included a provision forbidding the rebates.

@koutterson

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