• 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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    • Regardless of the legality, I’ve used one of these. I was taking Alvesco intermittently for asthma induced by seasonal allergies. My insurer charged a $60 copay. Alvesco reduced that to zero. I would probably have faced a $30 copay for an equivalent preferred branded drug.

      That said, Alvesco appears to have no greater efficacy and no better side effect profile than other long acting steroid inhalers (I checked the cost effectiveness literature). It is pricier to the health plan than, say, QVAR (I knew this from my insurer’s drug pricing tool).

      You can see why the manufacturer would want to discount the copays. But in this case, they are hawking a pricey drug that is no better than competitors. Maybe more plans should move to ban such rebates (which I assume can be legally done) and lower the copays for drugs that are found to be effective.

    • Coupons that give you $60 off suggest that the price is wildly inflated and the pharmaceutical company (provider) is effectively ripping off the insurer. Strangely skewed incentives are a feature of the American system.

      • Big Pharma lobby. Nuff said.

      • Not necessarily. $60 is often not a lot when taken as a percentage of the price. With coupons that can change the co-pay by $60, etc. the companies are just tapping into price discrimination to increase sales. Plenty of industries do this with coupons, discounts, and time-based pricing of various sorts.

    • I tried to use one of these coupons, but it turns out that with a high deductible insurance rather than a copay it doesn’t apply, so the eye infection drug the coupon covered was going to cost me $185. I refused and contacted the doctor. He prescribed a similar drug (not new, but very effective with the same antibiotic and a different steroid) and the cost to me was $18! So the drug companies are definitely ripping off the insurance companies and patients with the cooperation of doctors who prescribe the latest drug pushed by the pharmacy rep, not necessarily the most effective and economical drug the patient needs.

    • Part of the problem with coupons and other free incentives from drug companies is that they get people started on expensive medications to treat chronic conditions that people want to continue once the free benefit is gone. Their goal is to get you started so that then you are willing to pay later on. Many plans grandfather patients in who are on certain medications, for example mental health medications where changing to a preferred drug could be detrimental to the patient. So if a person gets started on an expensive drug via a coupon, then enrolls in a health plan who grandfathers that medication, the plan then covers the extra expense. Or the patient does out of pocket if they’re not willing to switch.

    • I use them all the time from the above website. Get off your high horse. I save almost a tgousand dollars a rear.

      Better in my pocket than in the big insuranc3e company

      • It does not stay in your pocket. Insurance rates rise to cover increased costs they pay for drugs. Incredibly, exasperatingly naive to think any saving stays in your pocket.

    • do you actually think they pass on the savings to us? that’s a canard.

      The CEO of Caremark made 20.3 $million dollars last year.http://www.internetdrugcoupons.com/blogs/Drug-Coupons-Add-32-Billion-Healthcare-Costs-Dont-Believe-Hype

      Lets make a deal … reduce my generic copay to zero and I stop using coupons.

      If we stop using coupons rates will remain the same.

      Plus, you assume I will stay on the same med when the coupon expires. When the coupon expires I switch to the therapeutically equivalent brand or generic drug. They explain it here:

      http://www.internetdrugcoupons.com/blogs/Drug-Coupons-Add-32-Billion-Healthcare-Costs-Dont-Believe-Hype

    • TANSTAAFL

    • TANSTAAFL – true. BUT you can get a free soda if you have qa coupon. 🙂