That is the allegation in a series of lawsuits filed today by several union health plans against eight large drugmakers. They charge that, rather than save consumers money, prescription drug coupons illegally subsidize co-pays for brand-name meds and can actually increase health insurance premiums, which can cause consumers to hit benefit caps or lose coverage altogether.
The lawsuit reflects an ongoing, behind-the-scenes battle over the cost of medicines. Insurers and pharmacy benefit managers have used tiered co-pays to encourage consumers to use lower-cost generics or favored brand-name drugs that carry lower price tags. Drugmakers have fought back with coupons or co-pay cards to preserve market share. Pfizer, for instance, began aggressively marketing a card for its Lipitor cholesterol well before the first generic version arrived late last year.
The coupons can lower co-pays for brand-name drugs to about the same cost as a generic, or simply offer a flat discount off the co-pay. This means that employers and unions that offer prescription drug coverage can pay more when coupons are used. But consumers like them. In Massachusetts, where there have been repeated efforts to overturn a state ban against coupons (see this), patient groups have repeatedly sided with the pharmaceutical industry to argue such discounting provides needed relief to people who have difficulty affording their meds.
However, four union health plans and a consumer advocacy group maintain coupons are a thinly disguised gambit to promote brand-name meds at the expense of generics. In arguing their case, the plans cite a federal statute that prohibits commercial bribery and charge coupons are illegal, because the undisclosed payments to patients and pharmacies are made through a so-called ‘shadow claims system,’ which is designed to hide the payment information from the health plans. In effect, the lawsuits charge the health plans are spending more than they should.
“Pharmaceutical corporations are duping consumers with misleading coupons that are more about increasing corporate profits than actually reducing the cost of drugs for consumers ” said Wells Wilkinson, director of the Prescription Access Litigation project at Community Catalyst, which worked with four health plans to file the lawsuits. “If not stopped, the use of these deceptive coupons will increase costs for consumers’ health plans by billions of dollars, contributing to higher premiums and the increasing loss of coverage and benefits for Americans.”
The drug makers that were targeted are Abbott Laboratories, Amgen, AstraZeneca, Bristol-Meyers-Squibb, GlaxoSmithKline, Merck, Novartis and Pfizer. The lawsuits were filed by the AFSCME District Council 37 Health & Security Plan Trust, Sergeants Benevolent Association, the New England Carpenters, and the Plumbers and Pipefitters Local 572 Health and Welfare Fund. These provide drug benefits for civilian and uniformed municipals workers, retirees and their dependents in New York City; plumbers in various states, and carpenters in New England.
How does the alleged shadow claims system work? The lawsuits maintain the coupons "are designed to undermine cost-sharing arrangements. By eliminating or reducing member co-pays for branded drugs, plan members have no incentive to use less-expensive generic drugs, and health benefit providers end up paying for more costly branded drugs," according to the lawsuits filed by four union health plans against the drugmakers (here is one of the lawsuits).
"Presenting a co-pay subsidy card to a pharmacist triggers a secondary form of insurance - provided by the manufacturer - that functionally reduces the price of the drug without disclosing that price reduction to the insurer. Each and every subsidy is calculated and processed electronically; the health benefit plans receive electronic records falsely indicating that the members paid their personal cost-share obligations, yet the manufacturer’s digital paper trail discloses the truth - that the copayments were subsidized by the manufacturer."
For their part, drugmakers defend the use of coupons and co-pay cards as a way to help pressed consumers afford their meds. A spokesman for Pfizer sends us this statement: "Given the larger cost-sharing burden being placed on patients, Pfizer supports the use of company sponsored programs which help patients with out-of-pocket expenses for the medicines prescribed by their physician.
"...While many health plans have raised their co-pays and/or are encouraging switching to generic medications to achieve cost-savings, these treatments may not be appropriate for all patients. The purpose of co-pay cards is to support the medical treatment choices made by prescribers by better enabling patients to afford these medications."
UPDATE: And PhRMA senior vp Matt Bennett sent us this: "Copay coupons address a serious problem of high cost sharing for medicines. They play a valuable role in increasing access to medicines and improving patient adherence to prescribed therapies, generating better health outcomes and reducing the use of avoidable and costly medical care. Today’s levels of cost sharing can pose a significant access barrier for patients, resulting in low adherence and poor health outcomes...
“Copay coupons help patients adhere to prescribed therapies by reducing high out of pocket costs. In fact, a recent analysis by the Amundsen group shows that the majority of copay coupon spending is for medicines for which substitutes are not available. This analysis of prescription drug claims data also found that copay coupons were most often used for brand medicines which health plans had placed on a preferred tier (often tied to deep negotiated discounts), and that use of the cards had no relationship to lower use of generic drugs in any of the major therapeutic classes studied.”
coupon pic thx to fontplaydotcom on flickr