Co-pay cards to hike drug costs $32B, report says
Co-pay discounts may be good for patients and good for branded drugmakers, but they're not so good for the payers in the middle. So says a new study from pharmacy benefits managers, which concluded that pharma coupons could fuel a $32 billion increase in drug costs over the next 10 years.
The report is especially timely because Pfizer ($PFE) plans to rely on co-pay discount cards to keep its Lipitor customers after cheap generic copies hit the market at the end of this month. The company has offered co-pay assistance for its top-selling cholesterol drug since late last year, and it's expanding that program with refill reminders and health advice. The co-pay cards allow patients to fill their Lipitor scripts for just $4 per month.
The program could help shore up sales at a time when Pfizer needs every script it can get. For current Lipitor users, it means they can continue on the drug at a bargain-basement price, but every patient who opts to stay on branded Lipitor means higher costs for insurers and PBMs, which have been counting on big savings from patients migrating to cheaper copies of the drug.
Those folks aren't happy with these discounts, which are not only used by branded drugmakers to woo patients from generics, but also to circumvent tiered co-pays, which are designed to steer patients toward less-expensive drugs, branded or not. "Co-pay coupons are designed to undermine generics, increase sales of more expensive brands and stick employers with the tab," Pharmaceutical Care Management Association CEO Mark Merritt said in a statement announcing the new report.
PCMA has a few other beefs with co-pay coupons besides the obvious: Drugmakers often raise prices to cover their co-pay assistance costs, the association says. They invite loyalty to the most expensive brands in each therapeutic class of drugs, and they don't help poor and uninsured patients who really need assistance buying drugs, PCMA says.
The PCMA report, produced by the consulting firm Visante, found that co-pay cards are increasingly popular. The firm projected a 15% increase in prescriptions associated with co-pay discounts. More than 300 co-pay programs were in force as of July 2011, a 260% increase from 2009, Dow Jones reports.
For Pfizer's part, CEO Ian Read (photo) said earlier this week that Pfizer had negotiated pricing deals with PBMs so that they wouldn't be hurt by the co-pay discounts on Lipitor. The industry as a whole says the discount cards encourage patients to keep taking their meds, a goal targeted by drugmakers and other healthcare providers alike.