CVS takes aim at co-pay cards by blocking drug coverage

Drugmakers, prepare for attack. CVS Caremark is fed up with your new favorite marketing technique: the co-pay card. The pharmacy benefits manager tells The Wall Street Journal that it's blocking coverage for 34 treatments, partly because of co-pay discounts offered by their makers. And that list will probably grow, COO Jon Roberts told the Journal.

The reason for CVS's frustration is obvious: Co-pay discounts encourage patients to stick with higher-priced branded drugs when generics--and lower-cost brands--are available. That, of course, is exactly what drugmakers want them to do. But that's exactly what a margin-minded PBM doesn't want.

So, CVS started blocking those 34 drugs in January. As the WSJ notes, about half of them have co-pay cards. For the other half, CVS couldn't get the rebates it wanted. Most of them aren't big sellers. So, perhaps it's been a way for CVS to see how patients--and drugmakers--responded, before the company tried to rein in bigger products. Lipitor, for instance; Pfizer ($PFE) has been pushing its $4 Lipitor program as a way to keep sales of the now-off-patent drug alive.

By July 1, CVS plans to set out its plans to block additional drugs, Roberts told the WSJ. "I think we are being aggressive," Roberts said. The company has only blocked drugs with solid alternatives.

CVS isn't the only PBM that's perturbed by the co-pay discounts. The industry has been balking at their use, saying they're bound to raise healthcare costs. An industry-sponsored study estimated that co-pay discounts would boost drug spending by $32 billion over 10 years, the WSJ notes. Meanwhile, some health plans recently sued drugmakers, likening the co-pay coupons to bribes.

- read the WSJ piece

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