HHS gives pharma the all-clear on copay cards for Obamacare patients

Drugmakers can spread their copay discounts to a new group of patients: Obamacare's enrollees. It's a victory for the practice, which pharma companies use to woo patients to new brands or build loyalty for older drugs soon to go off patent.

As The Wall Street Journal reports, copay assistance is barred by Medicare and Medicaid, but until now, it's been unclear whether that provision applies to coverage bought through the Obamacare exchanges. Health and Human Services (HHS) Secretary Kathleen Sebelius last week said the insurance offered via the exchanges isn't a federal healthcare program--and as such, copay help is perfectly legal.

The news cheered drugmakers, which have relied on copay cards and other assistance to build up their branded drugs. Biogen Idec ($BIIB), for instance, has been offering to pay for its new multiple sclerosis drug Tecfidera for a full year if patients have trouble winning insurance reimbursement. Pfizer ($PFE) rolled out a copay discount for Lipitor, its cholesterol drug, as the brand went off patent and generics appeared in hopes of shoring up sales as much as possible. As Lipitor generics hit, Pfizer managed to cling to a higher percentage of sales than previously seen with major patent expirations.

So, copay assistance is a tried-and-true tactic and a key part of pharma's prevailing promotional strategy. Drugmakers wanted to use it on patients joining the ranks of those insured via the healthcare exchanges. And no wonder: If you've checked out the plans offered through the exchanges, you know that many of them include high deductibles and big copays on drugs.

GlaxoSmithKline ($GSK) told the WSJ that Sebelius's ruling "appears to be good news for patients, and may provide important assistance for those who need help affording medicines under exchange plans." And it's true that many patients wouldn't be able to pay for their drugs without that help. What's good for Big Pharma in this case is also good for these patients.

But private insurers and pharmacy benefits managers aren't so thrilled. PBMs and health plans use higher copays to steer members toward cheaper alternatives, such as generic drugs or older meds that aren't as pricey as newer offerings. PBMs are particularly miffed about copay discounts on drugs that have clear, effective, economical alternatives.

Indeed, Express Scripts ($ESRX) recently excluded 48 products from its national formulary, most of them because of copay cards. CVS Caremark ($CVS) stopped covering a smaller number of lesser-used drugs last year, perhaps to test the market. Some healthcare insurers have banded together to sue drugmakers over copay assistance.

- read the WSJ story (sub. req.)

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