News Update
Copay Assistance for Expensive Drugs Raises Costs
As companies like Mylan, manufacturer of the Epipen, face outrage for prescription drug costs, manufacturers say they cushion the impact of high prices on patients by assisting with copays – but is this policy good for everyone?
In an opinion piece published in the Annals of Internal Medicine, Peter Ubel, professor of business, medicine and public policy at Duke University and a member of the Duke-Margolis Center for Health Policy, teams up with Peter Bach of Memorial Sloan Kettering Cancer Center’ Center for Health Policy and Outcomes to argue that copay assistance is not a solution, but in fact plays an integral role in prescription drug prices, which are one of the fastest growing components of healthcare costs.
First, copay assistance programs reduce public outcry over outrageous drug prices. As Dr. Bach has seen at Memorial Sloan-Kettering, an announcement of a major cancer hospital rejecting a drug due to its high price – and the resulting public scrutiny –persuaded the company to lower its price.
Second, the programs undermine benefit designs that enable low cost insurance plans, which usually have higher out-of-pocket expenses. Plans with high out-of-pocket costs inhibit healthcare utilization, an effect that is mitigated by copay assistance and creates pressure to raise premiums.
When companies offer copay assistance, coupons, or charitable programs, they are often available only for prescriptions filled before insurance benefits kick in – whether or not patients pay in cash or receive assistance. The insurance company must count the entire cost of the drug toward the patient’s out-of-pocket maximum, meaning subsequent prescriptions are paid for by the insurer with little impact on patient choice.
These programs also reduce negotiating leverage for insurers who assign drugs to different tiers in a formulary, providing incentives for patients to use and physicians to prescribe drugs in lower tiers. Copay assistance removes the incentive for drug companies to negotiate with insurers on price to ensure their products’ inclusion in tiers with lower out-of-pocket costs.
Finally, copay assistance programs provide an artificial price support and reduce pressure for consumers to factor cost into their decisions and on companies to lower prices.
Ubel and Bach go on to argue that policy changes could mitigate these negative consequences, including:
- Requiring companies to offer copay assistance for all products to ensure that patients with some conditions are not favored over others.
- Requiring public disclosure of copay programs.
- Requiring dispensing pharmacies to report copay assistance separately from the patient’s cash payment.
- Reporting copay assistance as a discount for the purposes of determining Medicaid best price floors, so that patients have access to the same discounts offered to other insurers.
- Adopting value-based pricing for drugs.
