Op-Ed: Is my co-pay coupon a charity or a bribe?
Before my insurer had even pre-approved coverage for the new injectable medication my doctor had prescribed, I received a voicemail from its manufacturer informing me that I might be eligible for its co- payment. This meant the company would cover at least the lion’s share of my co-pay, leaving me with minimal, if any, out-of-pocket contribution.
My antennae were up: If a drugmaker offers co-payment assistance, you can assume the list price of the drug is high, but I didn’t realize how high. Was this outwardly kind offer, essentially, a kind of bribe?
This copayment coupon system is both common and lucrative for pharmaceutical companies that sell expensive drugs. Here’s how it works: Manufacturers, either directly or through non-profit foundations, disburse money to subsidize patient co-payments as a form of what they seek to call charity. They often deduct from their income taxes the billions they pay.
But the federal government sees it differently. It generally considers coinsurance coupons and manufacturers’ coinsurance assistance programs to be illegal bribes, prompting patients to use and doctors to prescribe more expensive drugs when cheaper drugs might suffice. This therefore severely limits the use of such assistance to patients covered by government insurers, a particular financial hardship for patients on Medicare.
Co-payment assistance is a profitable form of charity – and yes, it’s an oxymoron. By paying patients a copayment — often 10-20% of the drug price — manufacturers are more likely to sell expensive drugs and bill insurers for the remaining 80-90%. Insurers are obligated to pay this tab, even if patients get help from drugmakers to pay their share.
Studies by marketing consultants and academics have shown that such seemingly benevolent programs generate excellent financial returns for drugmakers – conservatively, about $2 for every $1 makes a donation to co-pay assistance up to 4 to 1according to an analysis by Harvard Business School.
Pharmaceutical companies also benefit from increased patient loyalty, who feel grateful to be able to obtain their medicines; most patients will not scream (or even notice) the Monthly cost of $10,000 a drug for multiple sclerosis or cost of $6,000 of a drug for arthritis and inflammatory bowel disease. These drugs often costs much less in other developed countries.
In study64% of co-pay coupons were for brand name drugs that offered cheaper and equally effective alternatives, even in the United States. And the Programs Are Growing: A 2017 Congressional Study report found that donations from 10 major manufacturer patient assistance programs “grew from $376 million in 2001 to $6.1 billion in 2014, with 4 accounting for 85% of all pharmaceutical donations and one-sixth of all US corporate charitable deductions in 2014”.
The programs force patients who otherwise could never afford the drugs they need into a Faustian stalemate. Many drugs offered with copayment assistance have prices in excess of $50,000 per year, which means that even a 10% copayment would be unaffordable for many unassisted patients.
I called the number left on my voicemail to get an idea of the cost of the drug and my out-of-pocket expenses if I chose to decline the drug manufacturer’s offer. The drug was a little over $1000 and under my insurance policy my co-pay was about $200 which was high but I decided to pay for it myself.
In a few years I might be on Medicare, when I couldn’t accept the offer anyway. Also, I am a health journalist, and standard newsroom ethics policy states that we cannot receive anything of value from any part of the industry. So, a week later, I threw away the letter from the copayment program, “wishing” myself and enclosing a copayment debit card.
The purpose of patient co-payments is to ensure that patients (and indirectly, their physicians) have their “skin in the game” – that they understand that their treatments come at a cost, and sometimes that’s a lot. – by encouraging them to be more discerning in the drugs they use and prescribe. This should make them wonder if they can use a cheaper drug that would also work. (My doctor had prescribed the injectable drug because I had had a terrible reaction to the cheaper generic oral treatment.)
Now, with coupons, manufacturers have broken that guardrail. With drug prices skyrocketing, it’s understandable that patients are desperate for help with co-payments and most are eager to get a subsidy; they often have no choice financially when their health is at stake.
But at the systemic level, these programs create a mirage that perpetuates the reckless spending of our system: they cover the true price of a drug, much of which is paid for by our insurers (and some of which is pocketed by supply chain). And that contributes to our insurance premiums and deductibles increasing year after year.
Elisabeth Rosenthal, MD, is editor-in-chief of Kaiser Health News and author of “An American Sickness: How Healthcare Became Big Business and How You Can Take It Back.”