Patients’ bills may surge due to new insurer policy on drug coupons

By Paul Demko
03/02/2018 04:20 PM EDT

Patients with severe, often life-threatening illnesses could see steep and unexpected drug costs in the coming weeks due to an arcane change in the way many insurers handle drug maker discounts.

At issue are coupons that pharmaceutical companies provide for pricey treatments for diseases like cancer, HIV, hepatitis C and rheumatoid arthritis. In the past, insurers have typically counted the value of these coupons toward members’ deductibles and out-of-pocket caps.

But many insurers have changed that policy this year. That means that once patients use up their coupons, they’ll be on the hook for all out-of-pocket costs, potentially thousands of dollars if they’re enrolled in high-deductible plans.

“It’s really going to hurt the patients,” said Carl Schmid, deputy executive director of The AIDS Institute. “It’s going to swing thousands of dollars more in costs their way.”
It’s unclear exactly how many insurers have stopped counting manufacturer coupons towards out-of-pocket costs, because there’s no data available.
Patient advocates complain that insurers haven’t been transparent about the change and warn that people with serious illnesses are going to be caught unaware.
“I was not able to get answers from a single one of the marketplace plans in Illinois,” said John Peller, CEO of the AIDS Foundation of Chicago, referring to insurers that sell on the state’s Obamacare exchange. “Nobody was able to answer the question. That is absolutely disturbing for consumers.”

It’s also unclear in some cases what insurers are doing to notify customers about the change. The country’s largest insurer, UnitedHealth Group, has been sending out letters to at least some customers about how manufacturer coupons for specialty drugs will be handled.

“While manufacturer coupons appear to lower costs for prescription drugs, often pharmaceutical companies recover the cost of the coupons they provide to customers by raising the prices of medications,” reads one such letter obtained by POLITICO. “This ultimately drives up the overall cost of health care for everyone.”

Insurers also argue that coupons obfuscate drug pricing and can create flawed incentives for patients to stick with more expensive drugs, even when cheaper alternatives are available. A cheaper, generic alternative exists for roughly half of all drugs with available coupons, according to a study just released by researchers at the University of Southern California.
“At the end of the day, it does become this sort of kickback to entice patients to use one product over another product,” said Daniel Nam, executive director of federal programs for America’s Health Insurance Plans.

Concern about drug coupons extends beyond insurers. In December, United Therapeutics agreed to pay $210 million to settle allegations that it violated the False Claims Act by providing kickbacks to induce patients to buy the company’s drugs, and at least four other companies have received subpoenas about their relationships with co-pay charities.

In addition, the National Academy of Medicines cited coupons as a factor behind the high cost of prescription drugs in a 2017 report. “While copay coupons provided by pharmaceutical companies can expand patient access to high-cost medications, they also increase the percentage of prescriptions that are filled with branded drugs, increase overall drug spending, and drive up individuals’ insurance premiums,” the report noted.

But patient advocates point out that for many of the diseases affected — including HIV and hepatitis C — there aren’t typically suitable, cheaper generic alternatives to branded medications. They worry that some patients might stop taking their drugs because they can’t afford them, which will ultimately result in higher medical costs for insurers.
“That leads to really serious health consequences for people who are living with HIV,” said Peller. “These policies are ultimately going to backfire.”

Anna Hyde, vice president of advocacy and access at The Arthritis Foundation, also notes that arthritis patients respond differently to various medications, often making it necessary to try multiple drugs before finding the most effective treatment.

“It’s a little like playing a game of whack-a-mole,” said Hyde, whose organization receives support from pharmaceutical companies. “There’s no rhyme or reason.”

At least one drug maker has changed its policies in response to insurers’ policy shift. Amgen, which manufacturers the rheumatoid arthritis drug Enbrel, said in a statement to POLITICO that it will not authorize insurers or pharmacy benefit managers to process coupon payments unless they’re used to reduce out-of-pocket costs for patients.

“We believe these enhancements will help patients on Enbrel maintain access to their medication and assist them with cost obligations related to managing their condition,” the statement said.

Patient advocates says it’s impossible to know the full effects of the change, in part because most patients have yet to use up their coupons, and aren’t yet paying out of pocket to get their prescriptions filled. But they say it’s only a matter of time before they start hearing from alarmed patients.

“I anticipate later i the spring we’re going to get more of an influx,” Hyde said.

Len Nichols, a health care economist at George Mason University, said there aren’t any easy answers to the standoff between insurers and pharmaceutical companies over drug pricing.
“They’re both wrong and they’re both right,” Nichols said. “Everyone’s looking for a one-size-fits-all solution.”