Wojcik and Alexander discuss how prescription co-pay discounts lower patients’ costs but can negatively impact pharmaceutical pricing in the long run. They say insurers’ approaches to co-pays offer only a short-term solution for a systemic problem.

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State Applies Co-pay to Deductible

In March, the issue of maximizers and accumulators was picked up by Virginia, the first in the nation to address the topic legislatively. Lawmakers there passed a bill, signed by the governor, requiring health insurers to count all payments made on behalf of a plan enrollee—including payments made under co-pay discount card agreements toward that person’s deductible and out-of-pocket maximum. According to Bruce Silverman, MD, a nephrologist in the Richmond, Virginia, area and advocate for the group Fair Health Care Virginia, 20% of all employers have implemented some form of adjustments to offset the co-pay discount cards. In an opinion piece in The Daily Progress, Silverman said the legislation is a cure for maximizers and accumulators that put “patients at risk of being forced to discontinue treatment for severe, even life-threatening conditions, because they simply cannot afford to pay out-of-pocket maximums that can be thousands of dollars.” The mandate doesn’t affect self-insured organizations.

What are co-pay offsets?
Alexander: Co-pay discount cards are one way that pharmaceutical manufacturers reduce patients’ burden from out-of-pocket costs. Coupons [like GoodRx] are another type of co-pay offset, and drug manufacturers, wholesalers and other parties, like McKesson and Walmart, are getting into the game as well because they have their own discount cards.

How do they help patients?
Alexander: No patient in their right mind will argue in the short term against a reduction in prescription co-pay costs. In a study we performed, we found that, in the short term, they did diminish patients’ costs and may increase utilization and adherence.

Why are pharmaceutical companies using them?
Wojcik: They are designed by manufacturers to keep patients on more expensive medication when there are less-expensive alternatives, generic or other treatments that could be used by the patient. They provide stickiness so the manufacturer can keep their share of the market longer than they would have when market threats are looming. They are often used for expensive specialty pharmaceutical drugs but also when a patent is about to expire or another potential drug, like a generic, is being introduced. They use them to avoid competition gains in the market.

Are there downsides to these co-pay discount cards and programs?
Alexander: These types of approaches propagate a healthcare system where enormous costs are charged for prescription drugs that are borne by consumers and by all of us. The short-term implication is clear—if you have a co-pay offset, it will let someone pay a $5 co-pay instead of a $50 one.

But the long-term effect is trickier to know and understand. Years ago, we did a study looking at free samples offered by physicians, which is slightly different. We found that, paradoxically, people receiving free samples had higher prescription drug costs during, and well after, they received their samples.

It seems counterintuitive until you stop to figure it out. If someone receives a free sample for a drug, even a high-priced one, they may go on to fill a prescription for that same drug. You can imagine the same sort of factor at play with offsets. They are allowing patients, for a time, to fill prescriptions for more expensive medications.

Wojcik: There are some cases when high-priced medications like specialty pharmaceuticals offer manufacturers’ discount coupons that are helpful to both the patient and the plan. If there is no alternative, this can help the patient. But that is the minority of cases. Discounting their co-pays is potentially discouraging them from seeking lower-cost medications that might be appropriate. It saves the patient money at the time they are buying the medicine, but, over time, it costs the plan—and therefore the participants—more if there is a lower-cost alternative medication that they could be using. Driving the use of more expensive medications when lower-cost ones are available drives up the cost for everyone.

How do patients get these discounts?
Wojcik: Physicians may supply them to patients, and there also could be some direct-to-consumer ads whether on TV, print media or the internet. You’ve seen those that say things like “Please talk to your doctor” or “Go to our website for more information on how to afford this medication.”

The use of these has grown a lot in the last few years. For example, in 2009 there were 75 medications that had co-pay cards associated with them, and by 2015 there were 700. So there’s a big growth in recent years along with the growth in specialty pharmaceuticals and an increasing number of high-priced medications. Eighty percent of specialty drugs have co-pay discount card programs associated with them today.

What are insurers doing to reduce patients’ use of these cards and programs? We’ve heard of benefit changes like “maximizers” and “accumulators” that are being implemented into benefit plans.
Wojcik: Maximizers and accumulators are two ways insurers are attempting to get around the manufacturers’ co-pay offsets. The accumulator basically doesn’t credit any kind of manufacturer’s discount toward a deductible. So the patient’s deductible isn’t reduced by the amount that the manufacturer is helping out.

Maximizers are even more recent to the market. When a pharmacy benefit manager is aware there is a coupon out there (and they have good information about ones available), they will encourage a member to seek out the maximum in terms of coupons and deductibles and will add that on to raise the deductible or out-of-pocket maximum to include the total amount of aid coming from the manufacturer.

Alexander: One wonders why it took so long for insurers to do this. Accumulators and maximizers are short-term and imperfect fixes for a long-term problem. As time goes on, more will be revealed about how they impact the market. Now, there is relatively little information on what effects they are having. Like, there are some questions about what effect they will have on drug utilization and adherence.

Patients often have a difficult time wading through their health plans as it is. It seems like these programs would just make things more confusing.
Alexander:
Patients can get caught in the middle, and it’s unusual, even for the most well educated, proactive patient, to stay on top of the way dollars are flowing through the healthcare system and the implications.

Wojcik: It’s not the ideal situation in the first place to have a need for a discount card and coupon and then on the back end adjusting for that as an accumulator and maximizer. It just adds confusion to the plan. Our response is, if it is causing so much of a workaround and administrative burden, why don’t they just reduce the price for everyone at the outset instead of just making it less for the lucky people that get these cards.

The plan owes it to patients to explain why they are implementing these: to ensure patients are getting the best value for their medications; that there may be a lower-cost alternative out there that is appropriate instead of the expensive name brand. In terms of a plan, they do, in written documentation, disclose when they are using maximizers or accumulators. But participants probably don’t read it, and then they have to call the insurer, who has to tell them their discount card doesn’t help reduce their deductible. It’s not an ideal situation all around.

Employers should reach out and say, “Why we have these is to reduce costs and improve value and spending on pharmaceuticals. And what we are trying to do is for the benefit of all of the members and the plan as a whole.” Otherwise, members will not understand how cards and coupons can be detrimental overall.

Are there other options brokers and employers could consider that have more of an impact on the system to reduce costs?
Alexander: Maximizers and accumulators are two tools in a toolbox that brokers have in order to get their hands around drug spending, but they are two of several.

The typical formulary has plenty of fat that can be trimmed. Pharmaceutical spend can be reduced by 10% to 15% by cutting products that have no business being covered. I realize there are a lot of factors that one has to swim upstream against, but, to be clear, if brokers and self-insured employers want to be part of the solution rather than the problem, they should trim the fat from their formularies.

Wojcik: Most employers feel the way pharmaceuticals are priced and the way the supply chain works isn’t optimal and would like another way. This involves payers coming together with manufacturers and figuring out a better way. But that’s a bigger change in the system.

We need more transparency in the pharmaceutical market and more information about how pricing occurs. This might obviate the need for things like co-pay discount cards and ways to counter them. The ideal scenario would be for patients to check with their plans and be fully knowledgeable about alternatives. Another important piece of communication and education which is increasingly happening is informing physicians about the prices of medications and alternatives. Often, they have no idea what the price in the system is. They can be more educated on pricing and the impact of discount cards and coupons when they are prescribing medication to patients.