Drugmakers' copay coupons let patients skip deductibles and kept brand-drug prices high

ProPublica's Charles Ornstein describes how copay coupons work as a counterintuitive marketing tactic. His family was quoted $135 for Ciprodex ear drops, of which $100 was the annual drug deductible and $35 the brand-name copay. A coupon cut their cost to $60, yet their pharmacy benefit manager credited them with spending the full $135 and they skipped through the deductible.

That is the mechanism. Pharmacies process insurance first and enter the coupon afterwards, and the information is not shared with health plans because it is treated like another method of payment. Insurers use deductibles and copays to send a price signal so patients choose cheaper products. A coupon cancels that signal, the story argues, and also means drugmakers get nothing if patients choose generics or skip the prescription.

Ornstein cites IMS Health figures showing coupon use among the top-selling brand-name drugs in 11 classes rose from about 8 percent in 2010 to more than 27 percent in 2015, and was above a third for autoimmune, hepatitis C, HIV and MS drugs.

Patients love the savings, so they have little reason to ask whether a cheaper alternative exists.

Insurers use deductibles and copays to make patients weigh price, and the coupon removes that weight.

Plans often cannot tell how often coupons are used, since pharmacies process them as a separate payment after insurance.

Drugmakers get nothing if patients pick generics or skip the prescription, so they pay to keep brand sales going.

If the payer's cost-control tool depends on the customer feeling the price, a third party can neutralise it by quietly paying that price.

Express Scripts' chief medical officer said the industry had not found a good solution. It had started refusing to cover some drugs partly based on whether the maker issues coupons, since an uncovered drug voids the coupon. The drug industry's trade group said the coupons keep products affordable as insurance benefits become less generous. Alcon did not answer questions about how often its coupon is used.