With coupon programs, drug industry hides ballooning costs of expensive new medicines

drug costsWhat are those clever drug companies up to? Plenty, I learned, recently browsing the website of Medical Marketing & Media, the trade pub that keeps healthcare marketers up-to-date on selling drugs, heart stents, and just about every other product the medical industrial complex dreams up. I spotted an e-book that answered my question. Called “Pathway to Specialty Access,” the book is a primer on how to market those new and very expensive specialty drugs like the hepatitis C medicine Sovaldi, which costs $84,000 for a course of treatment and has helped boost all of our insurance premiums for next year and for the foreseeable future. “Medicine has never had so many specialty products,” the book tells readers. Indeed spending for these drugs, which treat complex, chronic, and costly conditions, rose $54 billion over the past five years contributing nearly three-quarters of the overall medical spending growth during that time. This is big business, folks!

The 10-page “book” sponsored by TrialCard, a vendor of co-pay cards and vouchers, promises insights into “Patient access needs and hurdles along the specialty drug pathway, supplemented by trends, data and insights on this shifting market.”  It’s not just an interesting read for snoopy reporters but it’s a cautionary tale for journos and the public about future health system costs and how patients are manipulated in the quest for even greater profits.

The tip-off for what this itty-bitty volume can do for a drug maker comes in this graph:

“Clearly there is a vast undermet need for greater access to specialty medications and better support services for patients. The answer, for pharma, surely lies in an integrated, coordinated patient-centric approach.”

In other words, pharma can and should, the book advises, hold patients’ hands from the time of diagnosis through the process of buying and paying for one of these uber-expensive medicines, and make sure the patient stays on the drug regimen. That’s the name of the game in the drug biz. Long-term use equals more drugs sold equals more profits. Apparently getting patients to take their medicine as prescribed is tough, and getting tougher especially now that more insurers require consumers to satisfy a separate drug deductible and impose high co-pays and coinsurance before paying a portion of their drug costs.

Some stats from the IMS Institute for Healthcare Informatics show what pharma is up against. Patients who switched to plans with drug deductibles “are immediately less compliant.” Only about one-quarter of patients with drug deductibles will most likely still be taking their brand name drugs after six months compared with 40 percent in plans without such deductibles. Abandonment rates – jargon for the rate at which patients don’t pick up their meds from the pharmacies — are 60 percent higher for new patients with brand drug prescriptions and deductible plans than those who have policies without drug deductibles. “If patients walk away, they frequently don’t come back with an alternative prescription,” says Andrew Pollpeter, a senior principal with The Amundsen Group, an IMS Health company.

We know from the recent reporting of John Fauber at the Milwaukee Journal Sentinel (see here and here), Pro Publica, and others over the years, those clever drug companies have amassed an arsenal of strategies for getting more drugs into the hands of patients through speaking fees to doctors who prescribe the drugs, sponsorship of medical education programs, and very effective detailing or selling in the doc’s office to push the latest and greatest. This time, though, the strategy is aimed at the patient’s pocket book, and the new world of specialty drugs opens up a box of possibilities for expanding their co-pay programs in which the drug company pays a significant portion of the cost-sharing an insurer requires. Pollpeter told me, “when a co-pay is optimized for the patients, they stay on the drug longer.”

The e-book also points out that a patient-centric strategy that enables drug makers to know their patients better pays off in other ways. “It has become an essential responsibility of pharma companies to monitor online conversations about their products—not least for warnings of possible adverse events,” the book advises, noting such monitoring can also lead to “positive experiences in facilitating treatment access.” When Novartis spotted a tweet from a patient who revealed she had to discontinue taking her multiple sclerosis (MS) drug Gilenya until her COBRA coverage started, it was Novartis to the rescue getting her the drug she needed.

How do these programs work? There’s the basic coupon, which doctors and druggists sometimes hand out, or patients can find them on line. The industry calls them “pay-no-more” cards, telling patients they will pay no more than, say, $50 for their prescription. Discounts vary by therapeutic class with some drugs carrying larger discounts than others. Some work like loyalty programs. A patient can get a certain number of drugs for free after they’ve bought so many. That’s sort of like accumulating points for a free massage at a nail salon. Then there are e-vouchers in which a prescription is sent from the pharmacist through a switch vendor that may provide other financial support to the patient. The drug maker works with the vendor to establish how much of the required cost sharing it will pay as well as other rules for the transaction. Both the rules and amounts the drug maker pays vary by the class of drugs. “The patient is blinded to the e-voucher,” Pollpeter says. “But they are happier when they see a lower copay.”

What’s wrong with this? It seems like a win-win for the patient and the drug company, right?  The patient pays less out of pocket—sometimes a lot less. In one example, the e-book notes that a patient’s out-of-pocket spending for specialty drugs for MS and rheumatoid arthritis can be as little as $5 a script. The manufacturer reaps more sales because patients are less likely to abandon therapy. But there’s one significant downside. High drug prices are still with us. “Coupons shield consumers from the true cost of medications and are less likely to make decisions based on the true cost of the drug,” says Troy Filipek, an actuary with the consulting firm Milliman.  So much for all that advice about shopping around for low-cost drugs and the cheapest co-pays! With these kinds of behind-the-scenes arrangements, you may never know what you’ll pay until you pick up your drug or it shows up in the mail.

“There’s nothing transparent about any of this,” says John Rother, the CEO of the National Coalition on Health Care whose project the Campaign for Sustainable Rx Pricing has helped raise public awareness of the skyrocketing cost of medicines. “Effectively these programs raise overall costs in the name of protecting patients, but for everyone else they raise costs and therefore premiums. It obscures the fundamental issue of unsustainable pricing for many pharmaceuticals.”

That fundamental disconnect brings me back to journalism and how so far, we’ve missed the deeper story here. It’s much easier to write how these wonder drugs, with or without any evidence they work, will save lives and to offer the standard consumer advice—use coupons to save money and shop around. It’s tempting to report on drug makers’ pocket-book strategies as more specialty drugs hit the market without explaining what’s really at stake. Do we want the health system to work for a few or for everyone? That should guide our reporting when the next news release touting the newest specialty drug shows up.

Trudy Lieberman is a veteran health care journalist and regular blogger for HealthNewsReview.org. She often writes about consumer cost and safety issues. She tweets as @Trudy_Lieberman.

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Comments (1)

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Brad F

December 22, 2015 at 7:22 pm

One thing you should mention. Its a large oversite.
As disagreeable as these programs might be, they only fly for commercial plans. No federal dollars can comingle with the rebate plans.