The only state prohibiting the use of copay coupons by commercially insured consumers — Massachusetts — has just overturned its ban, but this development may have some unintended consequences for both sides in the debate over the use of such coupons.

On the one side, pharmaceutical manufacturers will gain some leverage in formulary negotiations, but the new exception could ultimately increase their cost of doing business in Massachusetts. “Pharmaceutical companies should be careful what they wish for,” cautions Mason Tenaglia, managing director of pharmaceutical strategy consulting firm The Amundsen Group. “Patient out-of-pocket exposure in Massachusetts has been quite reasonable for both traditional and specialty brands, and with the introduction of copay support, insurance companies may begin to shift more costs to patients knowing that the manufacturers will pick up the change.”

PBMs, meanwhile, argue that the manufacturer-offered discounts will raise overall drug costs by undermining the formulary process. The Pharmaceutical Care Management Association (PCMA) trade group released a report last November estimating that overturning the ban in Massachusetts would increase prescription drug costs for employers and other plan sponsors by $750 million over the next decade (DBN 11/11/11, p. 7). The study was conducted by Visante on behalf of PCMA and used CMS National Health Expenditure projections, PBM industry projections pertaining to volume, and drug cost estimates that excluded specialty pharmaceuticals to come up with its estimates.

In an amendment to an existing state law that prohibits kickbacks to induce the selection of products covered by health insurance, the 2013 state budget — which was signed by Gov. Deval Patrick (D) on July 8 — specifies that the law does not apply to “any discount, rebate, product voucher or other reduction in an individual’s out-of-pocket expenses, including co-payments and deductibles,” provided that the pharmaceutical manufacturer does not “exclude or favor any pharmacy in the redemption of such discount.”

Only Medicare and Medicaid enrollees continue to be barred from using the coupons, as they qualify as kickbacks under federal law.

In response to the action, PCMA spokesperson Charles Coté said, “Repealing this ban will increase costs for employers, unions, and taxpayers by steering consumers away from lower cost alternatives to more expensive prescription drugs.”

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