Featured Health Business Daily Story, Aug. 2, 2011

Copay Cards Could Be Win-Win If All Sides Work Together

Reprinted from DRUG BENEFIT NEWS, biweekly news, proven cost management strategies and unique data for health plans, PBMs, pharma companies and employers.

By ,
July 22, 2011Volume 12Issue 15

When it comes to the topic of drug companies’ copayment cards, the consensus among PBMs and health insurers is pretty clear. The discount cards, issued by pharmaceutical companies to defray patients’ out-of-pocket costs, interfere with payers’ ability to manage trend and the formulary process.

But because it’s unlikely that copay cards will disappear anytime soon, some industry analysts are calling on PBMs, payers and employers to look at copay cards as a multi-dimensional issue where there are opportunities for a win-win.

Speaking at the July 13 AIS-sponsored webinar, “Health Plans vs. Drug Coupons: Tactics to Combat Brand-Name Drug Promotions,” George Van Antwerp warned that the attitude that copay cards are bad may be too simplistic a view. The general manager of pharmacy solutions at Silverlink Communications said, “There is an opportunity to look at these programs in light of medication possession ratio and other outcomes and try and determine, is there a win-win that can be created? And how would the industry partner around this topic to create that win-win?”

Cleveland Research reports that there are around 300 different copay programs and 100 million to 125 million prescriptions where copay cards are being used. That’s 30% of the market and 13% of branded prescriptions, according to Pembroke Consulting.

IMS Health reported that vouchers and discount card use has risen by about 26% in the past 48 months. “You’re certainly seeing this as an accelerating trend in use as a marketing tool by a lot of manufacturers,” Van Antwerp said.

From a drug manufacturer’s perspective, copay cards are becoming a standard marketing tactic. “They are less expensive than samples. You don’t have to track, distribute, manage signatures, have reps dropping them off,” Van Antwerp said.

Sean Brandle, vice president, National Health Practice at The Segal Company, who also spoke at the webinar, said that a key question to ask is, what are some of the ways that plan sponsors and PBMs can try and manage copay cards?

Brandle suggested several options, including:

  • Adopting a restricted or closed formulary;

  • Increasing copay differentials;

  • Implementing a “member-pays-the-difference” program (in which the customer covers the difference in cost for more expensive drugs when a cheaper alternative is available) without an exception for prescriptions marked “dispense as written”;

  • Instituting preferred drug step-therapy rules;

  • Increasing member education efforts; and

  • Adding contract language to prohibit the use of drug manufacturer coupons.

Cards Are Tough to Counteract

“I’m not sure how this would be done,” Brandle said. “The PBMs don’t really have their arms around exactly what the parameters are or the impact of this issue, because they do not have a way of actually knowing when a coupon has been used and when it has not been used when they look at the claim data.”

Brandle added that he would look to the PBMs to come up with a mechanism or methodology to ensure that the use of coupons is cost-neutral to plan sponsors.

When sorting out the pros and cons of copay cards, higher prescription costs must be weighed against lower medical costs.

“We’re hoping we are going to have increased medication possession ratio,” commented Brandle. “Folks have more of the drug on hand — hopefully they are being more adherent. We have to accept the fact that there is going to potentially be a lower generic fill rate.”

On the other side, Brandle asserted, “we expect to have lower medical costs because of increased adherence, better outcomes, less hospitalizations and less comorbidities.”

From the physician and patient perspectives, copay cards are hot. “The patient has an economic incentive to look for ways to save money. The economy is causing people to second-guess as to whether they need a medication or not,” Van Antwerp noted. “It certainly made them much more sensitive to savings opportunities.”

Many doctors go out of their way to help patients find copay cards. A report by Credit Lyonnais Securities Asia (CLSA) revealed that 37% of physicians polled were much more likely to prescribe a drug if they were aware that a copay card was available.

Van Antwerp pointed out that some doctors even favor a copay card that focuses on a specific condition such as diabetes, but runs across manufacturers. A card that could be used more broadly now doesn’t exist, Van Antwerp said. “Perhaps that concept of some type of industry collaboration around a particular disease might create some opportunity.”

Dual Scenarios

In their webinar presentations, Van Antwerp and Brandle outlined two potential scenarios for how copay cards might play out.

In one scenario, copay cards become the norm, but still are opposed by payers. Among the results would be that rebates become less relevant, formularies get closed, costs per copay card go up, and there is a higher administrative burden for all players.

“If you’re a plan sponsor or a PBM, you’re really faced with building hurdles or obstacles, which in the end can affect the patient much more than the manufacturer,” Brandle said.

The hurdles could include payers refusing to cover certain drugs, closing formularies, increasing the copay differential, or establishing other financial penalties for patients such as a member-pays-the-difference policy. Payers could institute “utilization management programs, mandatory mail, which a lot of folks aren’t fond of, and contract language with manufacturers and pharmacies.”

Brandle asserted that among the objections to couponing is that plan sponsors are looking at their trends and the increasing costs year after year for retaining their prescription drug plan as it’s stated. “What they’re seeing based on the price increasing primarily on the brand drugs, what makes sense is to get as much generic utilization as you possibly can,” he said.

Under the second scenario, there is a win-win created. “You can have an industry that embrace those [cards] and that might drive down out-of-pocket costs for the patients. It could create a mechanism for tracking their use,” Van Antwerp said.

The result would be:

  • Lower out-of-pocket costs for the patient;

  • The ability for everyone to track their use (more easily than may be done with samples);

  • Easier access to copay cards for physicians;

  • The ability for pharmacies and PBMs to manage their distribution; and

  • Therapeutic maximum allowable cost (MAC) and other management tools that can be used in plan design.

Under this scenario, Van Antwerp asserted, you could easily make sure that physicians and patients have access to the copay cards. “One of the things that needs to be addressed in this process of finding a win-win is how to move from really a shotgun approach, to more of a narrow casting approach about how and when these cards are used.”

Van Antwerp posed the question: How could you focus these cards to get them to the appropriate people who need them, while at the same time coordinate data on copay card programs to route people to the right opportunity?

“Could there be a copay card pledge that the industry took that said, ‘Under these circumstances, if we could make these five things work, we can create a win-win scenario’?” Van Antwerp asked.

Having a greater focus on specialty medications where the copay cards are available and focused would be important too, Van Antwerp said.

For more information about the July 13 webinar, visit the MarketPlace at www.AISHealth.com, or call (800) 521-4323.

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