As we’re reminded in news reports every week, the cost of prescription drugs continues to skyrocket. One of the practices helping drive up the cost of people’s medications is the use of drug coupons, or copay cards, from pharmaceutical manufacturers. While these coupons appear to save consumers money on the surface – often covering their insurance copay or deductible costs – they can have the opposite effect.
A 2011 study in Pharmaceutical Care Management estimated drug coupons would add $32 billion in additional prescription drug costs over 10 years for non-specialty medications alone.
Drug coupons drive up prescription prices because they mask the true cost of a brand or non-preferred medication to the member, the employer and the health plan. This encourages more use of expensive brand medications while taking the focus away from clinically equivalent and much lower cost generics, driving up overall health care costs.
In 2017 the American Economic Journal reported that “coupons increase branded sales by 60+ percent, entirely by reducing the sales of bioequivalent generics. During the five years following the entry of a generic drug to the market, coupons increase total spending by $30 to $120 million per drug.”
The U.S. Department of Health and Human Services explains, “coupons may cause physicians and beneficiaries to choose an expensive brand-name drug when a less expensive and equally effective generic or other alternative is available because the member is not responsible for paying all or a portion of their cost share.” And when drug manufacturers cover peoples’ copay or deductible obligations, those same drug manufacturers are then free to raise prices without consumer scrutiny.
That is why the Federal government forbids the use of drug coupons by anyone enrolled in Federal health care programs, such as Medicare, Medicaid, Tricare and the Veterans Administration. The state of California recently enacted similar prohibitions.
What can help reverse this trend? More easily accessible information about drug prices and lower cost options. Members can check the price of medications on myuhc.com. In addition, UnitedHealthcare launched PreCheck MyScript in 2017, a new tool that allows prescribing physicians to see the exact cost to the patient of different drug options based specifically on their insurance coverage. They can use this tool while they’re still in the exam room with the patient – ensuring the patient knows exactly how much they’re expected to pay for a medication before leaving the doctor’s office.
For more information about how manufacturer drug coupons increase health care costs, check out these other resources:
American Economic Association: When Discounts Raise Costs
Bloomberg: An Easy Way to Cut Drug Costs
ProPublica: Are Copay Coupons Actually Making Drugs More Expensive?