In the wake of the recent class action lawsuits charging that copay cards constitute illegal bribes by drug companies to patients, our expert makes the case for why the copay program is a win-win for healthcare in America.
The May 2012 PM360 article “Insurer Suits Highlight Copay Assistance,” detailed the March class action suits brought against several pharmaceutical companies, alleging that by providing copay cards to patients the companies subvert the system of control set in place by insurers that results in increased health care costs. It is quite likely that the lawyers bringing these cases have already built their arguments and will now embark on a massive fishing expedition— known as “discovery”—where they will hope to reel in incriminating materials, ranging from marketing plans to market research reports to flippant comments in e-mails. Their hope is to “prove” their accusations are true. But they simply are not. By whatever name you wish to call them, copay cards save money for the health care system and the health insurance industry. This is driven by a series of facts that the plaintiff lawyers will try to spin away—but, as John Adams once said, “Facts are stubborn things.” Does that mean pharma can’t lose this case (or these cases)? Not at all. It depends on the defenses that are mounted and whether the firms are even aware of the arguments they should make. With that in mind, here are some things to think about:
Prescription drugs are the most effective health care intervention available.
The appropriate use of medicines reduces the need for other costlier interventions and improves outcomes. Studies have shown that many of the greatest improvements in health care, such as the massive decrease in cardiovascular deaths, can be attributed to new prescription drugs as opposed to other interventions. Drug spending has increased in recent years because more and better drugs have been brought to the market. Although research productivity has slowed lately, new drugs continue to bring great value to the health care system.
Lower patient costs lead to higher compliance.
Medication noncompliance is a problem with many causes, but one of the most common and most easily rectified is cost-driven noncompliance. Patients often forego filling prescriptions because of cost, and insurers know that higher copays reduce compliance. In a study of over 10 million prescriptions for over five million patients, researchers found that when patients had copays of $50 their prescriptions were three times more likely to be abandoned (not filled) than when there were no out of pocket costs, and over twice as likely to not be filled than those with a $25 copay. They also found that in over half of those cases of abandonment, the patients did not have a similar prescription filled within the next month—which means that those who didn’t fill an Rx because of cost were not likely to have a lower cost alternative (such as a generic or preferred drug), they just went without treatment. This study was funded by a PBM, which described it as a “breakthrough in understanding prescription abandonment.” Many insurers actually build noncompliance into their cost models and count on it to reduce the drug budget. I have recently spoken with some pharmacy and medical directors who won’t pay for drugs with high compliance because they can count on patients abandoning those that are more difficult to stick with. This means, they presume, lower pharmacy costs.
Higher compliance leads to better outcomes and lower costs.
Improving compliance results in better outcomes. It’s a given that patients do better when they take their medicines as directed. More filled prescriptions lead to higher drug spending, but it also leads to lower total health spending. Insurers know this as well, as their own data prove this again and again. But a lower drug budget for the current year is much easier to celebrate and take credit for than is lower total spending over several years, so the short-term orientation of budget reporting leads to the false conclusion that lower drug spending saves money overall.
Copay cards result in improved compliance . . . and outcomes.
It has been shown in several academic and industry studies that lower patient out of pocket costs increase prescription fill rates, adherence, and compliance. Several studies have also shown that copay assistance cards have the same or better effect on compliance as do simply lower copays. This is because the copay cards often have built in compliance programs—some were originally called “compliance cards” because that was their intent.
Copay cards don’t reduce generic use to any great extent.
The argument that copay cards result in lower utilization of low-cost generics is weak, and in the end pointless. Branded drugs with actual generic competition are unlikely to employ or sponsor copay cards, because few companies support their products once they go generic. This is often because mandatory generic substitution—whether a legal requirement or store policy—makes it very difficult for brands to be used. Although there are many branded drugs in which other drugs in the category have generic substitutes, they are not, by definition, equivalent and not interchangeable with other brands. If the prescriber had wanted the generic drug to be used it would have been prescribed, and there are reasons for not prescribing generics for every patient. Physicians prescribe the drug they believe will work best for the specific patient, and the decision is based on several factors. The most important factor is the differences among the drugs themselves.
In general, new drugs work better than old drugs.
Branded drugs tend to be newer than generics, that’s simply the way things work. Newer drugs are usually developed to provide improvements over older drugs, and studies have shown the use of newer drugs result in lower costs than older drugs. Cheaper drugs do not automatically result in lower total costs, in fact on average they result in higher costs. This relates back to the first point; that drugs are more cost effective than other interventions. Studies show that the additional costs of newer drugs are often more than offset by lower total costs, especially in reductions in hospitalizations.
Brands help patients feel better.
Branded drugs have been shown to result in better patient quality of life than have older generic drugs. Here again, this is because new drugs are developed to provide improvements over older agents. Improvements in dosing and reductions in side effects all result in higher measured quality of life for patients.
Generics actually cost more than brands.
Studies have conclusively shown that when patients are forced to rely on generic drugs over newer branded drugs they not only have higher total health care costs, but they also often spend more on drugs. That’s because older drugs are often less potent than newer agents or formulations. Newer agents can also provide effects that require two or more different older agents to attain, which means that patients require more prescriptions to get the same or similar effect when they are forced to use generics over brands. All of the evidence shows that copay cards reduce health care costs and improve patients’ health. If in the long run the courts uphold this then justice will be done. If not, then it will just be another case of the same lawyers hitting the lottery again and making hundreds of millions of dollars and, in their own way, driving up health care costs.