The Formulary Files

Copayment coupons undermine formularies

Who doesn’t want to save a few bucks these days? Members are getting a deal when they use copayment coupons provided by drug manufacturers. But coupons issued by manufacturers, often to combat the generic wave of medications that will soon wash over the traditional pharma industry, could increase the costs to employers, unions, and other payers over the next 10 years by $32 billion, according to the Pharmaceutical Care Management Association, the trade group made up of pharmacy benefit managers.

Mark Merritt, CEO, says, “Copayment coupons are used to make members avoid switching from branded drugs to generic. It’s a way to get consumers to use more expensive versions of the same drug.”

The other problem is that coupon programs exist outside of the normal claim adjudication process. Typically, claims are adjudicated when a member fills the prescription. “Everyone knows what happens,” says Merritt. But manufacturers set up the coupon program like a “shadow claims system, so that the coupons are processed separately in a system where the payers can’t see when the coupons are being used. It makes it difficult to underwrite the policies.”

To combat these coupons, insurers can educate their members, vigorously promote the use of generics, and emphasize use of mail order pharmacy, especially for chronic conditions. “Mail order pharmacy manages claims service from tooth to tail and will not accept these types of coupons,” says Merritt.

Estimated increase (millions) in Rx costs from coupons, 2012–2021*
Alabama $608
Alaska $62
Arizona $591
Arkansas $308
California $2,454
Colorado $410
Connecticut $447
Delaware $138
District of Columbia $84
Florida $2,052
Georgia $974
Hawaii $123
Idaho $149
Illinois $1,387
Indiana $803
Iowa $297
Kansas $309
Kentucky $599
Louisiana $509
Maine $140
Maryland $709
Massachusetts** $0
Michigan $1,121
Minnesota $571
Mississippi $291
Missouri $681
Montana $96
Nebraska $189
Nevada $253
New Hampshire $164
New Jersey $1,043
New Mexico $165
New York $2,316
North Carolina $1,120
North Dakota $64
Ohio $1,511
Oklahoma $401
Oregon $338
Pennsylvania $1,756
Rhode Island $140
South Carolina $547
South Dakota $64
Tennessee $890
Texas $2,560
Utah $277
Vermont $67
Virginia $935
Washington $638
West Virginia $261
Wisconsin $617
Wyoming $51
U.S. total $32,276
*Expenses are rounded to the nearest million.
**Copayment coupons are illegal in Massachusetts.

Source: Pharmaceutical Care Management Association, “How Copay Coupons Could Raise Prescription Drug Costs by $32 Billion Over the Next Decade.” November 2011.

A blueprint for high-volume, high-quality lung cancer screening that is detecting cancer earlier—and helping to save lives

Clinical Brief

Multiple Sclerosis: New Perspectives on the Patient Journey–2019 Update
Summary of an Actuarial Analysis and Report