President Trump renewed his attack on drug manufacturers last week, tweeting, “Pfizer & others should be ashamed that they have raised drug prices for no reason. They are merely taking advantage of the poor & others unable to defend themselves. ” Just a day later, Pfizer relented and canceled its planned price hikes.
But for patients, who worry about the share of costs they pay, not the list prices of prescription drugs, this drama is much ado about nothing.
The best solution to lowering prices at the pharmacy counter is transparency and insurance plan redesign that result in lower cost-sharing for patients. In practice, this means shining a spotlight on the practices of pharmacy benefit managers (PBMs), which secretly negotiate deeply discounted rebated prices for insurers and pharmacies in a process that FDA Commissioner Scott Gottlieb has called “Kabuki” theater. It also means stopping insurers’ from increasingly passing the buck to patients — with their attack on copay assistance being just the latest example of this trend.
Though drug companies make convenient villains, it’s insurance companies that are more to blame for rising out-of-pocket health care costs. According to data from the Kaiser Family Foundation, deductibles have risen by 300 percent since 2006 and coinsurance costs have nearly doubled. The CDC reports that 40 percent of privately insured Americans now have high-deductible plans, compared with one-quarter who had such plans in 2011.
With cost-sharing on the rise in recent years, drug manufacturers have — in contrast to the rhetoric — been lowering list price increases steadily since 2015. As more costs have shifted to patients, manufacturers have stepped up to fill the gap by offering copay assistance (aka copay coupons or copay cards).
These programs do exactly what they sound like: cover the copay cost, so patients can access their medications. Copay assistance has the added benefit of contributing to annual deductibles and out-of-pocket maximums, protecting patients from insurance cost-sharing.
Copay assistance plays a huge role for a tiny population. Roughly 85 percent of Americans spend less than $20 a month on prescription copays. Yet, about 2 percent of the population spend $1,000 or more. For these patients — mostly sufferers of cancer or rare diseases — they have insurance in name only. Even though they are the ones who need it most.
Drug manufacturers spend billions of dollars each year on these assistance programs, a majority of which support their more costly specialty tier medicines without a generic equivalent.
But in an attempt to further pass on costs to patients, major insurers began not accepting assistance this year in some of their plans. These plans, known as “copay accumulator” still happily accept the copay assistance money but don’t count it toward the patient deductible. As a result, when copay assistance is maxed out in the middle of the year, patients will be on the hook for their copayments up to their deductible, leaving them with thousands of dollars of new expenses.
Insurers win in two ways with these plans: First, they effectively get deductibles paid twice — first by copay assistance programs, then by the patient. Second, they save money on prescription drug coverage costs because some patients will no longer be able to afford the cost-sharing associated with them.
In theory, eliminating copay assistance is supposed to encourage patients to economize. While raising costs to reduce use works well for some products — like taxes on tobacco — it doesn’t work for prescription drugs. Raising costs on medications by barring copay assistance will result in some patients simply abandoning their medications.
According to a review of IQVIA analyses, more than one in four specialty brand prescriptions are abandoned during the deductible phase. That’s three times the rate of prescription abandonment when there is no deductible.
Non-adherence sets patients up for larger issues down the line that will most likely include more expensive health care in a hospital or worse.
President Trump is absolutely right to be frustrated about the increasing price of prescription drugs. We all are. But he’s wrong to point the finger solely at drug manufacturers, whose copay assistance programs now being threatened by insurers help millions of Americans access their medications.
• Terry Wilcox is the co-founder and executive director at Patients Rising.