Top 3 Things You’ll Learn
- How the rise of high-cost prescription drugs led to the growing use of manufacturer coupons
- Strategies to lower specialty drug costs for employer-sponsored pharmacy plans
- How a variable copay program can counteract the negative financial impact of drug coupons
During the six years from 2014-2019, the most used brand drugs experienced list price inflation of 70.5%. In contrast, a market basket of everyday household goods rose only 9.9%, and prices for the most used generic medications declined 40.9%. Although only 2% of the population use specialty drugs, the specialty share of prescription drug spending jumped from 44.7% in 2018 to 47.7% in 2019 – nearly half of all spending. This staggering trend has continued to grow as new specialty therapies enter the market with few-to-no competing drugs to help drive down prices.
Brand-name drugs, which comprise only 10% of all prescriptions dispensed in the U.S. but account for 79% of total drug spending, frequently have prescription drug coupons available to help cover the high costs. As brand drug list prices increased by 5.2%, the share of expenses paid by patients went up only slightly from 15% in 2018 to 15.1% in 2019. However, these same coupons have wreaked havoc on self-funded employers, who are forced to take on more of the financial burden but limited on how much they can shift costs to members. Managing specialty costs in a way that benefits both the employer and members continues to be a challenge.
The Low-Down on Drug Manufacturer Coupon Programs
The availability of manufacturer-provided coupons for specialty drugs has increased significantly over the last decade. In 2009, manufacturers offered coupons for fewer than 100 brand name drugs in the U.S. overall, but by 2015, that number surpassed 700 by some estimates. From 2016 to 2018, the average value of coupons nearly doubled, with Truvada® and Trulicity® taking the top spot for most coupons and diabetes the top drug category, comprising 20% of all coupons.
More commonly now, members see TV or online ads for a drug and coupon offer, and many will then ask their doctor about that prescription drug. The impact of this direct-to-consumer advertising cannot be ignored, as multiple reports found that physicians who are aware of the manufacturer coupon may be more likely to prescribe the branded drugs to patients with the coupon use in mind. An FDA survey found that 47% of physicians surveyed felt pressured to prescribe the specific brand-name drug when asked by a patient. The coupon “halo effect” occurs when a physician’s awareness of a coupon program increases their prescribing of the brand drug for patients who need financial assistance – as well as for patients who do not have high cost-sharing amounts. When administered properly, manufacturer copay assistance programs may be able to provide much-needed relief to employers bearing the financial brunt of the drug coupons used by their members.
From 2016 to 2018, the average value of manufacturer-provided Rx coupons nearly doubled. However, these same coupons can wreak havoc on your pharmacy plan if not managed in a way that benefits both your program and your members.
The Manufacturer Copay Assistance Program Solution
Many drug manufacturers offer copay assistance programs for their specialty drug products. These programs influence prescribing patterns and utilization, but they also can be leveraged to reduce or eliminate member cost-share and lower plan exposure to high costs. Manufacturer copay assistance programs generally have two components: accumulator protection, which ensures that no assistance money is applied to members out of pocket costs, and variable copay programs, which align the copay to the amount of assistance available.
The variable copay program can be implemented with, and coordinated under, employer-sponsored programs – unlike traditional drug manufacturer coupons, which are often needs-based or outside the employer-sponsored benefit. The variable copay program helps to reduce or eliminate member cost shares, but when managed correctly, is also reduces client financial responsibilities by applying the maximum assistance available when the member is filling their prescription.
Utilizing Manufacturer-Provided Funds to Employers’ Advantage
As employer-sponsored pharmacy plan costs continue to increase, some insurance brokers have successfully added these programs to their clients’ plans. A National Business Group on Health survey found that 17% of the large employer respondents have already adopted a copay accumulator program. More than half said they are considering putting such a program in place for 2019 or 2020. Some pharmacy benefit managers (PBMs) utilize third-party vendors to provide their clients access to these savings programs. For example, Express Scripts uses SaveonSP while CVS/Caremark uses PrudentRx.
It is essential to note the amount of assistance funds available and the list of covered specialty medications varies by program. Additionally, variable copay programs are not available for employers with HSAs or government-sponsored plans, and benefit design requirements or enrollment minimums may need to be met for employers to be eligible. Variable copay programs are recommended for employers who offer a flat dollar copay for specialty medications, which can be implemented if the copay structure follows a typical two- or three-tier benefit design.
The amount of savings generated from a variable copay program can be significant for self-funded employers that are struggling to manage high-cost specialty drugs on their pharmacy plan, ranging from $6-$8 PMPM for some. By applying the maximum available manufacturer assistance funds through a program made specifically for employers, your clients can add value to their pharmacy benefit in a way that does not disadvantage the plan or its members.
To learn more about variable copay programs, including a detailed example, check out our on-demand webinar Getting Unstuck: Strategies to Save on Pharmacy Benefits.
