But what most consumers don't know is that these deep discounts are promotional tools and weren't designed to help you. They are made to reel in new customers (and keep the old ones from leaving) and fatten the company's bottom line.
Over the past few years, drug makers have rolled out an enticing but confusing array of colorful promotional materials offering coupons, co-pay offsets, rebates and other incentives to try to sell their drugs. These discount programs are hugely controversial for a lot of reasons, and state prosecutors and federal officials have recently increased their oversight of the increasingly popular incentives.
Coupons and similar programs first came into being as a response to two major changes in the U.S. drug market. The first is the creation of drug tiers by insurers that made the out-of-pocket cost of premium brands more expensive, and the second is the expiration of a whole bunch of patents that made it more difficult for brand names to compete with generics on price.
The incentives save you money in the short-term — but many analysts have argued that this will eventually come back to haunt you and basically mess up the whole drug market. Here's how: Let's say you have a choice between the EpiPen, at $300 with the new coupon, and the generic Adrenaclick, which is $140 with its own coupon. You choose the EpiPen because that's what you're used to and what your kid's teachers, camp counselors and babysitters are trained on. But since the wholesale price of the EpiPen is greater than the Adrenaclick, the difference will be picked up by employers, unions and government agencies and other insurance providers. That cost will eventually be passed back to you in the form of increased premiums or prescription drug prices.
A 2011 white paper written by the Pharmaceutical Care Management Association estimated that the consequences could be enormous — that discount programs could actually raise the cost of prescription drugs by $32 billion in one decade. The report also raised numerous other concerns. One is that when consumers redeem co-pay coupons, companies process them through a “shadow claims system” which makes it difficult or impossible for plan sponsors to know about them. Another is that drug companies also require consumers to submit sensitive and confidential personal information in order to redeem coupons, which helps them better target their products but makes you more vulnerable to their marketing.
This year, several companies have found themselves on the defensive for trying out a relatively new subset of these discount strategies that involves the drug companies giving money to charities to help fund co-pay assistance programs. Gilead Sciences, Jazz Pharmaceuticals, Biogen and Valeant Pharmaceuticals have all disclosed that they have been issued subpoenas related to the issue, according to USA Today.
The issue of drug coupons is especially controversial in Massachusetts, which is considered a leader in health care. You might recall that the state passed its own universal health-care law in 2006, years before President Obama's Affordable Care Act took that approach national. The state flat-out bans coupons when there's a generic equivalent, and there's a broader law in place that bans all drug coupons and similar incentives through an anti-kickback law. In 2012, then-Gov. Deval Patrick (D) signed into law a temporary lifting of the ban, but efforts to permanently lift it have recently failed.
On a national level, the Department of Health and Human Services' office of the inspector general has been looking into possible violations to kickback rules that make it illegal for the coupons to be used by those covered under Medicare because it increases costs, the Wall Street Journal reported. In a report in 2014, HHS found that the efforts by drug companies to prevent these patients from using the discounts was inadequate. It's impossible to tell whether those safeguards were lacking because of an oversight or whether it was a conscious business decision.