Co-pay coupons are the best we got
In the absence of real change, do the least harm to sick patients.
Elisabeth Rosenthal, the editor-in-chief of Kaiser Health News and the author of the excellent book An American Sickness: How Healthcare Became Big Business and How You Can Take It Back, wrote an op-ed for the Los Angeles Times this week about something I’ve mentioned here a few times: Co-pay assistance programs.
Having been prescribed an expensive specialty drug, Rosenthal received a voicemail from the drug company informing her about their program, which would lower or even eliminate her cost. These schemes, Rosenthal wrote, might be helpful for individual patients, but harm everyone overall by driving up drug prices:
With skyrocketing drug prices, it is understandable that patients desperately need help with copays and most are eager for a subsidy; they often have no choice financially when their health is on the line.
But at a systemic level, these programs create a mirage that perpetuates our system’s reckless spending: They cover up a drug’s true price, much of which our insurers pay (and some of which is pocketed by middlemen in the supply chain). And that contributes to our escalating insurance premiums and deductibles year after year.
It might seem weird for drug companies to set the price of drugs so high and then spend money subsidizing that high price. But drug companies are eager to do this for new specialty drugs, if it encourages doctors to prescribe them. I’ve used these programs for Aimovig and Nurtec, two new and expensive migraine drugs. This was especially crucial in the early days of Aimovig, before many insurance companies had decided to cover it. At first, “Aimovig Ally” would even ship the drug to your door for free once your doctor prescribed it. (Rosenthal notes that drug companies get about a 2-to-1 return on ‘donations’ to their assistance programs.) Patients with decent insurance will only pay a small portion for a co-pay, meaning the insurer will pay the rest of the high price the drug companies set—if it’s covered, that is. A recent NBER working paper found copay assistance programs raise spending on these drugs by up to 30 percent, which I got mad about behind the paywall a few weeks ago.
This is why insurance companies hate these programs, and an increasing number have taken steps to limit their costs by shunting them back onto the patient. They call these counter-schemes “copay accumulators,” which is a jargon term for not counting copay assistance towards a patient’s deductible or out-of-pocket max. As a crude example: A patient has a deductible of $6000 and requires a drug with a list price of $6000, which has a copay assistance program that provides a maximum annual benefit of $12000. With a copay assistance coupon, the patient’s deductible is met in the first month, meaning they owe nothing for the drug (or most other medical care that year). If that coupon doesn’t count towards their deductible, it may pay for the drug at first, but the next month after the assistance is maxed out, the patient owes $6000 again. The numbers will be different, but the mechanism is the same: The patient suddenly owes more. How much more depends on the price of the drug, the generosity of the program, and the quality of their insurance coverage.1
More and more insurance companies are fighting back against copay programs in this way: A 2021 analysis found that as many as 83 percent of insurance plans have implemented copay accumulators. The Trump administration issued a rule in 2020 explicitly allowing insurance companies to do this, though states have their own varying laws; the Biden administration is on board with it, too, and even “encourage[d] issuers and group health plans to consider the flexibility to exclude” copay programs as a “tool” to lower drug prices.
Rosenthal, to be clear, doesn’t suggest banning copay assistance programs—her article is just a useful primer on why it’s such a stupid way to lower patient costs. But I want to talk about the idea of banning them and why I’m firmly against, since it’s already happened in some states. California enacted a law banning copay coupons for drugs that had a direct generic competitor in 2017; a study in JAMA found it was “associated with no significant increase in generic substitution in its first year.”
Copay assistance programs are obviously a very silly way to make drugs affordable. They allow drug companies to claim tax deductions (it counts as ‘charity’) for what is essentially a marketing scheme. They raise drug prices overall. They are confusing and convoluted, like much of American healthcare. But without putting a better alternative in place, copay programs are often the only lifeline for patients who need them, and pushing costs back onto patients is the least efficient and cruelest way to lower drug prices.
You might think this blunt instrument would be justified if it did encourage doctors to prescribe equally effective, cheaper drugs. The problem is that insurance companies can’t be trusted to accurately and consistently determine what “equally effective” means, because they have such a strong financial motive not to cover expensive drugs. And because there are many insurers with hundreds of different formularies, it’s hard to hold them accountable if their standards are harming patients. If one insurance company requires you to try one alternative to an expensive drug, and another requires you to try three, that difference can’t have anything to do with clinical evidence; patients who have Aetna aren’t clinically shown to respond differently from patients with CareFirst, as far as I know.
As an example: I recently tried to schedule my next infusion of Vyepti, a drug that has dramatically reduced the number of migraines I get. What I’m hoping is an administrative error led the infusion clinic to submit the request to my insurance company under the prescription benefit, instead of the medical benefit, which covers drugs administered by a medical professional. Oscar Health denied the prior authorization request, and the letter informing me of this said I would have to try three alternatives first: Aimovig (which I already tried), Ajovy, and Emgality. But I don’t think these are actually equivalent at all. Those three are self-administered subcutaneous injections; Vyepti is an IV infusion. Even if they work on the body in the same way, they certainly aren’t interchangeable. A doctor might have very good reasons for prescribing one and not the other. Crucially, the IV infusion one has worked remarkably for me, and the injection type did not. I don’t fancy going through six months of migraines just in case taking Ajovy saves Oscar a few thousand dollars. Rosenthal herself is went through a similar thing: She was prescribed this expensive injection because she had “a terrible reaction to the cheaper generic oral treatment.”
For some patients, the costs, and stakes, are even higher. Last year, I interviewed Nick, who has multiple sclerosis. He takes glatiramer acetate, the generic form of Copaxone, for his condition. Nick is already on the ‘cheaper, equally effective’ drug—and that drug still costs $2300 a month. When Nick runs out of copay assistance for the year, which happens after just a few months, he now has to pay his entire deductible; if that assistance was allowed to count towards his deductible, his drug would be free, as would his doctors’ visits. This does not encourage his doctor to prescribe him a cheaper alternative, because there isn’t one. It just means he has to pay up or get sicker. (I’d point out that a person with a condition like MS getting sicker probably does not save their insurance company money overall in the long run, but this is really beside the point; we want people to be healthy because that is good, not because it’s cheaper.) There are countless cases like this. I might be one, if my Vyepti doesn’t get covered.
It’s not rare, either, for people like Nick to have no alternative. Rosenthal cites a study in the New England Journal of Medicine that found that 62 percent of these coupon programs were offered for drugs that had a cheaper alternative, most of them generics. That sounds pretty bad! It also means that more than one in three drugs with these programs are without a cheaper equivalent, which means that without the copay coupon, a patient might to choose between paying up for the drug or going without it. Tough luck, I guess. Don’t they care about lowering drug prices?
Even if the alternatives are medically equivalent, anything that involves more interaction with an insurance company leads to more bureaucratic hassles and wasted time for many patients. Every time an insurance company requires a prior authorization (PA) for an exception, that adds a delay in care; the patient can’t get their medication until their doctor fills in a form and sends it off, and the insurance company approves it. If it’s a new patient and the doctor doesn’t have access to medical records showing drugs the patient tried without benefit in the past, they might have to request those from the previous doctor, or they might just not bother.
Each of these steps introduces a potential hurdle. The patient has to call the doctor’s office, which in practice often means calling several times to get through. Your chance of success depends on how good your doctor is at filing PAs, and how soon you’ll get your drug depends on how quickly they do it. Having a doctor try cheaper alternatives first might theoretically be sound, but the realities of the American healthcare system make requirements like these onerous for patients and doctors.
I’d also note that allowing insurance companies to sidestep copay coupon programs specifically harms patients who have large deductibles. The theoretical ideal consumer for a high-deductible plan is someone who is young, healthy, and psychic; someone who knows they won’t get sick in the next 12 months, and ideally who can put aside money in case of emergency. In practice, many people with high-deductible plans are just too poor to afford anything but the most basic coverage, and even people who have higher health costs don’t necessarily (or can’t) pay up for better plans. Having such a plan makes it harder for people to get primary care, too, which makes them more likely to end up with worse, more expensive illnesses down the road. Copay accumulator programs don’t just discourage patients from filling an expensive prescription; they discourage poorer patients from doing so. They’d do nothing to discourage a rich patient with a generous insurance plan, who has no or low cost-sharing anyway. A 2021 NBER working paper found that even a $10 increase in copays causes a 22 percent decrease in prescription fills, even for lifesaving drugs. Now imagine that their copay assistance worth hundreds or thousands of dollars a month evaporates.
If we want to lower drug prices, we should simply lower drug prices—like, by actually setting prices at the federal level, ideally through single-payer, or by having the government manufacture drugs, or by putting electric shock underwear on pharmaceutical executives that gets activated whenever they try to set the price of a drug higher than it is in France. We could prevent the many little tricks drug companies use to get around the expiration of patents, like ‘pay for delay’ agreements or ‘product hopping,’ where they make extremely minor changes to a drug and reintroduce it at a higher price. We could ban prescription drug advertisements, like almost every country on Earth does. All of these are more effective and more direct ways of addressing the problem that don’t involve telling patients they suddenly have to pay thousands more dollars for drugs they need—but that’s good, actually, because it’s lowering drug prices. Just not for them, and not yet, and mostly for their insurance company, actually.
A recurring theme of this newsletter is the back-and-forth finger-pointing in the healthcare industry. Each bad actor blames the other bad actors, claiming someone else is the real reason costs are so high. They’re also constantly trying to shove those high costs onto someone else, in a way that actively prevents lowering costs overall. This crossfire often catches patients in the middle, with dreadful and deadly consequences. Hospitals set absurdly high list prices for procedures, which they hand-wave away by saying most patients don’t pay them—until an uninsured patient needs care, or an insurance company doesn’t cover something, and then suddenly the cost is real and they owe it all, yesterday. Drug companies set sky-high list prices for drugs, which they insist most patients don’t have to pay anyway, until they do and they die. This crisis is too severe, the rot too deep, to tinker with little things that are so far downstream of the problem. It reflects a sad sort of powerlessness to imagine that the only thing we could do to fight drug prices is the thing that pushes even more cost directly onto patients.
The fundamental evil of high drug prices is that it forces patients to pay prices they can’t afford in order to stay alive or healthy; if they can’t pay, they get sicker, or die. Banning these coupons just weaponizes that awful situation, putting patients into danger to force drug companies to lower their prices. But we don’t have to do that. We have a government. A government can force drug companies to lower prices all by itself, if only they wanted to. They don’t have to grab the gun and put it to the patient’s heads themselves.
Below the paywall break, a roundup of interesting healthcare stories from this week; subscribe now to read on.