Kaiser Health News Editor-in-Chief Elisabeth Rosenthal, MD, penned an op-ed in the Los Angeles Times on April 19 arguing copay assistance and coupon programs from drug manufacturers are leading to higher premiums and deductibles.
Copay assistance programs are when drug manufacturers subsidize patients' copays on expensive medications and then use those subsidies for charitable tax breaks, according to Dr. Rosenthal.
The federal government generally classifies these programs as illegal kickbacks and places limits on public plans.
Dr. Rosenthal argues these programs are "a form of profitable charity." By paying patients' copays at a rate that is often 10 percent to 20 percent of the drug price, manufacturers are more likely to sell expensive drugs and charge payers the other 80 percent to 90 percent.
Research shows these programs are both lucrative and growing in popularity. For manufacturers, these programs can sometimes yield as much as $4 for every $1 donated by patients, according to a Harvard Business School analysis.
A study from the New England Journal of Medicine found 64 percent of copay coupons were for brand-name drugs that had cheaper and equally effective alternatives. A 2017 Congressional Research report found donations by 10 large manufacturers' copay assistance programs increased from $376 million in 2001 to $6.1 billion in 2014.
These copay programs are intended to incentivize patients and physicians to use cheaper drugs, but with the consistently increasing cost of prescriptions, Dr. Rosenthal says it is understandable why patients have little choice but to participate in copay assistance.
She argues these programs perpetuate "our system's reckless spending." By shifting the high cost of prescriptions to payers, drug manufacturers are fueling the annual rise in members' premiums and deductibles.