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A Lump of Coal: Big Pharma's Patient Programs Are Clever Trappings for Higher Drug Prices


Published Dec 21, 2022 • by AHIP

Big Pharma would like you to believe it is a benevolent Santa Claus supporting copay coupons and patient assistance programs to make their prescription drugs more affordable. But as two different experts recently pointed out, Big Pharma deserves its own lump of coal for using these schemes as clever ways to wrap up their out-of-control drug prices.

First, consider copay coupons. In a recent story in Harvard Magazine, Harvard Business School Professor Leemore Dafny summarizes her recent research which compared claims data from Massachusetts, which bans a certain type of co-pay coupon, and New Hampshire, which allows them. Dafny’s research found that as a result of the Massachusetts ban, privately insured residents were more likely to switch to a drug’s generic version—which costs far less than the brand drug, even with the coupon—than those in New Hampshire.

That’s important, Dafny notes, because generic medications lower costs for everyone.

“If the manufacturer offers to cover your co-pay for the branded version, say $35, you might be happy to purchase it in place of the generic, which might have a $10 co-pay,” Dafny writes. “But your insurance plan is paying the rest of the much higher brand-name cost.” Those unnecessary added costs are paid for through higher premiums and cost-sharing for all patients.

Next, let’s look at patient assistance programs. James Gelfand, President of The ERISA Industry Committee, notes that these programs, too, function as a windfall for Big Pharma, in his letter to the editor of Kaiser Health News.

“A pharmaceutical manufacturer will cover the costs of a patient’s copay, sometimes even pay the entire deductible, to keep the patient on its more expensive product (instead of cheaper alternatives the patient’s health plan would pay for),” Gelfand writes.

As a result, once the patient hits their maximum out-of-pocket limit, their employer will be responsible for paying 100% of the drug’s cost, and the drug manufacturer will go back to making a 100% profit, Gelfand said. Again, these unnecessary added costs—all profit for manufacturers—are paid for through higher premiums and cost-sharing for all patients.

Drugmakers create life-saving treatments and breakthrough cures. But the problem is the price. Big Pharma alone controls their prices—and they alone can lower them for Americans today. Instead, they continue to raise prices year after year—even several times a year—making health care more expensive for everyone. Big Pharma should make a resolution for the New Year to work together to lower drug prices for everyone.