Insurers Have a New Strategy to Short-Change Patients

Among the new ideas in President Trump’s Blueprint to Lower Drug Prices is a proposal to allow patients in Medicare or Medicaid to use “copay coupons,” which are discount cards that drug makers provide to patients to offset out-of-pocket drug costs. These policies already help many patients with private insurance pay for their prescription drugs and would be a welcome benefit for lower-income and elderly patients enrolled in Medicaid and Medicare. But while the president looks to expand the reach of these important coupons, insurance companies are diminishing their worth by pocketing the value for themselves, passing even more costs to patients.

Insurers are increasingly reducing their coverage of high-cost medications through higher copays, increased coinsurance, restrictive drug formularies, and skyrocketing annual deductible requirements. Drug manufacturers and some charities have begun offering copay assistance — usually in the form of coupons or discount cards with capped annual limits — to patients after insurance companies started making them pay a larger share of medication costs.

Under new health insurer policies, deceptively known as “copay accumulator” programs, insurers refuse to apply the full value of copay coupons towards a patient’s annual deductible, even though it covered an expense not paid by the insurer. In practice, patients are forced to pay their full deductible themselves, even if they receive outside assistance. Consequently, patients may suddenly face huge out-of-pocket costs for their medication until they can pay down their entire deductibles, which can run thousands of dollars.

Insurers insist the coupons drive up pharmaceutical prices by making it easier for patients to choose costlier brand-name drugs over cheaper generics, though fewer than half the medications copay coupons cover have generic equivalents. Patients treating chronic conditions often work through multiple medications before finding one that is both effective and that they can tolerate.

Regardless of their impact on medication choices, the coupons have become a lifeline for many patients with chronic conditions, especially those who — like a growing number of Americans — are enrolled in high-deductible health plans. Coupons allow them to meet their deductibles quickly and obtain full coverage from their insurer as a result.

Insurers have not banned the coupons, however, or limited how much of a copay they may cover. Instead, they have hidden copay accumulator programs in contractual fine print that states that any copay charges paid through coupons are not considered out-of-pocket payments and won’t count toward a patient’s deductible.

For patients managing chronic conditions, accumulators turn copay coupons into financial time bombs. They may begin a prescribed medication regimen using the coupons to pay little or nothing, only to be hit with the full price of a branded or specialty drug when the coupon is exhausted. Meanwhile, patients with chronic conditions may be months into the coverage year, just starting to pay their out-of-pocket obligations and with no coupons to defray the costs. When hit with astronomical, surprise bills when they go for a refill, many patients scramble and try either to switch to lower-priced alternatives (if there are any) or to stretch their original prescriptions until they have met the deductible.

Patients forced to switch medication regimens may have to change from a single-pill treatment to multiple-pill combinations, increasing the risk of patient error and inviting adverse drug reactions requiring additional, expensive medical care. Skipping doses or splitting pills can render medications almost entirely ineffective and allow chronic conditions to worsen.

Some patients just stop taking their medications altogether. A 2017 study by IQVIA, for example, found more than 25 percent of patients abandon their medications while under their deductible. A 2018 follow-up study discovered that 67 percent of those patients discontinued medication entirely. Another study suggests medication non-adherence accounts for 10 percent of hospitalizations — up to 25 percent of nursing home admissions — and causes as many as 125,000 premature deaths annually. This contributes an additional $289 billion each year to U.S. health-care costs. 

Copay coupons are essential to patients with chronic diseases, who rely on them not only to access costly, specialty drugs, but also to help meet their annual deductibles so they can obtain full coverage and effectively treat their conditions. Insurers committed to patient health should think twice about copay accumulator programs that pass even more of cost of care to the most vulnerable.

Stacey L. Worthy is counsel to Aimed Alliance (Alliance for the Adoption of Innovations in Medicine), a member of the Doctor-Patient Rights Project.