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Sponsored Prescription Rx Co-pays better than Generic

Patients were using a card distributed by the maker of an expensive antibiotic used to treat acne, sharply reducing their health insurance co-payments. With their out-of-pocket costs much lower, consumers had switched from generic alternatives to the more expensive drug.

With drug prices rising and many people out of work, pharmaceutical companies are increasingly helping patients with their co-payments. The use of such co-payment cards and coupons and other types of discounts has more than tripled since mid-2006, according to IMS Health, an information company that tracks the pharmaceutical industry.

"It seems the best strategy for a pharmaceutical company is to price their drug as high as they possibly can and offer that co-pay assistance broadly" to insulate consumers, said Joshua Schimmer, biotechnology analyst at Leerink Swann, an investment bank.

Jazz Pharmaceuticals has quadrupled the price of its narcolepsy drug Xyrem, to about $30,000 a year, over the last five years, according to a recent report from the securities firm Jefferies & Company. To cushion patients, the company recently increased its co-pay assistance to as much as $1,200 a month.

Drug companies cannot offer co-payment assistance for patients in federal programs like Medicare because such offers are considered an inducement to use a drug and in violation of anti-kickback laws. Some companies have responded by contributing to, or even helping to set up, charitable foundations that can provide co-payment assistance legally.

Massachusetts also bars drug company coupons, and on similar grounds. It is the only state to do so.

Last spring, the Massachusetts House of Representatives voted 156 to 0 to repeal the ban on coupons. The state Senate eventually passed a more narrowly worded repeal, but it came too late in the session for the two bills to be reconciled.

EXECUTIVES at insurers and pharmacy benefit management companies say they would like to counter the cards and coupons but are not sure exactly how to do so. One problem is that the information they receive from pharmacies does not specify whether the co-pay was made by the patient or by the drug company.

"The payer doesn't know, and the P.B.M. doesn't know," said F. Everett Neville, chief trade relations officer at Express Scripts, a pharmacy benefits manager. "We have no ability to stop it and no ability to prohibit it."

Analysts at Leerink Swann recently said a backlash against co-pay assistance might be inevitable but is not likely to happen in 2011.

Eileen Wood, a vice president at the Albany insurance company, Capital District Physicians' Health Plan, found her own solution. Her company started requiring patients to try the generic before using Solodyn. The cost per claim dropped back down.

Coupons for Patients, but Higher Bills for Insurers
Published: January 1, 2011
In their fight against generics, big pharmaceutical companies are covering part of patients' co-payment for their drugs. But insurers say the practice raises the overall cost of care.


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