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Consumer beware: Drug discounts may contain catch

Critics say coupons and other discount programs mask rising prescription prices.


Coupons, patient assistance programs and other drug discount offers have become a big part of the prescription market as consumers struggle to deal with rising costs for their medications.

But some in the health care industry question the overall impact of these programs, which critics say mask rising prices while employers and insurance providers still foot the bill.

IN-DEPTH REPORT: Consumers kept in the dark over drug pricing

Consumers also complain they don’t know now how to navigate the vast sea of discount offers — each with unique restrictions — in order to find the best deal on prescription drugs.

“These are all different ways to avoid saying what the cost of a drug is,” said Antonio Ciaccia, director of Government and Public Affairs for the Ohio Pharmacy Association. “I believe that it is purposely designed this way… and we as consumers have sanctioned this with our compliance.”

‘I’m getting gouged’

Tim Rau, 56, of Kettering, has been a diabetic for 15 years and insulin dependent for a decade, but he’s still baffled as to why his Lantus prescription costs so much, can change in price so quickly, and costs a different amount at every pharmacy.

In early 2015 he paid about $1,250 for a 90-day supply of the insulin; by the next year the same prescription was $1,986 — a nearly 60 percent increase.

The insulin he needs to live has driven him into credit card debt and he’s had to borrow money from his parents.

“Here I am the little guy and I’m getting gouged,” Rau said.

Irate over the unexplained price hikes he went online and found the same drug for $750 through the online discount site BlinkHealth.com.

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But as with many of the coupon options available, there was a catch. In order to get the discount price, consumers must purchase their drugs outside of insurance. The consumer pays less out-of-pocket, but the money doesn’t count toward any insurance deductibles.

For Rau, the options turned out be near equal: about $3,000 out-of-pocket either way. But if he chose the discount route, he would be responsible for his deductible if he had any other health expenses during the year, like a surgery.

Experts say this is one drawback of the discount programs that consumers need to consider.

“If they know they are going to hit the deductible… then use insurance,” said Brad Bangerter, CEO of LowestMed.com, another online discounter. He said patients need to do their homework — checking the cost with insurance and with available coupons or discounts — before jumping into what looks like a great deal.

Buyer beware

Researching the cost of drugs is exactly what pharmaceutical manufacturers don’t want consumers to do, according to Linda Cahn, executive director of The National Prescription Coverage Coalition, and a critic of the coupon system.

She thinks drug companies are using the coupons to quiet negative press about their prices while creating brand loyalty. The hope is that consumers will stick with the brand — and what may be a high price — even when there is no coupon available.

A video guide: How do prescription drug prices get set?

This tactic of aggressively marketing directly to the consumer is relatively new, experts say.

When copays were low and insurance companies covered most prescription drugs, consumers had no reason to care about the price of their medications, Bangerter said. But as health plans have passed more of their costs on to their members through higher deductibles, higher premiums and more cost-sharing, consumers have started to get wise and begun to make a public stink about high prices.

At the same time, the growth of generic options has put pharmaceutical companies under more pressure to advertise and convince consumers to buy their brands.

Enter manufacturer coupons and other discounts.

When criticism was heaped on Mylan for high cost of its EpiPen last year, the company highlighted its assistance options, saying the majority of consumers end up paying less than $50 for the $600 product.

Amid an uproar over insulin prices, manufacturer Eli Lilly and pharmacy benefit manager Express Scripts did the same thing, announcing a partnership to offer 40 percent discounts on three Lilly diabetes drugs.

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“The biggest threat to drug manufacturers’ extraordinary earnings is an uprising by consumers over drug prices,” Cahn said. “Manufacturers are doing all they can to reduce — or eliminate — copays and deductibles by the widespread distribution of coupons and discount cards.”

Consumers don’t care as long as they are getting a good deal, but some question how much benefit they are getting.

For example, drug makers may offer coupons to get around the system of rebates and exclusion lists set up by pharmacy benefit managers, the middlemen in the drug pricing system that often determine which drugs end up on formularies used by health plans.

READ MORE: Who’s really controlling your drug prices? 5 things to know

Pharmacy benefit managers solicit rebates from drug manufacturers in return for placing their products on formularies that determine which drugs are covered and preferred. They also can require prior authorizations — advance approval from the health plan before a patient can use a high-priced drug.

The manufacturer of a drug that is not on the preferred list or is supposed to get prior authorization may offer a coupon to entice consumers to use their product anyway, end running around the system pharmacy benefit managers say saves millions.

Often the coupons are only good for one or two refills, with the manufacturer hoping the patient will stick with their brand after the discount has run out, Ciaccia said. And if they do keep using the high-priced drug after the coupon runs out, the patient’s health plan could be stuck paying more for a drug it tried to steer them away from.

Manufacturers’ actions ignore the fact that employers and the government pay for the bulk of prescription drugs, Cahn said.

The rebates the pharmacy benefit managers receive are controversial too, and some argue they offer no savings to the consumer because manufacturers build the cost of the rebate into their pricing structure.

Secretive system

For consumers, it may make sense to grab at whatever option will result in a lower prescription price. But Ciaccia and others argue that coupons and other discount programs are part of a secretive system that won’t change as long as drug companies can make big profits by keeping their customers in the dark.

“PBMs, and manufacturers, and the government are together ensuring that no one knows the actual price of drugs. By hiding rebates and other discounts — and distributing coupons to reduce consumers’ costs — price competition is eliminated,” Cahn said. “To drive down the cost of drugs, we need competition on prices, which means we need to know drugs’ net costs.”

By allowing drug manufacturers to buy them off with coupons and discount cards, while manufacturers continue to raise their prices to the entire marketplace, “these consumers are choosing to be part of the problem,” she said.

In a twist, Rau ended getting a big break on his insulin costs, but not through any coupon program. When his wife was laid off, her new employer’s health plan makes him pay just a $30 per month copay for his insulin.

Navigating discounts

Prescription drug consumers are bombarded by a number of different discount offers, but it can be difficult to determine what’s a good deal. Here are some things experts say to look for.

Manufacturer coupons: Can be found online or may be given out by doctors and pharmacies. Check to see if the discount expires after a set dollar amount or number of refills and whether or not drug purchases will count toward insurance deductibles or out-of-pocket ceilings.

Patient assistance programs: Usually run by the manufacturer to offer free drugs to those who meet certain need requirements. Experts say some of these are very good and others have a lot of restrictions, so investigate these offers thoroughly. Go to the manufacturer’s website to get details on their programs.

Third-party discounters: Sites like BlinkHealth.com, GoodRX.com and LowestMed.com work with pharmacy benefit managers to negotiate discounts on hundreds of drugs that can be used by any consumers regardless of their health plan. These discounts are offered as “coupons” on their sites, but they can be used over and over again with no limit. These sites also show which local pharmacies have the lowest prices on both brand name drugs and generics.

Non-profit foundations: There are a number of foundations that offer grants to under-insured patients to help with prescription costs. Some of these organizations openly work with drug makers, some get donations from drug makers, and some are completely independent with no drug-maker funding. The best way to find these is to search by a particular disease.

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