(Corrects references to a brand-name drug in third and fourth paragraphs.)
Even for people who have health insurance, brand-name prescription drugs can be expensive. If the companies that sell those drugs want to give some patients a little help covering the cost, well, what could be the harm in that?
A lot, it turns out. Welcome to the shadowy world of health-care financing, where the battle between drugmakers and insurers is fought with coupons -- and where the Affordable Care Act might give insurers, and by extension the rest of us, the upper hand.
Unlike coupons for, say, breakfast cereal, coupons for pricey drugs are a bit of a racket. It works like this: Your doctor says you need a drug to, say, treat your depression. Perhaps you've heard about a particular brand-name antidepressant and ask for it; your doctor says a generic version has just been approved but agrees to prescribe the brand you want. (She's not alone: More than one-third of U.S. physicians report prescribing brand-name drugs when asked, even if an appropriate -- and much cheaper -- generic is available.)
Your doctor, however, isn't paying the cost of the drug; your insurance company is. Insurers could simply refuse to cover brand-name drugs, but then who would buy their policies? Instead, companies discourage higher-priced medicines by charging you a higher copayment. Drugmakers know this, and they offer some patients coupons offsetting that copayment. You stick with the brand-name drug; the drugmaker gets more revenue; and your insurance company is hit with a much higher cost.
Those costs add up. Coupons will increase U.S. pharmaceutical spending by as much as $32 billion from 2012 to 2021, according to a study paid for by pharmacy benefit managers, who help insurers manage drug costs. That extra spending is passed on to consumers in higher premiums. What looks like a freebie ends up being anything but.
Enter Obamacare. Medicare and Medicaid don't allow coupon programs, calling them kickbacks by drugmakers; until last fall, it looked as though the government might impose the same prohibition on insurance bought on the new state exchanges. Then Health and Human Services Secretary Kathleen Sebelius said the kickback rule didn't apply; drugmakers say they're waiting for a final verdict.
For a law with the phrase "affordable care" in its title, failing to block coupon programs would be a missed opportunity. In the meantime, states can help. Massachusetts banned those programs in 1988, and the state has one of the country's lowest levels of spending on prescription drugs as a share of total health-care costs.
None of this should detract from doing what's right for the patient. Since 2012, Massachusetts has allowed drugmakers to offer copayment assistance for treatments where no generic is available. Applying that compromise to Obamacare could address a situation that Bloomberg News reported on last month, in which some drugmakers, worried about running afoul of federal rules, have ended assistance for people on exchange-based plans, even for drugs that have no generic alternative.
The U.S. continues to spend 50 percent more than any other developed country on health care, and there aren't many easy ways to close that gap. Blocking drug coupons when generics are available is one strategy that could help.
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