Posted on October 19, 2016 at 9:20 AM
My article with Peter Bach of Memorial Sloan Kettering continues to generate debate. The two of us argues that copay assistance programs from pharmaceutical companies help specific patients in the short run, but make it easier for drug companies to demand high prices for their products.
Here is one take on the topic, spurred on in part by our arguments:
“If you can’t afford your medicine, Astrazeneca may be able to help.”
Millions of U.S. consumers hear and read those words every day in direct-to-consumer (DTC) ads from the London-based pharma and similar verbiage from its cohorts. Copay assistance, discounted pricing and free medications for those who qualify are hallmarks of the biopharma industry’s ubiquitous patient assistance programs (PAPs), which also encompass services such as insurance reimbursement support, counseling, genetic testing, health care classes and certain devices.
PAPs – some created decades ago – were established to provide a safety net for patients with the greatest financial need to ensure they could have access to life-saving medications. That sense of compassion still undergirds the efforts of many programs.
“There is always going to be a need for patient assistance programs because there will always be gaps,” Gary Pelletier, executive director of the Pfizer Patient Assistance Foundation, told BioWorld Today. “We’re never going to have a perfect state where everyone has perfect coverage.”
Even if all patients had optimal prescription drug coverage providing $5 copays on every prescription drug, “some patients will still need help because they might be on multiple medicines, and $5 across multiple medicines can add up,” Pelletier pointed out. “We do have many patients in our program who have very low incomes. Even a $5 copay, if they’re lucky enough to have that, can be too much.”
But in recent years PAPs also have become vehicles for certain bad actors to increase prices and further muddle the enormously complex pricing of drugs across the supply chain. In February, Democratic members of the House of Representatives Committee on Oversight and Government Reform issued a blistering memo alleging that officials at Valeant Pharmaceuticals International Inc. used the company’s PAPs to justify raising prices and to generate higher revenues by driving patients into a closed distribution system. The committee concluded, based on a review of 75,000 pages of internal company documents, that Valeant used its PAPs to divert attention from price increases, especially for drugs it sought to categorize as orphan products.
The committee’s findings were part of a string of revelations about Valeant business practices that led to the ouster of CEO J. Michael Pearson. (See BioWorld Today, March 22, 2016.)
‘IF WE DID AWAY WITH THEM, IT WOULD HURT PATIENTS’
Although the actions of a few have shone a harsh light on PAPs, they’ve also fueled debate over a larger question: Are these programs part of the industry’s drug pricing problem or part of the solution? The concerns have reached beyond the halls of Congress. This month, Annals of Internal Medicine published several commentaries on the topic, with one suggesting that copay assistance – the bedrock of most PAPs – may do more harm than good to the U.S. health care system. Health policy researchers Peter Ubel, of Duke University, and Peter Bach, of Memorial Sloan Kettering Cancer Center, suggested that the PAP hastily introduced by Mylan NV to deflect attention from the soaring price of its Epipen represented “a recipe for higher health care costs in the future.”
The Epipen debacle, which became the subject of water cooler chatter and late night TV talk show monologues for more than a month, was largely responsible for dragging PAPs into the larger controversy surrounding drug pricing. (See BioWorld Today, Aug. 24, 2016, Aug. 26, 2016, and Aug. 30, 2016.)
Ubel and Bach argued that co-pay assistance programs, in general, diminish price pressure, undermine benefit designs that allow for low-cost insurance plans, reduce negotiating leverage for insurers and prevent patients from acting as consumers.
The researchers pointed out that the copay assistance programs that serve as the centerpiece of most PAPs “are not as good as they seem,” maintaining that biopharmas offer such assistance “only for those that patients fill before their insurance kicks in. When patients reach their out-of-pocket maximums, insurers pay all future costs. Because insurers cannot distinguish between payments from patients and copay coupons, the coupons can be used to speed patients to their out-of-pocket maximum even when they have not paid the share their insurance plan requires.”
Ubel and Bach don’t advocate eliminating copay assistance programs altogether because, “if we did away with them, it would hurt patients.” Ubel told BioWorld Today. He added, however, “if we rely on copay assistance, it just drives prices up in the long run.”
PAPs have critics even within the industry. Kalobios Pharmaceuticals Inc. CEO Cameron Durrant, who was the first to issue a responsible pricing model for his company – for now a paper tiger, since Kalobios has no commercial products – said it’s important to step back and consider the reason the industry uses coupons and other discount programs.
“People are feeling the pinch of higher out-of-pocket costs,” he acknowledged, “but why is that? Generally, it’s because of the formulary position of their therapies and the direct relationship to the price of their drugs.”
Durrant questioned whether PAPs benefit the patients who need the most help, maintaining that the programs are structured more to meet commercial sales targets than patient needs, with actual coupon and discount card redemption rates hovering in the single digits.
Coupons and savings cards also represent an extra burden on pharmacies, especially in small communities that are underserved by the national chains, according to the National Community Pharmacists Association (NCPA). Most cards involve billing as secondary insurance, adding to the pharmacy’s work flow. On top of that, the cards often are handed to patients by prescribers without explanation, leaving pharmacists with the responsibility of educating customers about eligibility and usage.
To Durrant, the obvious solution is to move away from discount mechanisms toward pricing models that are fair, transparent and sustainable.
“Patient assistance programs are a sign of the broader malaise around price,” Durrant told BioWorld Today. “They’re an effort to tackle pricing through the back door. If we don’t take this issue on, it’s going to be done to us as an industry through regulation.”
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