from The Washington Post June 30, 2016
by Charles Ornstein
Charles Ornstein is a senior reporter at ProPublica, a nonprofit investigative news organization based in New York.
A few months back, after returning from a family vacation that involved lots of pool time, my 9-year-old son complained that his ear hurt. A Sunday morning trip to urgent care brought a diagnosis of swimmer’s ear — an infection of the outer ear canal — and a prescription
for ear drops. When my wife went to fill the prescription, for a quarter of an ounce, she was told that our share of the cost would be $135.
Even with the increasingly high cost of drugs, that seemed like a lot. Since I’m a longtime health-care reporter, my wife asked me what to do. “Fill it,” I said, thinking more like a father than a journalist.
Wisely, she didn’t listen. Instead, she searched online for a coupon for the brand-name drug the doctor had prescribed, Ciprodex. She pulled one up on her phone, showed it to the pharmacist and sliced our cost by more than half, to $60.
That was great for us. Like most consumers, we were practically giddy about the savings. But such coupons have hidden effects on health-care costs that most of us don’t ponder.
Drug coupons are a clever marketing tactic increasingly used by pharmaceutical companies for a counterintuitive purpose: to keep drug prices high. By forgoing or reducing patients’ payments for pricier brand-name drugs, they ensure more sales for which insurers foot the bulk of the bill. (The companies get nothing if people choose generics or don’t fill prescriptions at all.) The coupons also stymie insurers’ attempts to encourage consumers to factor price into their health-care decisions. And by making the true cost of a drug essentially unknowable, they are yet another example of how medical pricing remains opaque, despite the promise of the Affordable Care Act.
In essence, it’s a war between two big industries trying to maximize their bottom lines: insurers vs. drug manufacturers. Patients, who often have no clue which drug is best, are stuck in the middle. They definitely enjoy getting what seems like a deal — but in the long run, the coupons help keep health-care costs rising.
The virtues and drawbacks of coupons have been thoroughly debated by health policy wonks for the past few years as they have surged in popularity.Supporters say that insurance companies and pharmacy benefit managers have been jacking up co-pays in pursuit of profits and that lower prices increase the odds that patients will take the medicine they need. Critics say they encourage patients to use brand-name products when cheaper alternatives may be available — and that raises costs, premiums and co-payments for everyone.
Coupons have another little-noticed effect. While health plans increasingly rely on deductibles to control rapidly rising drug costs, coupons are just as rapidly undermining them — which, in another paradox, could wind up driving them even higher.
Deductibles require consumers to pay a certain amount before their insurers start covering costs. Of the $135 our pharmacy initially wantedfor Ciprodex, $100 was to cover my son’s annual drug deductible, and $35 was the standard co-payment for a brand-name drug. With the coupon,
we paid only $60 for the prescription. Still, my pharmacy benefit manager (which manages drug coverage for my insurance company) credited us with spending the entire $135, so we skipped right through the deductible. “It’s kind of like a get-out-of-jail-free card,” said Joseph Ross, an associate professor at the Yale School of Medicine.
Others have had similar experiences. Dave McCulloch, 32, has used coupons from Gilead Sciences to fully cover his out-of-pocket costs for Truvada,an expensive drug that prevents HIV infection for groups at high risk. (The drug is effective both at treating HIV and preventing it.) When he filled his prescription for the first time in March, McCulloch later discovered that his pharmacy benefit manager credited him with paying $350 when he’d actually paid nothing. His insurer, CareFirst, “has no idea that Gilead paid that amount instead of me,” McCulloch said in an
email.
When patients can meet their deductibles with a pharmaceutical company’smoney, as McCulloch and I both did, they have less reason to pay attention to how much money they’re spending on health care — which, in theory, the deductible and co-payments are supposed to make them do.
That means prices can continue rising, pushing insurers to raise premiums, deductibles and copayments in response.
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, I have private medical coverage through my wife’s employment and was going to pay cash for Rx. No matter–as soon as I punched my birthdate into the system, I was kicked out with no opportunity to explain my circumstances. Grrrr.