I last reviewed ZHI’s Co-Pay Offset Monitor in September 2012’s A New Reality Check on Co- Pay Offset Programs. The new edition shows dramatic growth since then:
- There are now 561 co-pay offset programs, up by 34% in less than two years. More than 700 brand-name drugs have co-pay offset programs. (Details below.)
- More than one-third of specialty pharmacy prescriptions used a co-pay offset program. Usage varied dramatically, however, among therapeutic classes. More than half of rheumatoid arthritis (RA) scripts, for instance, had a co-pay offset, while only 7% of oral oncology prescriptions had one.
LET 708 FLOWERS BLOOM
ZHI defines a co-pay offset program as: “a manufacturer-sponsored co-pay program for branded pharmaceutical products directed at the commercially-insured population.” Co-pay offset programs differ from patient assistance programs (PAP), which focus on uninsured patients (or those denied coverage by their commercial plans) who meet financial eligibility criteria.
Despite controversy over co-pay programs, Zitter identified 561 co-pay offset programs in winter 2014, a 34% increase from the 419 programs in summer 2012. (See chart below.) The number of brands with co-pay offset programs grew even faster, from 440 brands in summer 2012 to 708 brands in winter 2014 (+61%). Note that a co-pay offset program can be applied to more than one brand, and vice versa.
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THE SWEET NECTAR OF COST SAVINGS
Zitter also looked at how co-pay offset programs are used at specialty pharmacies. ZHI estimates that its sample accounts for about 25% of national specialty pharmacy claims.
The table below summarizes the results for the third quarter of 2013. On average, about 37% of specialty pharmacy prescriptions used a co-pay offset program, although usage varied dramatically among therapeutic class.
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Consider two of the biggest specialty pharmacy categories:
- In ZHI’s sample, rheumatoid arthritis (RA) accounted for about half of the specialty pharmacy scripts. The average co-pay (before any offset) for a rheumatoid arthritis (RA) script was $60. More than half of these scripts had a co-pay offset, typically reducing a patient’s out-of-pocket cost to $0 or $5.
- Multiple sclerosis (MS) accounted for about one-quarter of sampled scripts. The average co-pay (before any offset) was $76, typically reducing a patient’s out-of-pocket cost to $10.
THE BUZZ
ZHI’s data illustrate payers’ tolerate/hate relationship with these programs.
PBMs and third-party payers usually argue that copayment offset programs interfere with benefit plan design, reduce generic substitution, and raise plan sponsors’ costs. See, for example, PBMs Launch a New Attack on Copay Cards.
In a white paper to plan sponsors, pharmacy benefit manager Prime Therapeutics states:
“[S]ome drug manufacturers’ coupons are clearly designed to increase sales of brand‐name products, even though less expensive options exist. Members may not know that using these coupons can increase costs for their benefit plan. Since most people with insurance do not pay the full cost of their drugs, it is usually the plan sponsor who ends up paying the price for bad coupon use.”Ominously, Express Scripts even cited co-pay programs as a contributor to formulary exclusion. See Express Scripts and the Inevitability of Formulary Exclusion.
But as I argue in How the Fourth Tier Coinsurance Boom Drives Copay Offset Programs, the prevalence of fourth-tier coinsurance is closely linked to co-payment offset programs. Consumer out-of-pocket expenses are a small portion of average prescription prices, especially for more-expensive specialty therapies. Some consumers, however, are being asked to pay a greater share of prescription costs for more-expensive specialty drugs.
With few formulary rebates available for specialty drugs, plan sponsors and their PBMs can force manufacturers to cover patients’ large out-of-pocket costs. Thus, co-payment offset programs for specialty drugs are becoming a roundabout way for payers to extract discounts from pharmaceutical manufacturers.
Thus, in contrast to its views on copayment programs for traditional drugs, Prime Therapeutics argues: “When it comes to specialty drugs, however, coupons can help make high cost medicines more affordable.” (source)
As more specialty drugs launch and therapeutic classes become more crowded, expect PBMs and payers to view specialty co-pay offset programs with more suspicion.
