Drug copay cards can be controversial, depending on who you are in the health plan arena. Drug copay cards are basically gift cards that are only good for one thing: a specific drug copay at the pharmacy. Copay cards are sometimes a form of patient assistance designed to help low-income people afford their medications. Copay cards are often designed to blunt patients’ incentive to switch to a cheaper drug. They are also designed to make you forget that a drug’s price is astronomical. People in government programs (Medicare and Medicaid) are not allowed to use drug copay cards precisely for the reason drugmakers offer them: drug copay cards are a financial inducement to spend the government’s money.
A few years back drugmakers came under fire because the relationship between drug companies and the charities offering patient financial assistance became too cozy. It was obvious drug companies were directing the charities that were helping steer drug copay cards to beneficiaries. Drugmakers donated funds to charities whose only purpose was to package those funds into copay cards and distribute them to encourage patients to use the drugmaker’s expensive drug. Historically, the purpose of drug copays was to steer patients to cheaper generic drugs, by requiring cost-sharing for drugs that health plans considered less preferred.
The Kaiser Family Foundation recently wrote about drug copay cards. A California man with an auto immune disorder was prescribed Otezla, an immunosuppressant medication. Over-the-counter medications failed to provide relief. By most accounts Otezla works quite well. It is also very expensive, costing roughly $5,000 a month for those who lack health insurance and do not qualify for patient assistance. It made the 2024 list of the 10 most heavily advertised medications.
Insurance companies negotiate large discounts off name brand drug list prices, often amounting to 60% off or more. That can still leave patients with significant cost-sharing when a drug is extremely expensive. To deter patients from being unable (or unwilling) to afford their drugs, drug companies often provide copay cards. In the KFF Health News anecdote, Jayant Mishra was approved for nearly $10,000 in patient assistance off his cost sharing, but then it was gone:
Mishra said he was approved for a copay card covering $9,450 a year. “I was happy when I got the message,” he said.
He added that the doctor reassured him about the cost. “She said: ‘You shouldn’t have to pay anything out-of-pocket. Your copay card will cover this.
He started the medicine and, at first, paid nothing.
Then the bill came.
Mishra owed $442.01 the second month. UnitedHealth Group’s in-house PBM did not pass on its negotiated discount price. Rather it billed Mishra the list price ($5,253.85) and only covered $308.34 of the total. Mishra’s $9,450 copay card was supposed to last all year but was exhausted by the second month of therapy. It appears that UnitedHealth essentially sold Otezla for $4,945.51 a month (that it probably paid less than $2,000), making a profit of maybe $3,000 a month. Moving forward Mishra would owe much more for his medication and would have to meet a high deductible.
Health insurers hate discount cards for the reasons I outlined above. A Harvard professor KFF interviewed described copay cards as a:
“tug-of-war between drug manufacturers and insurers,”
While a UnitedHealth Group spokesman said:
“The copay card is an arrangement between the patient and the pharmacy. It is used outside of insurance.”
Anecdotes like this raises a lot of ethical and financial questions about what is fair. Primarily, why do some new drugs come with annual list prices that exceed the cost of a new car? Why is the list price often nearly three times the negotiated price? Also, how can insurers arbitrarily decide if their PBMs are going to change full price to one plan member, and provide discounted prices to another? Should drugmakers even be allowed to provide copay cards, which are not allowed under Medicare? Then there is the question of whether patients should expect innovative medications for free that cost their health plan something like $24,000 a year?
While Mishra’s case is a clear example of someone who needed an advanced medication – which can be expensive – there are plenty of other examples of drugmakers using patient assistance programs to overcharge health plans when cheaper alternatives exist. One example is a pain medication formulated from common, OTC ingredients, being sold for several thousand dollars a month.
Read more at: KFF Health News: He Needs an Expensive Drug. A Copay Card Helped — Until It Didn’t.