TRENTON, N.J. — Eight major drugmakers are being sued by a consumer coalition claiming the companies’ popular coupon programs, which cover much of the patient co-payment for hundreds of brand-name prescription medicines, are illegal.
Community Catalyst alleges the increasingly common couponing programs appear to save patients money but increase overall health care costs significantly and violate federal bribery laws because they’re meant to conceal information about the payments from health insurance plans. The coupons will eventually drive up consumers’ health premiums and can cause patients to reach benefit caps quicker, according to Community Catalyst’s Prescription Access Litigation project, which has sued drugmakers over their pricing and promotion strategies.
Insurance plans and other prescription benefit managers for years have used tiered co-payments to steer patients to generics and lower-cost “preferred” brand-name drugs. They are now expected to fight back with new strategies to discourage coupon use. Such coupons generally reduce patient co-payments for brand-name drugs, such as cholesterol fighter Lipitor and heartburn treatment Nexium, to the co-pay for a generic drug. That’s typically around $10, well below the average $25 to $75 co-payment for preferred and non-preferred brand-name drugs, respectively. Some coupons instead offer a set amount such as $25 or $50 off the co-payment.
Either way, employers and other prescription plan sponsors often end up paying much more when coupons are used, because they cover the bulk of the prescription’s cost and the patient is getting a much-pricier drug.
The coupons encourage patients to buy the brand-name drug rather than a generic version, which can cost 20 percent to 80 percent less than the brand-name. Such coupons have increasingly been used by drugmakers in recent years as their top blockbusters lose patent protection and the companies face the prospect of losing billions in annual revenue almost overnight.
On Wednesday, Community Catalyst was filing identical lawsuits naming different defendants in federal courts in New York, Chicago, Philadelphia and Newark, N.J. The companies sued are Abbott Laboratories, Amgen Inc., AstraZeneca PLC, Bristol-Myers Squibb Co., GlaxoSmithKline PLC, Merck & Co. Inc., Novartis AG and Pfizer Inc.
The companies did not immediately respond to a request for comment.
Boston-based Community Catalyst is a coalition of national, state and local groups. Its nearly 40 funders include major foundations focused on health issues, health providers and two Massachusetts Blue Cross Blue Shield plans.
The plaintiffs are four different union health insurance plans, which say they are struggling to cover drug costs that keep rising.
“By combining direct-to-consumer marketing and supermarket ‘coupon clipping,’ pharmaceutical companies are steering consumers to higher-priced drugs in the pursuit of greater profits,” Edward Mullins, president of one of the plaintiffs, the Sergeants Benevolent Association, said in a statement.
A November report by the Pharmaceutical Care Management Association estimates that co-pay coupons, if left unchecked, will increase prescription drug costs for businesses, unions and other plan sponsors by a total of $32 billion over the next decade. The association represents prescription benefit managers hired by health plans and employers to process prescription claims and hold down prescription costs.
The coupons have become nearly ubiquitous, with a December report by stock research firm Cleveland Research Company noting that since it began tracking the programs in July 2009, the number of programs jumped from 86 to 362. Coupons are available for drugs from Bristol-Myers-Squibb’s psychiatric drug Abilify to Johnson & Johnson’s prostate cancer pill Zytiga.
Besides mailings to patients, the programs are touted in television, radio and print ads, such as one for a $4 co-payment card available to many patients getting blockbuster cholesterol drug Lipitor, which just got generic competition on Nov. 30. Its maker, Pfizer, has said that for insurers agreeing to favor its brand-name Lipitor over generics, it is making up the difference between what they previously paid for Lipitor and what they would pay for a generic, called atorvastatin.
The lawsuits seek a court ruling that co-payment subsidies are illegal and an order that the defendants stop offering the subsidies. The suits also seek unspecified damages for the plaintiffs and triple damages as allowed under federal antitrust law.
Community Catalyst noted that drug co-payment coupons are banned by federal health plans such as Medicare and are also banned in Massachusetts under an anti-kickback law.