Patients covered by government programs need not apply

Print 24 October 2016
Mari Serebrov / BioWorld

When Mylan NV tried to put out the public outcry over its latest hike in the Epipen price by expanding its patient assistance programs (PAPs), U.S. lawmakers weren't impressed.

"PAPs seem like a playbook all [drug] companies are using instead of coming down on the price," Rep. Elijah Cummings (D-Md.) responded last month to Mylan CEO Heather Bresch's testimony before the House Oversight and Government Reform Committee about the Epipen price increases. (See BioWorld Today, Sept. 23, 2016.)

Bresch tried to explain that drug companies have no control over how much a patient pays at the pharmacy, so their only way to ensure patients can afford the copays or coinsurance is by offering coupons, savings cards and other PAPs directly to the patient.

But Cummings wasn't buying it. "You're repeating industry talking points with no substance whatsoever," he said, summing up the committee's overall attitude toward the company's solution. While Mylan's new savings card knocked $300 off a patient's out-of-pocket cost for a two-pack of the epinephrine auto-injector, which carries a list price of $608, the expanded program came too late to help patients who had already restocked their Epipens with a card that saved them only $100. (See BioWorld Today, Aug. 26, 2016.)

A bigger problem with programs like the savings card Mylan offered is that they're are off limits for some of the neediest patients in the U.S. Viewing them as an inducement to buy rather than a ticket to patient access, the U.S. government deems any manufacturer program that helps federally covered patients with out-of-pocket costs a kickback.

Thus, manufacturer coupons, savings cards or other PAPs intended to reduce what a patient pays for prescription drugs are out of bounds for Medicare beneficiaries enrolled in Parts B, C or D, Medicaid recipients, Tricare enrollees and those covered by any other federal or state drug benefit program.

THE BOTTOM LINE

The reasoning behind the prohibition has nothing to do with whether the patients can afford the out-of-pocket cost for all their prescriptions. Rather, it's about the bottom line for the government programs and, ultimately, taxpayers.

Medicare Part D plans, for instance, may charge enrollees 20 percent to 30 percent coinsurance for pricey brand drugs to encourage them to use a cheaper alternative or a generic. If enrollees could use a coupon to cover the coinsurance, their out-of-pocket might be cheaper for the brand drug than it would be for a generic with no PAP. But the plan's costs would increase, as would the cost to taxpayers, because the plan would be paying for the pricier drug, according to a 2014 report by the Department of Health and Human Services Office of Inspector General (OIG).

"In theory, there's a logic to that, and it makes sense," said Ron Cohen, president and CEO of Acorda Therapeutics Inc. and chairman of the Biotechnology Innovation Organization executive board. But in practice, he told BioWorld Today, "it becomes a very wide broom that sweeps everything in its path without discrimination," as it also applies to products that have no cheap equivalent on the U.S. market.

A 2013 study from The New England Journal of Medicine found that 42 percent of coupons were for brand drugs for which there was no lower cost generic alternative available. But since they can't use those coupons, patients enrolled in state and federal programs are stuck with hefty out-of-pocket costs that could keep them from getting drugs they need to control their disease or condition.

Once a copay passes a certain threshold, many patients will forgo necessary drugs. "There's no question, based on the data, that there are copays keeping patients from getting their drugs," Cohen said, adding that he'd like to see the Centers for Medicare & Medicaid Services (CMS) address patients' out-of-pocket issues, especially those caught in the so-called Part D donut hole, in which the patient's cost-sharing increases.

"What do they think the real-world consequences are?" Cohen asked, noting that when patients don't get the drugs they need, other health care costs increase.

The Government Accountability Office (GAO) recognized the role coupons can play in terms of access. "For single-source drugs . . . such programs can help patients afford their medications and have been shown to improve patient adherence to specialty drug regimens," the GAO said in a July report prepared for Rep. Chris Van Hollen (D-Md.), the ranking member of the House Budget Committee.

However, the report ignores the impact adherence has on a patient's health and increased costs to government programs when covered patients end up getting sicker when they refuse to get needed drugs because of the copay. Instead, it focuses on the benefit drug companies get from patient compliance. "Manufacturers gain revenue from the sale of drugs received by patients who might have quit a drug regimen," according to the report.

BECOMING MORE POPULAR

Meanwhile, privately insured patients use manufacturer coupons all the time, "particularly with the higher-priced drugs," Rep. Buddy Carter (R-Ga.), the only pharmacist in Congress, told BioWorld Today.

The 2014 OIG report noted that "copayment coupons have become increasingly prevalent." Whereas 86 coupons were offered in July 2009, that number had increased to 525 by the end of 2012. The OIG cited several reasons for the growth, including brand efforts to retain market share when confronted with generic competition. It also found that more manufacturers are offering "coupons to offset the high cost of specialty and biologic drugs, which may not have generic alternatives."

In its report this year on the use of coupons for Medicare Part B drugs administered in a doctor's office, the GAO said that the number of brand prescriptions involving the use of a coupon increased from 3 percent in 2011 to 8 percent in 2014. Usage varied by drug, program and insurance coverage. For instance, patients with no or little copay would have no need for a coupon. PAPs that limit usage based on income wouldn't have as many takers as those open to all privately insured patients.

In looking at coupon utilization among privately insured patients, the GAO found that 21 of the 50 high-expenditure Part B drugs had coupon programs in 2013. The government watchdog collected information on the discounts from manufacturers for 18 of the drugs. About 19 percent of the 509,000 privately insured patients who got the 18 drugs that year used a coupon program. The coupon usage varied greatly, ranging from 1 percent to more than 90 percent, depending on the drug. Only two drugs had coupon programs used by more than 40 percent of patients.

Usage percentages might be higher if coupon programs were open to Medicare beneficiaries and enrollees in other government programs. According to the OIG report, 36 million Americans were enrolled in the Medicare Part D prescription drug program in 2014. Added to that are all the millions of people covered by Medicaid and other Medicare programs, veterans, active military and their families and any others covered by state and federal programs.

Unless things change, those millions of patients will continue to be excluded from PAPs that will increasingly provide access to more than innovator drugs. Biosimilars, which can be nearly as pricey as the biologics they reference, will likely provide programs mimicking or bettering the PAPs offered for their reference drugs.

In launching Zarxio (filgrastim-sndz) as the first U.S. biosimilar, Sandoz Inc. offered its One Source PAP to help privately insured patients afford the drug. Patients in the program pay nothing out-of-pocket for the first dose or cycle of the biosimilar and only $10 for subsequent doses or cycles for a maximum of one year.

Besides excluding patients whose prescriptions are paid, in whole or in part, by state or federally funded programs, One Source is closed to cash-paying or uninsured patients, those living in states that ban such programs and patients 65 and older. All those patients are on their own to meet copays that can add up to hundreds or thousands of dollars – unless they qualify for a free drug program or charity help.

To avoid anti-kickback violations while helping uninsured patients and some patients in government-funded programs afford their medication, drug companies have two choices. They can set up a PAP that covers the entire cost of the drug for eligible patients, or they can contribute to independent charities that help government-covered patients with their out-of-pocket drug costs. Eligibility in such programs is generally based on income, which means patients would have to share tax or other income information with the charity or the drug company to prove that they qualify for the help.

CRACKING DOWN

While patients covered by a government plan who knowingly and willfully use a coupon or savings card for a drug can be held liable, the onus of the anti-kickback law falls mostly on drug companies. OIG spokesman Donald White told BioWorld Today that the penalties would vary depending on the circumstances. To date, no drug manufacturer has faced penalties for PAPs that violate the law, White said.

But the government is looking for ways to tighten the programs to ensure violations don't occur. The OIG report noted that 6 percent to 7 percent of surveyed seniors reported using manufacturer coupons for prescription drugs purchased through Part D plans, even though drug companies place the exclusions on the coupons.

The report cited issues with the pharmacy systems that could allow a coupon to be used with a drug acquired through a government program. It recommended that the CMS work with industry to improve the system and close the gaps. Although the OIG report was released two years ago, Acorda's Cohen said he was unaware of any CMS efforts to address the issue.

The GAO is taking a different tact. It wants to see coupons reflected in the average sale price (ASP) used to determine reimbursement for Medicare Part B drugs. Part B spending for the 18 drugs for which the GAO collected coupon information could have been about $69 million lower in 2013 had the ASP equaled the effective market price that included the coupon discounts.

Other concerns are about the overall impact of PAPs on drug pricing. In many ways, Carter said, coupons and similar PAPs "are only causing the cost of the drug to go up." After all, nothing is free. In setting the list price for a drug, manufacturers take into consideration the cost of their PAPs, free drug programs, charitable contributions, etc. What they give away will be covered by higher prices – for other patients, insurance companies and the government programs.

When Bresch testified before the House committee, she confirmed that the price of every Epipen two-pack covers $105 in "related costs," which includes Mylan's cost of offering the PAPs, free auto-injectors to schools, and the company's promotion and awareness efforts.

Another policy concern with PAPs is that by reducing the impact on patients, such programs allow drug manufacturers to charge higher prices to purchasers than the market would sustain otherwise, the GAO said. Reading between the lines, the GAO seems to be implying that the public outcry needed to force action only comes when patients feel the pinch of the drug price.

That kind of reasoning is "trying to make sick patients the policy arm. . . . That's ludicrous," Cohen said. The problem isn't PAPs; it's the failure to look at health care as a whole and come up with systemic solutions.

Focusing on PAPs "seems to be nibbling at the margins rather than dealing with the more profound issue," he added. He also warned that, unless Congress steps in, the same law that keeps Medicare and other government beneficiaries from participating in many PAPs could prevent real reform of how the U.S. pays for medicine and health care in general.

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