New programs that target co-pay coupons for expensive medications have taken off, quickly becoming a risk factor for big drugmakers.
At least four pharmaceutical companies, including Pfizer Inc. PFE, -0.61% Amgen Inc. AMGN, -0.71% and Sanofi ADR SNY, +0.46% have brought up these new initiatives — called co-pay accumulators — in financial filings made in the last month, with most naming them as risks.
But drug companies selling high-priced specialty drugs, which treat diseases like rheumatoid arthritis, inflammatory bowel disease, hemophilia and multiple sclerosis, could be affected.
“It’s an industry-wide phenomena and it would affect everybody, give or take where their medicine is in the benefit design” of health plans, said Novartis Pharmaceuticals NVS, -0.26% Chief Executive Paul Hudson on a late January conference call.
Drugmakers have long made coupons available to lower co-pays on patients’ medications.
The coupons have been controversial for almost as long. Critics say the coupons push patients away from cheap alternatives, raising overall health care costs in the process — a charge that now has some support from research papers.
New co-pay accumulator programs, also called co-pay accumulator adjustment or maximization programs, don’t let drugmaker coupons reduce a patients’ co-pay as fully, nor do they help patients meet their out-of-pocket requirements with the coupons.
That has already affected whether patients fill prescriptions, especially those with high-deductible plans, affecting drugmakers’ sales in turn. These specialty drugs boast some of the highest price tags, and are among the most lucrative products for the pharmaceutical industry.
The accumulator programs do, however, take advantage of the coupons, also serving to make the programs more expensive for drugmakers.
MarketWatch was the first to report about this trend last July, and it has since become more popular among health insurers and pharmacy-benefit managers, middlemen that negotiate drug prices.
Co-pay assistance programs are run by drugmakers to help patients financially with their drug co-pays. But critics say they push patients away from low-priced rival medications, helping drive up health care costs.
Amgen, Pfizer and biopharmaceutical company OptiNose Inc. OPTN, -1.68% name co-pay accumulators as among the risk factors for their businesses, alongside other cost-controlling actions taken by health insurers, employers and pharmacy-benefit managers.
Co-pay accumulators are being used “to shift more of the cost burden to manufacturers and patients,” according to Pfizer’s most recent 10-K financial filing. “This cost shifting has given consumers greater control of medication choices, as they pay for a larger portion of their prescription costs and may cause consumers to favor lower cost generic alternatives to branded pharmaceuticals.”
Amgen’s best-selling product is the rheumatoid arthritis, plaque psoriasis and psoriatic arthritis therapy Enbrel, which brought in $5.4 billion in sales last year. The company has also had high hopes for its therapy Repatha, which targets high cholesterol, but which has sold less than expected, bringing in $319 million last year.
But at specialty pharmacies where “the majority of our sales for Enbrel and Repatha occur, the use of such measures by pharmacy-benefit managers (PBMs) and insurers has continued to intensify which have limited Amgen product usage and sales,” according to Amgen’s most recent 10-K financial filing.
One way that might play out, for example, is that “patients may obtain coverage for Repatha but abandon their prescriptions rather than pay their co-pay amount,” according to the 10-K.
Wall Street has also been asking this year what drugmakers are going to do about the trend, especially when specific drugs seem particularly at risk.
The companies have largely signaled that they’ll respond to these programs in kind, perhaps developing their own tactics to subvert them.
For patients taking Belgium-based biopharmaceutical company UCB SA’s UCB, +0.00% anti-inflammatory drug Cimzia, “we’ll actually contact them and make sure that new solutions are offered,” said Executive Vice President Emmanuel Caeymaex on a late February conference call.
“There are tactical ways through it and you can rest assured we are implementing those on products like Taltz and others,” Eli Lilly & Co. LLY, -1.73% Chief Executive David Ricks said on a late January conference call, referring to the company’s autoimmune disease drug.
“There will be, I think, a to-ing and fro-ing around these points through time,” Ricks said. “And we’ll compete as we do.”
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