Brand-Name Coupons Bring Prices Down, Increase Competition

In an effort to compete with lowerpriced generic medications, brandname drug manufacturers are turning to coupon books, according to an Associated Press report published August 20, 2012.

Coupons that reduce the copayments on brand-name medications —and bring the medication price close to or lower than that of generics—are the latest method for brand-name drug manufacturers to recoup a portion of lost profits after product patents run out.

The trend began in 2011, shortly before Pfizer Inc’s blockbuster cholesterol medication, Lipitor (atorvastatin), went off patent. Prior to the drug’s patent expiration, Pfizer began offering discount coupons that knocked $50 off drug copays. In addition, the company signed deals with insurers that lowered the insurance portion of Lipitor costs so that the costs equaled that of a generic.

Despite the introduction of generic medications from Ranbaxy Laboratories and Watson Pharmaceuticals, Inc, on November 30, 2011, Pfizer retained 750,000 patients—much fewer than were taking the drug before the generic introduction, but better than its anticipated loss. Its program, called “Lipitor For You,” also included lifestyle coaching, health tips, and heart-healthy recipes, according to The Associated Press.

Although Pfizer later ended its agreement with insurance companies, it also raised its coupon discount from $50 to $75 per month, allowing most patients to receive the brand-name drug for less than the cost of a generic. It also introduced $4 copay coupons for Aromasin (exemestane), Effexor XR (venlafaxine hydrochloride extended-release), Geodon (ziprasidone), Revatio (sildenafil), and Caduet (amlodipine besylate/atorvastatin).

In the case of Lipitor, insured patients pay only $4 for their medication as long as their copay is lower than $79 per month. Uninsured patients get $75 off the drug’s $175 per month cost. The coupon programs are only valid with private insurance or for those without insurance, meaning patients with Medicare or other government health insurance cannot use them.

For health insurers, coupons end up raising costs, because the insurance company’s portion of the cost of a brand-name drug is higher than that of a generic. Some companies have instituted policies requiring patients to pay fees for staying on a brand-name drug.

Trade groups for prescription benefit managers predict the copay coupons could raise spending by $32 billion in a 10-year period, adding to overall health care costs, the article stated. Industry experts quoted by the Associated Press said the coupons are not a passing fad, due to the patent cliff and brandname drug makers’ desire to retain some of their profits.