PCMA: New OIG Report Cites Drug Manufacturer“Copay Coupon” Use in Medicare Part D

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Suppliers are Prohibited From Using “Kickbacks” to Increase Sales in Federal Programs

“Drug companies must develop robust marketing safeguards to assure regulators that copay coupons don’t induce demand for brand drugs and increase costs in public programs like Medicare," said PCMA President and CEO Mark Merritt

“Copay coupons,” a drug manufacturer marketing tactic often used to inflate sales of brand drugs among patients with prescription drug coverage, may now be infiltrating Medicare Part D, according to a new report from the Department of Health and Human Services Office of the Inspector General (OIG). Federal anti-kickback laws prohibit suppliers from offering side-payments to increase sales of goods that are subsidized by the federal government.

The report highlights that two recent surveys, including one by the Pharmaceutical Care Management Association (PCMA), found that approximately 6 to 7 percent of seniors in Part D reported using coupons to purchase prescription drugs.

According to the OIG report, “manufacturers may be liable under the anti-kickback statute if they offer coupons to induce the purchase of drugs paid for by Federal health care programs, including Medicare Part D.”

The report notes that “coupons may increase costs for Part D plans because they may encourage the purchase of more expensive brand-name drugs instead of less expensive alternative treatments, such as generic drugs.” One study indicated that copay coupons could increase costs in Medicare by $18 billion.

“Drug companies must develop robust marketing safeguards to assure regulators that copay coupons don’t induce demand for brand drugs and increase costs in public programs like Medicare. Manufacturers would do more good by focusing on the millions of uninsured Americans who must bear the full cost of drugs, not merely the copay,” said PCMA President and CEO Mark Merritt.

The OIG report also found:

  •     Pharmaceutical manufacturers’ current safeguards may not prevent all copayment coupons from being used for drugs paid for by Part D.
  •     Most surveyed manufacturers use pharmacy claims edits to prevent coupons from being processed for drugs covered by Part D. Most of these edits may not prevent all coupons from being processed for Part D-covered drugs.
  •     Part D plans and other entities cannot identify coupons within pharmacy claims.
  •     The Centers for Medicare and Medicaid Services (CMS) should cooperate with industry stakeholder efforts to improve the reliability of pharmacy claims edits and make coupons transparent.

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