In Massachusetts, Drug Coupons on the Brink 

Drug manufacturers are concerned that, barring legislative action, drug coupons in Massachusetts will soon be forbidden. The clock is ticking for lawmakers to preserve the existing law and no signs have emerged indicating they intend to act by an end-of-the-year deadline.

The existing law permits manufacturer coupons, discounts, product vouchers and other reductions for drugs that don’t have AB-rated generic equivalents. The coupon must be given directly or electronically to an individual through a point of sale or mail-in rebate, or through similar means. Note that “similar means” is not defined, so the manufacturer’s general counsel would need to determine how broadly to construe that verbiage. Also, manufacturers must not exclude or favor any pharmacy from being permitted to redeem the discount, coupon, rebate, product voucher or other expense reduction offered to a consumer.

Massachusetts and California are the only two states in the nation where a law must be proactively passed to allow for prescription drug coupons. This is because the current law in these two states makes them illegal.

In 2012, Massachusetts relaxed the state’s anti-kickback law to permit drug coupons for those therapies that don’t have generic equivalents. Since then, the state legislature has allowed this relaxation of the anti-kickback law to continue by taking action every two years. But the last extension was through Jan. 1, 2020, and since there’s been no action, manufacturers are concerned.

The last reiteration (in 2018) ordered the state’s Health Policy Commission (HPC) to study the use of coupons and issue a report, which will presumably influence legislative action.

The HPC released its preliminary report findings on Oct. 2, 2019: diabetes therapy including insulin, is the top category of coupon use by volume. Coupon availability and use for diabetes has grown significantly and spending per person has more than doubled for the period studied (2013 to 2018).  Spending per person went from $1,891 to $3,838. The average patient out-of-pocket exposure per claim for branded diabetes therapy products rose 50 percent from $38 to $57.

Before the preliminary report was released, stakeholders submitted written testimony.

GlaxoSmithKline recommended Massachusetts continue allowing drug coupon programs for patients unable to access medicines or vaccines through third-party coverage.

“GSK’s patient assistance programs provide medicines and vaccines at no cost to eligible patients,” wrote GSK Vice President of US Public Policy Margaret Nowak Mann.

The Massachusetts Association of Health Plans argued that while a drug coupon reduces the amount an insured consumer has to pay out of pocket for a drug, it does not reduce the price a payer would pay for the drug.

The long term effect of drug coupons is to increase drug prices and premiums by making consumers insensitive to drug prices, thereby allowing manufacturers to increase the list price of drugs without losing market share. This market distortion results in higher drug prices that negatively impacts all consumers, wrote Sarah Chiaramida, vice president of public programs and advocacy and general counsel.

Although the 2018 reiteration of the law does not specify when the HPC must issue a final report, it is presumed to be in the works.

Missing from the debate about drug coupon usage in Massachusetts is the lack of choice patients have concerning the drugs they’re prescribed, said Zach Stanley, vice president of public affairs with the Massachusetts Biotechnology Council (MassBio) trade group. Stanley points out that prescription drugs are currently prescribed based on such considerations as formularies, tiers, and prior authorization.

“In our view, that is what makes the decision about what a patient ultimately receives, not whether or not they have a coupon,” he said. “I think we’d like that to be recognized during the debate about whether the coupon program should be continued in Massachusetts.”

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Health Policy Commission’s Report

What must it include?

  • the total number coupons and discounts redeemed in the commonwealth;
  • the total value of coupons and discounts redeemed in the commonwealth;
  • an analysis of the types of biological products and prescription drugs for which coupons and discounts were most frequently redeemed;
  • a comparison of any change in utilization of generic versus brand name prescription drugs;
  • a comparison of any change in utilization among therapeutically-equivalent brand name drugs;
  • the effect on patient adherence to prescribed drugs;
  • patient access to innovative therapies;
  • an analysis of the availability of the coupons or discounts upon renewals;
  • an analysis of the cost impact to consumers upon expiration of the coupon or discount;
  • an analysis of the impact on commercial health insurance premiums, attributed to both employers and individuals;
  • an analysis of the impact on any health care cost containment goals adopted by the commonwealth; and
  • an analysis of the impact on prescription drug costs and premiums for health plans offered by the group insurance commission. The commission may require manufacturers of biological products and prescription drugs to report on the number and types of coupons that such manufacturers have issued and which have been redeemed in the commonwealth.

Where will the report appear? The report shall appear on the commission’s website.

When will the report be distributed? The law does not specify a release date for the final report. It requires the HPC to conduct an analysis and issue a report by June 1, 2019. A preliminary report has been issued.

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