less for more sandwich board

The Los Angeles Times ran an article today by Fran Kritz, Heading to the drugstore? Clip a coupon — but read the fine print. The article talks about the growing use of retail “coupons” by drug companies anxious to stave off competition, from cheaper generics or other drugs. Coupons are better suited to regular consumer products like shampoo, fabric softener and breakfast cereal than to medical treatment. This is why we here at Prescription Access Litigation oppose the use of coupons for prescription drugs, and why last year we called on the FDA to ban them.

PAL’s director is quoted in the article:

Last year, the FDA posted a federal register notice asking for public comments on the proposed study. The agency has since pulled the notice, spokesman Sandy Walsh said, in order to refine the parameters of the study, but in the meantime, comments voicing opposition to coupons came into the agency. The Prescription Access Litigation Project, for example, a group devoted to lowering the cost of prescription drugs, filed comments representing 23 consumer groups calling for an outright ban on prescription drug coupons. Among the complaints: that coupons interfere with a doctor/patient relationship by leading consumers to ask their doctor for a drug for which they’ve seen or received a coupon, and that they deceive consumers into using high-priced brand names over generics.

“A $10 coupon is nothing compared [to] the long-term savings from using a cheaper generic drug, particularly for long-term maintenance drugs,” says Alex Sugarman-Brozan, the group’s director.

The prices of brand-name drugs that don’t face competition from less expensive generics are completely arbitrary — the manufacturer just sets a price that it thinks the market will bear. So what does a coupon mean in that kind of situation? We compare it to a store that one night raises its prices, and then the next morning announces a sale. How do you know how much you’re really saving? How do you know if you’re getting a good deal? The answer is — you don’t. And brand-name drug companies count on that. They also count on the fact that people think they’re getting a better deal when they get some kind of discount (sale price, coupon, etc.) than when the base price of a product is just lowered. So drug coupons create a false sense of savings.

Drug coupons are also intended to do an “end-run” around health plans’ efforts to steer their members to less expensive but equally effective generic drugs. Let’s say your health plan charges a $10 co-pay for a generic heartburn drug, and a $20 co-pay for an expensive brand-name heartburn drug. The difference to you, the patient, is $10. If you get a $10 coupon for the brand-name drug, you don’t pay any more for the brand-name than the generic. But the generic usually will work just as well as the brand-name. So what’s wrong with that, people may ask.

The difference to the health plan is usually much more. The health plan might be paying $40 or $50 more for the brand-name drug than the generic. So what, you might say. That’s their problem, not mine. That $40 or $50 more the health plan pays doesn’t come out of nowhere — it comes out of your premiums. So next year, your premiums might go up that much more. In prescription drugs, as in life, there’s no such thing as a free lunch.

The article also points out that the savings with a coupon often still don’t match the savings on a generic:

Synthroid, for example, a brand-name drug from Abbott Laboratories that treats thyroid hormone insufficiency, costs $13.99 per month at drugstore .com, versus $8.99 for the generic. But the coupon Abbott is now promoting only takes $3 off of each prescription, making the generic cheaper by $24 per year.

So, next time you see a coupon for a prescription drug, be wary. Ask your doctor if there are generic or even Over-the-Counter options that work as well as the brand-name drug. If you have health insurance, see if your insurance (if you’re insured) has lower co-payments for generics — some insurers are even starting to charge zero co-payments for generics. If you don’t have health insurance, check out RxOutreach.org, a Patient Assistance Program offering deeply discounted generic drugs. And whether you have insurance or not, check out Consumer Reports Best Buy Drugs to see what drugs are the “best buy” for the condition you have.

To read our comments to the FDA, calling on them to ban drug coupons, go here.