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The pharmaceutical industry has a simple tool at its disposal to lower health care costs for patients: It can simply reduce the prices they set for prescription drugs. Instead, the industry uses the market power granted by its patents to keep drug prices high, and when those expire pharmaceutical companies often resort to various machinations to keep the cost of brand-name medicine high.

For instance, drug companies often offer copay coupons to steer patients away from cheaper generic options with the promise of deep discounts for their own, more expensive medicine. Then, once the patient has become accustomed to using their product, it stops honoring the coupons and leaves the patient with significant out-of-pocket costs. It also forces the employer or health plan to cover the rest of the cost of the expensive drug, which ultimately leads to higher insurance costs for everyone. 

However, pharmacy benefit managers (PBMs) have figured out how to help patients and employers maximize the value of these copay coupons through cost relief programs (which are sometimes referred to as “co-pay accumulator programs”) that limit some of the pharmaceutical companies’ more egregious strategies. These programs shield patients from being responsible for paying the full list price of the drug once the coupon is revoked.

Last year, the drug industry lobbied for passage of a bill in the Ohio legislature that would prohibit these cost relief programs used by PBMs to combat Big Pharma’s pricing games. The main impact of the legislation would have been to increase drug company profits while increasing medical costs for everyone else. Fortunately, Ohio Senators declined to pass the bill and seem disinclined to vote for it this session as well. 

Drugmakers are pushing lawmakers to ban these essential cost relief programs in other states as well. 

Instead of making an already dubious system even more advantageous for drug companies, lawmakers should focus on measures that actually lead to lower costs for patients. For instance, while the use of copay coupons is already banned in Medicare and Medicaid, lawmakers could go a step further and simply ban drug companies from using them in the commercial health insurance market. Research shows that such a step could lower spending on prescription drugs by over $1 billion a year.

At the very least, lawmakers should require drug companies that offer copay coupons to do so for the entire year, so patients do not get hit with a surprise bill--which invariably comes at the end of the year--and there could also be much more transparency in the process: For instance, drug companies could be forced to disclose how much they spend each year on pricing promotions like copay coupons, as well as inform health plans when their patients enroll in such offers.   

Healthcare inflation reached an all-time high in 2022. Banning cost relief programs used by PBMs would only worsen that problem.

Tom Capone is a former health analyst for the Cato Institute. 

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