Specialty Drug Copay Coupons: Despite Patient Benefits, Compliance Issues Persist
Conflicting opinions surround drug copay coupons, which can improve out-of-pocket costs while decreasing the effectiveness of cost-sharing requirements that promote prudent prescribing and purchasing choices.
IN RECENT YEARS, drug manufacturers have been forced to make difficult decisions regarding copay coupon programs by weighing the associated business and patient benefits with the risks of inviting government and payer sanctions.
However, when it comes to specialty medications, including biologics, orphan drugs, and targeted treatments for cancer, as well as complex and rare diseases, many manufacturers have concluded that the advantages far exceed any compliance concerns. Nevertheless, because coupons are banned under federal health care programs, manufacturers of specialty drugs—and the pharmacies that assist in furnishing these products—should recognize that the government has yet to provide definitive guidance on the sorts of safeguards that are necessary and sufficient to keep coupons out of the hands of Medicare and Medicaid beneficiaries.
Drug manufacturers have touted the benefits of drug copay coupons as a means to facilitate drug access by reducing patient out-of-pocket costs. Given their ability to enhance adherence to treatment regimens, coupons have been generally favored by physicians, whose patients may have difficulty meeting their cost-sharing obligations even with generous insurance benefits.
On the other hand, insurers, pharmacy benefit managers, and government regulators have expressed concerns about coupon programs since they can erode the effectiveness of cost-sharing requirements that promote prudent prescribing and purchasing choices based on the true costs of drugs and market price competition. Coupon programs have been strongly opposed, through insurer prohibitions or even formulary exclusions, where they are designed to encourage beneficiaries’ selection of non-preferred products for which there are available generics or therapeutically equivalent alternatives, thereby creating higher costs for health plans.
By contrast, these programs have faced less resistance when they are designed to ease the substantial beneficiary copay obligations associated with expensive agents. Accordingly, industry studies, including Zitter Health Insights’ Co-Pay Offset Monitor, have found that coupon programs are more prevalent in the specialty drug sector. Despite the patient benefits, specialty drug coupon programs may still be subject to close scrutiny.
For one thing, just because a product fits within the nebulous definition of a specialty drug does not mean that insurers will grant it a pass; therapeutically equivalent or similar alternatives with preferred formulary status may still exist. For example, in 2013, UnitedHealthcare implemented a policy barring network pharmacies from redeeming coupons for selected specialty drugs with cheaper therapeutically equivalent options.
Moreover, current government enforcement policy does not automatically afford leniency to coupons for preferred specialty products. Therefore, it is critical that manufacturers and pharmacies that provide specialty drug coupon programs are aware of the fraud and abuse risks. In 2014, the Office of Inspector General (OIG) of the US Department of Health and Human Services released a study and Special Advisory Bulletin (SAB) that highlighted regulatory concerns over the use of manufacturer copay coupons under the federal health care programs.1
The agency noted that liability risks may arise under the False Claims Act (FCA), the Anti-Kickback Statute (AKS), and the beneficiary inducement provision of the Civil Monetary Penalties (CMP) statute, if coupon offerors do not implement sufficient safeguards to prevent federal health care program beneficiaries from using coupons for branded drugs. Although the guidance primarily focused on the use of copay coupons under Medicare Part D, the agency specifically noted that the prohibition applies to all federal health care programs.
Furthermore, while the OIG focused on manufacturers’ liability risks, it noted that pharmacies accepting manufacturer coupons for Part D beneficiaries may also be subject to scrutiny. In its guidance, the OIG noted that manufacturers should review and upgrade their current safeguards to ensure that the coupons are being appropriately screened.
The study found that non-compliance primarily stemmed from 3 factors:
1. Beneficiary and pharmacy notices regarding coupon prohibitions were inadequate.
2. Claims processing edits do not reliably prevent payment for coupons presented by Medicare beneficiaries.
3. Coupons are not transparent in the pharmacy claims transaction system to entities other than manufacturers (eg, Part D plans, pharmacies, government agencies).
Nonetheless, the agency stopped short of actually specifying the sort of “appropriate steps” that coupon offerors should take to ensure that their coupons are not used to induce the purchase of federally reimbursable drugs. Indeed, the agency observed that at present, manufacturer claims edit processes cannot completely prevent coupon processing for drugs paid under Part D due to unreliable proxy data used to identify beneficiaries.
The OIG’s study and SAB are intended to place manufacturers and pharmacies on notice of the types of compliance issues relating to drug copay coupons. Additionally, the OIG recommended that CMS cooperate with relevant stakeholders to enhance pharmacy claims edits that permit verification of Part D enrollment. To date, it does not appear that the government has provided the sort of guidance and assistance desired by stakeholders seeking comfort from a risk perspective.
For instance, on December 3, 2015, CMS issued a memorandum to Part D plan sponsors stating that the Medicare eligibility query function, which is used to determine patient eligibility and to support coordination of benefits, “cannot be used for the purpose [of] ruling out Medicare coverage in order to ensure that coupon use would not violate the anti-kickback statute . . . .”2
In the absence of concrete guidance, manufacturers and pharmacies are left to implement controls to prevent coupons from being used by federal beneficiaries. Although there is no foolproof way to achieve this goal, stakeholders can proceed from the basis that the AKS, the FCA, and the CMP are intent-based statutes, meaning that the more thorough and earnest the efforts taken to ensure compliance, the more protection may be gained.
To this end, stakeholders should consider the following tips and considerations:
- Implement comprehensive policies, procedures, and internal controls specifically tailored to copay coupon compliance issues.
- Thoroughly document all steps taken to ensure compliance.
- Gather input from outside consultants and legal counsel.
- Consider retaining vendors that specialize in administering copay cards.
- Require patients to certify that they are not Medicare beneficiaries.
- Claims edit processes could be enhanced by employing multiple identifiers, including bank identification numbers and patient age (ie, excluding persons over 65 years of age).
- Internally monitor, communicate, and react in a nimble manner to comply with new commercial prohibitions and conditions.
- Compliance risks may be greater when coupons promote the purchase of expensive drugs associated with cheaper and therapeutically equivalent or similar alternatives.
- Coupon programs should be considered part and parcel of broader arrangement s between manufacturers and pharmacies (particularly specialty drug distribution arrangements).
Because of the continued uncertainty, some industry players have chosen to forego the use of drug coupon programs altogether. Nonetheless, with the growing influx of specialty drugs, including innovative targeted cancer therapies, coupons may serve as a critical mechanism to ease enormous patient cost burdens, thereby facilitating access and promoting adherence.
This fact should not go unheeded by government policy makers who could take greater strides in accommodating and collaborating with industry stakeholders seeking to effect beneficial change. Unless or until this occurs, specialty drug manufacturers and pharmacies will need to closely monitor their arrangements to minimize ongoing compliance risks. SPT
- See OIG, Manufacturer Safeguards May not Prevent Copayment Coupon Use for Part D Drugs (2014); Special Advisory Bulletin, Pharmaceutical Manufacturer Copayment Coupons (2014).
- CMS, Health Plan Management System memo, Appropriate Access and Use of the Part D Eligibility Query (Dec. 3, 2015).