As an employer, what should I know about Patient Assistance Programs (aka drug coupons)?

Jan 03, 2013

Recently, there has been a proliferation of advertisements from brand name pharmaceutical manufacturers indicating that they will pay the cost difference between a generic and the brand name drug. For example, Lipitor is a common brand name cholesterol lowering drug manufactured by Pfizer and its patent has expired. To ensure that patients continue to take Lipitor instead of the generic equivalent, Pfizer has created a drug card that pharmacists can use to pay for the cost difference between the generic and Lipitor. In the US, these programs are often referred to as “drug coupons” and in Canada, these are called “Patient Assistance Programs” (PAP).

At first glance, most employers will think that this is great as it will help their plans and employees without costing them anything more but,  if any of the below points apply to your current benefit plan, you would unfortunately not be able to take full advantage of PAPs.

  • Your plan reimburses brand name drugs
  • Your plan reimburses generic drugs unless the doctor notes “no substitution”
  • Your plan does not have a drug card

 

If your plan reimburses brand name drugs or if a doctor indicates “no substitution” on the prescription, the PAPs would not apply to you because your plan will pay for the brand name drug (Ie. Lipitor). In fact, if your plan pays for brand name drugs and your employees’ plan is coordinated with a spouse’s plan, your plan could be taking up a larger portion of the drug bill if the spouse’s plan is mandatory generic drugs only.

To fully take advantage of the PAP, your drug plan design would have to be mandatory generic which means that even if a doctor writes “no substitution”, your plan will only pay for the cost of the generic drug.  However, it should be noted that there could still be reimbursement for single source drugs (drugs that do not have a generic equivalent).

Discussions surrounding drug plan designs can be quite complex and there is no “one fits all” formula that will help contain rising drug costs. A mandatory generic drug formulary may not appropriate for many employers, however, with the increasingly number of PAPs available to patients, an understanding of the context in which they operate will better equip you to make informed decisions on your drug plan design.

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