Around 21 percent of all health care spend is on medications. With the costs of drugs skyrocketing, members and providers have turned to manufacturer coupons and rebates to offset costs. Though using coupons and rebates to save money sounds appealing, it can sometimes drive up total health care costs.
How do pharmacy rebates work?
Drug manufacturers provide financial incentives, in the form of rebates, in an effort to increase use of brand name drugs. Typically, the more expensive the drug, the higher the rebate. And, if high-cost brand drug use increases, then there is a greater rebate to pharmacy benefit managers (PBMs) from manufacturers. While receiving a higher rebate sounds attractive, it can actually cause an increase in overall pharmacy cost. It’s important to have a comprehensive look at total pharmacy spend instead of focusing on the perceived savings from rebates.
How do pharmacy coupons work?
Members may use drug coupons for purchasing brand name prescriptions and high-cost specialty medications. Many specialty drugs do not have a generic alternative, so use of a manufacturer coupon can help in providing the lowest cost option to those taking the specialty medication. This is typically not the case for brand drugs. Why is this? Because many brand drugs have a lower-cost, safe and effective generic option available. When you look at prescription costs (average cost of a generic 30-day fill = $20.00, average cost for a brand 30-day fill = $280 and average cost of a specialty 30-day fill = $4,600), you can see how generic options help to reduce cost.
Coupons and rebates often don’t equal a lower overall spend
The savings a consumer sees when using a coupon, or the returns PBMs see from manufacturers for branded drugs doesn’t always mean a reduction in overall spend for an employer group. Generic drugs are required to meet the same standards as brand drugs and are lower in cost because of a number of factors. Because many brand medications are available in a generic option, using coupons to purchase brand drugs when a generic is available may increase overall pharmacy spend. According to the National Bureau of Economic Research, coupons increase the sales of brand name drugs by 60 percent or more by reducing generic sales. For this reason, coupons tend to benefit drug manufacturers but can increase cost to employers by increasing brand use. Take careful consideration about the amount a PBM will save you when making the decision to partner for pharmacy services.
Learn about the five reasons you’re seeing an increase in pharmacy costs.