The area of extended health benefits doesn’t often lend itself to controversy across multiple stakeholder groups. That’s not to say the challenges impacting the space are not dynamic, and, at times, complicated, but there are very few issues that are fraught with polarizing views. The most debated drug plan issue of the day appears to be that of the impact of brand name drug cards. (I’ve also heard them referred to as patient choice cards or brand drug coupon cards.)
The bottom line is, regardless of the title used, we are talking about a third-party payment card that’s intended to cover the difference between the cost of a brand name product that has lost its exclusive patent protection and the cost of a generic equivalent.
Advocates of these cards point to the following positives.
- They give a patient choice in his or her therapy, and, if the patient has seen success with a given product, it avoids the need for a change.
- They’re not intended to cost plan sponsors any more than they would otherwise have been subjected to.
- They keep the marketplace competitive and another vendor in the picture for a given molecule.
- They may have a positive impact on patient adherence.
Opponents of these cards on the other side of the fence argue the negatives.
- They adversely impact plans that have not yet introduced generic substitution because the plan, as first payer, would now be responsible for 100% of the cost of the brand product, instead of the plan seeing a claim for a generic equivalent that might cost 25% of that price.
- They assume that pharmacies are correctly inserting brand cards as second payer (not third payer after two private plans or public and private plan coverage) and not simply adding it to the bottom of the list of plans on a member’s profile (i.e., as payer of last resort).
- They are not guaranteed to exist from year to year (i.e., they can be discontinued at any point by the manufacturer), or the structure of the program could change, which could cause disruptions and communication challenges within a plan.
- They send a confusing message to plan members that some older brand drugs are covered by a card, but others are not.
The one conclusion that we have drawn from our work with plan data is that there is no right answer when it comes to the impact of these cards. The impact to plan sponsors and their members can vary significantly. Regardless of one’s perspective, this is an area that carrier, claims processors, plan sponsors and advisors need to give due consideration to because the use of these brand cards is not a trend that will disappear any time soon. In fact, quite the opposite: it’s very likely we will see greater utilization as these programs continue to evolve and the number of products made available grows.
Some examples of what we have seen in data that plans may wish to consider when looking at their experience to determine their perspective with the issue:
- Whereas the use of the brand cards in some plans has been negligible, the growth has increased dramatically for others. In one plan we looked at recently, the number of brand card claims increased more than 400% in 2012 and a further 26% in 2013—this for a plan with tens of millions of dollars of drug plan spending every year, so the trend is by no means insignificant. It’s likely that, given the nature of the products in question (i.e., almost all chronic therapies), a plan is more likely to see these claims if it has an average employee and spousal age of over 45 years.
- No surprise to most who follow the debate—the financial impact on a plan is completely dependent on plan design and how pharmacy vendors are handling these claims:
- If a plan doesn’t have generic substitution, then clearly it’s paying 100% of the cost of the more expensive brand name product as a first payer with or without the brand card in play, and that’s a liability to the plan. Although a cynic could easily point out that generic substitution was something plans were jumping on board with years ago when Sony’s PlayStation 2 was all the rage, we had just survived Y2K, and I still had a majority of my hair.
- In plans that do have generic substitution, provided the plan has been set up properly, the liability appears to be limited to spousal claims where the plan in question was kept as a second payer by the pharmacy and not moved to a third payer. In a couple of examples we assessed recently, the average additional cost burden to the plan was between $6.33 and $6.59 per brand card claim submitted to the plan.
- One thing we are seeing that may or may not have anything to do with the growth of brand drug cards is an increase in the number of “no substitution” prescriptions in given plans from year to year (where the data exist to track that). Again, this could be the result of many factors that have nothing to do with brand drug cards, but the trend is noteworthy because it’s relevant to the conversation about brand and generic drugs. Critics have suggested that physician awareness of these programs has led to more no substitution claims being written, which would transfer full-cost responsibility to the plan unless it was set up with mandatory generic substitution.
It’s also worth highlighting that there’s no standard protocol as to how these brand cards work. In late 2013, there was a letter that was distributed to pharmacies (I’m not sure if it was just in Ontario or nationwide) that suggested one manufacturer would be charging a co-payment to members to use their card, presumably because they felt a brand name product was worth a premium. A vendor is free to run a program how it wants to, but the downside is confusion in the marketplace. Do members have to pay with these programs? Do they not have to pay? If so, for which drugs? How much? I haven’t seen a followup to that initial letter to pharmacies, so I have no idea what the current status of that program is, but that’s irrelevant. The point is that a lack of consistency in the process and structure of these plans is not helpful for plan sponsors and their members.
From our vantage point, the data would suggest that the support of brand drug cards within a plan experience could range from having no adverse financial or member impact, to a very moderate impact that could well be offset by the perceived benefits of “patient choice” for members, to a negative impact for plans that are either not designed or currently set up to deal with this evolution in the market. One size doesn’t fit all, so I’m sure the debate will continue in earnest for years to come. In the meantime, for a plan sponsor, its answer lies in the plan experience and the plan structure.
What I do hope emerges from the debate is greater sophistication in how pharmaceutical manufacturers and their partners interact with plan sponsors, and how agreements to support or not support these programs are structured. Given the rapid acceleration of the preferred provider network conversation, it would seem logical that plans would start to look at brand card metrics in their experience and include those in the conversation. Debating the pros and cons of this issue at a high level is a complete waste of time when there is data that exist that can guide the conversation in a constructive manner. It’s up to manufacturers (both brand and generic), their vendor partners, pharmacy providers, carriers, claims processors, plan sponsors and their advisors to determine how they want the conversation to play out. The good news: the results can be measured in very concrete financial terms.