Policy & Regulation News

Safeguards possibly ineffective on some copayment coupons

By Elizabeth Snell

- Pharmaceutical manufacturers’ current safeguards may not prevent all copayment coupons from being used for drugs paid for by Part D, according to a recent Office of Inspector General (OIG) report.

The coupons are typically offered to reduce or eliminate the cost of patients’ out-of-pocket copayments for specific brand-name drugs, which then induces the purchase of those drugs. Coupons do reduce individual patients’ immediate costs. However, they might also increase the cost of prescription drugs for health insurers, including those offering Medicare prescription drug coverage through Part D plans, OIG said in its report.

To identify the safeguards, OIG surveyed 30 manufacturers of the top 100 Part D brand name drugs with coupons and with the highest Medicare expenditures. The agency also interviewed employees who work with pharmacy claims transactions to see what other vulnerabilities are associated with coupon use in Part D.

All respondents said they provide notices directed to beneficiaries and pharmacists that coupons may not be used in Federal health care programs, OIG said. The majority of manufacturers surveyed use pharmacy claims edits to prevent coupons from being processed for drugs covered by Part D. However, those edits might not prevent copayment coupons from being processed for drugs paid for by Part D. This is because manufacturers cannot accurately identify a beneficiary’s Part D enrollment status, OIG said.

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  • “Manufacturers’ claims processing edits use proxies that are substitutes for but do not replicate actual enrollment information,” the report said. “These proxies use data that may be unreliable or cannot be obtained by all manufacturers.”

    Moreover, Part D plans and other entities cannot identify copayment coupons within pharmacy claims, OID said. Entities other than manufactures could have difficulty identifying coupons while they are processed through the pharmacy claims transaction system or after they are adjudicated.

    “This vulnerability impedes other entities, including Part D plans, other primary insurers, and pharmacies, from preventing the use of coupons for drugs paid for by Part D and oversight entities, like CMS and OIG, from monitoring the use of coupons,” the report explained.

    OIG added that its Special Advisory Bulletin “affirms that pharmaceutical manufacturers are at risk of sanctions if they fail to take appropriate steps to ensure that their copayment coupons do not induce the purchase of Federal health care programs items or services, including but not limited to, drugs paid for by Medicare Part D.”

    Because of that, OIG said that manufacturers might engage industry stakeholders and CMS to try to find an answer to guarantee that coupons are not used for drugs paid for by Part D.  OIG recommended that CMS cooperate with industry stakeholder efforts to improve the reliability of pharmacy claims edits and make coupons transparent. The agency said in its report that CMS agreed with that suggestion.