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Consumer group sues pharmaceutical companies over drug coupons

A consumer coalition dedicated to health care reform has filed lawsuits against eight major pharmaceutical companies, claiming their popular coupon programs for brand-name prescription drugs are illegal. The coalition is seeking class-action status in its commercial litigation on behalf of insurance plans that could make up more than 60 percent of the U.S. healthcare market.

The group alleges that the drug coupons claim to save patients money on high-priced brand-name drugs, but actually increase health care costs by driving up consumers’ health care premiums and causing them to reach their benefit caps more quickly. The lawsuit also says the drugmakers are violating federal bribery laws by hiding information about the payments from health insurance plans.

For years insurance plans and other prescription benefit programs have used tiered co-payment plans to encourage patients to use generic and lower-cost “preferred” brand-name drugs. They may now turn to more restrictive contracts and those that require prior authorization before using brand-name drug coupons. The coupons usually offer either a set amount off a patient’s co-payment for a brand-name drug, or reduce the co-payment to the level of a generic drug, which typically costs around $10. Because brand name drugs are significantly more expensive, the subsidy can amount to up to $500 a month.

When a brand-name drug’s patent expires, generic equivalents enter the market at a much lower price, gobbling up much of a drug’s revenue. Pharmaceutical companies attempt to retain their customers using the brand-name drugs by offering them coupons. But employers and other prescription plan sponsors cover the bulk of a prescription drug’s cost.

The plaintiffs are four union health insurance plans, all of which claim to be struggling to cover high drug costs. “By combining direct-to-consumer marketing and supermarket ‘coupon clipping,’ pharmaceutical companies are steering consumers to higher-priced drugs in the pursuit of greater profits,” said one of the plaintiffs.

According to a November report by the Pharmaceutical Care Management Association, co-pay coupons could increase prescription drug costs for businesses, unions and other plan sponsors by some $32 billion over the next decade.

The lawsuits are aiming for a ruling that declares the co-payment subsidies illegal and orders the defendants to stop offering the coupons. They also seek damages for the extra payment for the brand-name drug over the cost of a generic, and triple damages for the whole class as allowed under federal anti-trust law.

Source: Boston.com, “Consumer group sues 8 drugmakers over drug coupons,” Linda A. Johnson, March 7, 2012

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