Did Someone say Kickbacks? HHS Warns About Medicare Part D Coupons
Brand-name drug makers regularly use coupons to woo consumers and boost sales. But inducing Medicare Part D beneficiaries to use coupons is illegal. So drug makers are supposed to use safeguards to ensure these consumers do not use coupons to obtain prescription medicines.
But a new report finds the efforts are lacking. As many as 7% of seniors report using coupons to purchase prescription drugs, which amounts to some 2 million people relying on coupons when they should not be able to do so. There are about 36 million Medicare Part D beneficiaries.
The implication is that Medicare is paying too much for some medicines. Why? Coupons may increase costs if these encourage consumers to purchase more expensive brand-name drugs instead of lower-cost generics. Brand-name drug makers, you may recall, have been increasingly relying on coupons to sustain market share.
The report, which was conducted by the Office of the Inspector General of the U.S. Department of Health and Human Services, did not provide an estimate of what coupons are costing Medicare. But the agency did note it is considered to be a kickback to entice consumers to use coupons to purchase medicines that are paid for by Medicare Part D or other federal health-care programs.
This sort of activity would constitute a kickback, which the OIG highlighted in a ‘special advisory bulletin’ issued late last week to remind drug makers and pharmacies. A spokeswoman for the Pharmaceutical Research and Manufacturers of America, the trade group for brand-name drug makers, says “we are in the process of reviewing the OIG report and special advisory bulletin on copayment coupon use.”
The OIG surveyed 30 drug makers that manufacture the top 100 Part D brand-name drugs for which coupons are offered and generate the highest Medicare expenditures. The agency also reviewed certain safeguards used by drug makers and interviewed staff at various organizations involved in pharmacy claims transactions.
So why is there a problem? For instance, the OIG found that nearly all of the coupons obtained had a printed notice, but only 80% had a comparable notice on the coupon web site. Moreover, 75% had an eligibility question online or over the phone. But only 3% had a tracking mechanism on their web sites to prevent a patient from changing an answer to the eligibility question to obtain the coupon.
Approximately two-thirds of the drug makers surveyed provided notices to pharmacists for at least one of the coupon formats they offer. Put another way, one third did not. And of those drug makers that did provide notices, the OIG found that of 40 coupons obtained and reviewed, 42% did not have notices with specific language directed to pharmacists. Pharmacists are busy and so added language can help.
Here is another inadequate feature of the coupons – the OIG found that manufacturer notices to patients and pharmacists “only communicate information stipulating the terms and conditions of copayment coupons. These notices cannot necessarily stop coupons from being processed to purchase drugs paid for by Federal health care programs,” the OIG report states.
Also, the behind-the-scenes method for processing insurance claims may not stop all coupons from being processed for drugs paid for by Medicare Part D because drug makers cannot accurately identify a consumer’s enrollment status. The reason is that drug makers use proxy data to identify Part D enrollees, since they are prohibited for privacy reasons from using actual data. But this is unreliable.
OIG recommends that the Centers for Medicare & Medicaid Services find a way to work with drug makers to improve the reliability of pharmacy claims and verify enrollment. CMS should also explore ways to make coupons universally identifiable. The OIG got no argument from the U.S. Department of Health and Human Service. In an attached reply, HHS Secretary Marilyn Tavenner agreed with all of the recommendations.
Brand-name drug makers regularly use coupons to woo consumers and boost sales. But inducing Medicare Part D beneficiaries to use coupons is illegal. So drug makers are supposed to use safeguards to ensure these consumers do not use coupons to obtain prescription medicines.
But a new report finds the efforts are lacking. As many as 7% of seniors report using coupons to purchase prescription drugs, which amounts to some 2 million people relying on coupons when they should not be able to do so. There are about 36 million Medicare Part D beneficiaries.
The implication is that Medicare is paying too much for some medicines. Why? Coupons may increase costs if these encourage consumers to purchase more expensive brand-name drugs instead of lower-cost generics. Brand-name drug makers, you may recall, have been increasingly relying on coupons to sustain market share.
The report, which was conducted by the Office of the Inspector General of the U.S. Department of Health and Human Services, did not provide an estimate of what coupons are costing Medicare. But the agency did note it is considered to be a kickback to entice consumers to use coupons to purchase medicines that are paid for by Medicare Part D or other federal health-care programs.
This sort of activity would constitute a kickback, which the OIG highlighted in a ‘special advisory bulletin’ issued late last week to remind drug makers and pharmacies. A spokeswoman for the Pharmaceutical Research and Manufacturers of America, the trade group for brand-name drug makers, says “we are in the process of reviewing the OIG report and special advisory bulletin on copayment coupon use.”
The OIG surveyed 30 drug makers that manufacture the top 100 Part D brand-name drugs for which coupons are offered and generate the highest Medicare expenditures. The agency also reviewed certain safeguards used by drug makers and interviewed staff at various organizations involved in pharmacy claims transactions.
So why is there a problem? For instance, the OIG found that nearly all of the coupons obtained had a printed notice, but only 80% had a comparable notice on the coupon web site. Moreover, 75% had an eligibility question online or over the phone. But only 3% had a tracking mechanism on their web sites to prevent a patient from changing an answer to the eligibility question to obtain the coupon.
Approximately two-thirds of the drug makers surveyed provided notices to pharmacists for at least one of the coupon formats they offer. Put another way, one third did not. And of those drug makers that did provide notices, the OIG found that of 40 coupons obtained and reviewed, 42% did not have notices with specific language directed to pharmacists. Pharmacists are busy and so added language can help.
Here is another inadequate feature of the coupons – the OIG found that manufacturer notices to patients and pharmacists “only communicate information stipulating the terms and conditions of copayment coupons. These notices cannot necessarily stop coupons from being processed to purchase drugs paid for by Federal health care programs,” the OIG report states.
Also, the behind-the-scenes method for processing insurance claims may not stop all coupons from being processed for drugs paid for by Medicare Part D because drug makers cannot accurately identify a consumer’s enrollment status. The reason is that drug makers use proxy data to identify Part D enrollees, since they are prohibited for privacy reasons from using actual data. But this is unreliable.
OIG recommends that the Centers for Medicare & Medicaid Services find a way to work with drug makers to improve the reliability of pharmacy claims and verify enrollment. CMS should also explore ways to make coupons universally identifiable. The OIG got no argument from the U.S. Department of Health and Human Service. In an attached reply, HHS Secretary Marilyn Tavenner agreed with all of the recommendations.
Time to cut the co-pay coupons, guys!
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