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Co-pay coupons entice patients to go for brand-name drugs over generics Posted: December 15th, 2011

By Beth Orenstein

Using co-pay coupons to get brand-name drugs for $10 may not be a bargain after all.

If you have a coupon, you often can get a brand-name drug for the same or less cost than you would pay for the generic. But your employer or other sponsor of your health insurance coverage pays more - often much more.

Pharmacy benefit managers fear that growing use of drug co-pay coupons could end up causing health insurance premiums to rise for everyone.

Generics cost less than brand names

According to the Food and Drug Administration, the generics it approves are equivalent to their brand names and have the same strength, potency and purity.

Generic drugs cost up to 85 percent less than their brand-name equivalents. When you buy generics, your plan's share of the cost is much lower.

Brand names are priced higher because they include the cost of the research and development of the drug. When you buy brand names, your plan's share of the cost is much higher. That's true whether your co-pay is $10 or $25.

If just half the people in your health plan opt for brand names over generics, it could cost your plan significantly more. A recent study by pharmacy benefit managers found that co-pay coupons could increase the cost of drugs by $32 billion over the next 10 years.

Eventually, pharmacy benefits managers argue, health insurance companies will have to raise their premiums to cover the additional cost of the brand-name drugs that many people continue to use.

Manufacturers: Coupons provide access

On the other side, drug manufacturers argue that co-pay coupons help people buy the drugs they couldn't otherwise afford. When patients have access to the medications they need, they take them, helping to keep their health care costs down, according to proponents of coupon programs.

The issue is expected to explode over the next few years as patents on many commonly prescribed drugs expire and more generics become available. Drug manufacturers have stepped up their use of co-pay coupons in response.

Some health insurance plans have responded by taking brand-name drugs off their list of covered drugs when generic equivalents are available.