Christina Polomoff, PharmD, BCACP, BCGP, discusses the differences between manufacturer coupons and cash cards and how they financially affect health plans and pharmacies.
Christina Polomoff, PharmD, BCACP, BCGP, is an assistant clinical professor at the University of Connecticut School of Pharmacy and population health clinical pharmacist at Hartford HealthCare Integrated Care Partners in Wethersfield, Connecticut.
How do pharmaceutical manufacturer coupons and pharmacy network discount cards work, who benefits, and who does not?
Polomoff: So, there is a huge difference between these 2 types of categories. You'll see that in our presentation we do split it up. We have our manufacturer-sponsored prescription coupons and then we have our drug discount cards, or pharmacy network discount cards, which we refer to as cash cards.
The manufacturer-sponsored coupon cards are from pharmaceutical companies; they focus on brand only medications. This is where the manufacturer has the ability to influence the patient toward a specific drug. For that reason, it's prohibited to use with government programs like Medicare and Medicaid.
These coupons can be applied for patients that have commercial insurance. They're applied at the point of sale. They insulate the patient from the higher co-pay when using a brand name drug. That is in turn going to reduce the co-pay by either a percent or a specified dollar amount. Those types of coupons do have a limit or expiration. It could be a year, for example, when the coupon expires, and the intent there is that the patient will build some brand loyalty during that time. When the coupon expires, they will hopefully continue that brand medication. If they are not able to afford it, then they'll either have to switch to another alternative or, in some cases, they stop the medication altogether, which could be problematic and lead to dangerous adherence gaps.
For these types of manufacturer coupons, they encourage the use of brand name drugs, which in turn is going to affect managed care organizations. It's going to undermine the tiered formulary system that these managed care organizations have in place to limit drug spending. So, that could, therefore, cause increases in rising expenses to our private insurer, because the remaining portion of that drug cost after the discount is applied is going to be much higher than the preferred equivalent alternative.
I'll talk now about cash cards; that's what our presentation focused on. These are the companies that you've probably heard about a lot. They've been more advertised recently, like GoodRX and Blink, as an example. You can access them on your phone or on the internet. They're pretty user friendly to access. These are purely cash businesses; it's like a cash transaction for a prescription. So, it's completely outside of the insurance program. A patient would not combine this type of card with their insurance plan. And for that reason, since there's no claim going toward insurance, it's not going toward their plan deductible or out-of-pocket maximum. So, that's one thing patients need to be cognizant of. A big difference with these cash cards is that they can be used for both brands and generics compared with the manufacturer coupons, which are only for brand name medications.
There are different types of cash cards. There are pharmacy-owned cash cards, where they've basically created their own cash [card] business. There's also the most common type, which is where a PBM [pharmacy benefit manager] is owning that cash card business. You'll see in the presentation that we break it out into private-owned such as Blink, who created their own PBA [pharmacy benefit administrator] vs an aggregator type cash card, like GoodRX.
Going back to your question in terms of who benefits and who does not, for these types of cash cards, there are some implications that we have to think about. It's not so intuitive. We're constantly thinking about manufacturer coupon cards, and therefore, accumulator [adjustment] programs have come into place for that. But for these cash cards, there really is no claim at all. There's no visibility, no transparency into that transaction. When a patient uses a cash card at the pharmacy, that doesn't get captured. For that reason, it reduces our ability in a health care organization to see if that patient is filling the medication. Are they adherent to their monthly fills or their every-3-months fills? What's going on with your medication? It's hard for us to see that when there is no claim being captured.
So, that can affect the treatment plan for the patient. And it can also affect our Medicare Part D star ratings. These are in place through CMS. And these adherence measures are for diabetes medications, hypertension medications, and statin medications. Basically, patients, to satisfy these measures, they need to be adherent to their chronic care disease medications at least a certain percent of the time of the year, at a minimum 80%. When we have patients going outside of their insurance plan and using these cash cards, those claims do not get captured. So, that can lower their adherence, in terms of what CMS will see, and, therefore, could bring down the star rating of the plan. These measures are triple weighted, so it can have a significant impact on the plan.
In terms of the impact to the pharmacies, anything that in the patient's eyes will reduce the cost is going to boost loyalty. So, these could increase loyalty to that pharmacy, and it could increase overall revenue, because patients are more likely to just walk into those stores and buy anything. So, that's going to increase more shoppers and revenue. But on the back end for the pharmacy, it reduces their per-claim revenue, because there's a transaction fee involved and there's a fee for the pharmacy to even participate in this cash card network, to be one of the preferred pharmacies. That can affect pharmacy revenue as well as the indirect costs associated, so the loss of time for revenue-generating tasks and wellness initiatives, like immunization, counseling, medication therapy management, all of that can be taken away if there's too much time spent on processing these cash cards.