How to beat the higher cost of co-pays for non-generics? Rebates!
Hmm... It used to be the claim of some drug manufacturers that generic drugs were evil or inferior to the real thing. Now some of them are selling generics. Of course the co-pay for the higher-priced spread is higher, too. How to get around this?
Here's how a co-pay for a medicine is supposed to work: Insurers set up a tiered system where patients fork over a smaller co-pay for cheaper drugs and a higher one for more expensive, brand-name drugs. The setup is supposed to encourage patients to use cheaper generics.
But the drug makers are disrupting that system, according to the WSJ. Increasingly, they are paying part of patient co-pays for brand-name drugs, forcing insurers to ante up for these pricer drugs.
"Initially, we did it quite honestly because we were facing a generic presence in the marketplace," Jim Sage, who manages marketing for Pfizer's cardiovascular drugs, told the WSJ. "We also did it because prescribing decisions were being based not just on clinical factors, but also cost."
Insurers say that the result is cost-shifting from patients to the insurance plan, which results in raised premiums for everyone. Drug makers counter that more expensive co-pays imposed by health plans are making brand-name medicines unaffordable for patients. The WSJ notes that the average co-pay jumped 44% for preferred branded drugs to $26 a prescription between 2002 and 2008, but the overall cost of the same drugs during that period skyrocketed 64%.
That leads some insurers to say that if the drug companies really wanted to help patients, they should just lower the cost of drugs.