Prescription Drug Discount Coupons and Patient Assistance Programs (PAPs)

U.S. pharmaceutical manufacturers fund a variety of programs to help consumers defray the cost of prescription drugs. Industry assistance includes drug discount coupons, as well as free drugs and cost-sharing payments for individuals with lower incomes or high medical expenses. According to one analysis, drug manufacturers tendered discount coupons for more than 600 brands in 2016. Nonprofit patient assistance programs (PAPs) offered by drug manufacturers and independent charities dispense billions of dollars in assistance annually, placing them among the nation's largest charitable organizations. Drug manufacturers say the generous aid is evidence of their commitment to patients who cannot afford a prescribed course of medication. Many manufacturer programs are designed to reduce consumer cost sharing for high-cost specialty drugs used to treat cancer, hepatitis C, Crohn's disease, and other serious conditions. Industry analysts and the Department of Health and Human Services' Office of Inspector General say that the programs also are used to bolster prescription drug sales and prices and can increase costs for government and commercial health payers. For example, an insured consumer may use a manufacturer coupon to buy a more expensive brand-name drug even if a lower-cost generic is available. Although the coupon reduces the consumer's cost-sharing obligation for the drug, it does not cut the price paid by the consumer's health care plan. Federal statutes, including an anti-kickback law, limit the use of coupons and manufacturer donations in conjunction with federal health care programs, such as the Medicare Part D prescription drug benefit. The anti-kickback law in Section 1128B(b) of the Social Security Act prohibits the knowing and willful offer or payment of remuneration to induce a person to buy an item or service that will be reimbursed by a federal health care program. In the private sector, some health plans have barred their enrollees from redeeming coupons for certain drugs or have chosen not to cover certain drugs that qualify for coupon discounts. Other health plans allow or encourage enrollees to redeem coupons for expensive drugs to improve the odds that the enrollees will complete a prescribed course of treatment. This paper provides background on prescription drug coverage and consumer spending and on the role played by coupons and PAPs.