Utilization and Spending Impact of Prescription Drug Coupons in Massachusetts

Abstract

Research Objective: To estimate whether manufacturer‐issued prescription drug coupons drive brand utilization over generic alternatives among commercially insured patients. Study Design: Prescription drug coupons are discounts offered by pharmaceutical manufacturers that reduce a commercial patient’s cost‐sharing responsibility. Manufacturers assert that coupons increase affordability and adherence, while payers and pharmacy benefit managers argue that coupons drive use toward high‐cost drugs when lower cost alternatives may be available, increasing health care system spending. Massachusetts authorized coupon use for commercial patients in 2012, but prohibited coupons for any branded drug that has an “AB‐rated” generic equivalent. Population Studied: Massachusetts’ Medicare population and a sample of commercially insured patients representing roughly 40% of the Massachusetts commercial market. Principal Findings: The relative use of the branded drug versus generic alternatives was significantly higher in the commercial population for 10 of the 14 drug sets. For four branded drugs, use trends were similar in commercial and Medicare populations. Across the 14 sets, spending was 18% higher on average per set than it would have been if commercial members used the generic close therapeutic substitutes as often as the Medicare population did, representing approximately $1.4 million in additional spending per drug per year in the data sample. Extrapolating to the entire commercial market in Massachusetts, we estimated that the spending impact would be an excess of approximately $3 million per drug per year, and $44.8 million total per year, for the 14 study drugs. Conclusions: Coupon availability was associated with moderately higher utilization of branded drugs relative to use of generic close therapeutic substitutes, and higher total spending. Implications for Policy or Practice: When evaluating drug coupons, policy makers should consider the tradeoffs between increasing access and higher health care system spending.