Medicare and the Co-pay Conundrum

Why can’t I use pharmacy discounts with Medicare? One of the biggest shocks people experience when they start Medicare is the cost of medications for rheumatoid arthritis. People who have traditionally used a co-pay card to purchase one of the name brand biologic treatments are usually blown away by the new cost when those co-pay cards no longer work.

Co-pays and RA medications costs

Humira has a co-pay card that makes its purchase cost $5.00 per month if the patient is not using Medicaid or Medicare. According to the Kaiser Family Foundation, the average cost for Humira for a person on Medicare utilizing Part D coverage was $5,471.00 in 2019.1 According to the AARP cost finder, Humira costs range from $4,872.67 to $5,312.39 at the local pharmacies in my area for 2020.2 The reduction is due to the decrease in the donut hole enacted in the Affordable Care Act (Obamacare). 

Therefore, if a person had commercial insurance in 2019 and they were using a co-pay card, their annual cost for Humira was $60.00. When Medicare becomes their drug coverage, the price jumped, on average, $5,411.00.

Co-pay cards as market distortion?

Surely people should not be penalized for going on Medicare. The reason is that Medicare is subject to a 1972 provision of the Medicare Act dealing with kickbacks.3 In essence, the statute classifies anything of value that distorts choice in the marketplace as a kickback. Think of it this way: if I give you something that causes you to take action, then I have given you a kickback according to the 1972 act.3 The General Accounting Office and Federal prosecutors have come to define prescription co-pay cards as a market distortion. Market distortion?

How can this be?

We have to understand that the reason manufacturers use co-pay cards is selfish. They use them to sell products. While we who use biologic medications never chose medications based primarily on price, there is a segment of the community who is deciding to have a biologic or not based on price. 

We can imagine the conversation in the doctor’s office, something along the lines of methotrexate is not working as well as it should, so we need to use a biologic medication. But, we cannot afford it unless it costs much less. The doctor then says, well guess what here is a co-pay program.  If that co-pay program allows us to use the biologic medication, then a market distortion has occurred.  I know what you are thinking: "What distortion? I needed the medicine and this co-pay card helped me pay for it. What is wrong with that?"

Use of medications due to cost

Well yes and no. From the payer perspective, you only started using the medication because you enrolled in a cost reduction program. Without the cost reduction, you would never have used the medication and look at how much Medicare would have saved if you never used the biologic medication. Thus a distortion occurred. We patients who rely on these medications to prevent joint damage and pain do not think of it as distortion; we think of it as life-giving.

Would Medicare recipients ever be able to use co-pay cards?

Recently the Trump administration proposed then quickly withdrew the suggestion to allow Medicare recipients the ability to use co-pay cards.4,5 This following the administration estimate that such a move would add $170 billion to Medicare spending from 2020-2029 and increase Medicaid spending by $7 billion.5

We would not want a manufacturer offering money to doctors if they prescribed x medication. That would be something like a bounty per prescription written. I think most of us would feel that such a practice (a classic kickback scheme) is a market distortion.

Co-pay cards usage with Medicare: what do you think?

Would patients distort the market if we were allowed to use a co-pay card when purchasing a Medicare-covered prescription? Would we bypass the use of methotrexate only in favor of using a biologic medication if a co-pay card is offered? Does the amount of the co-pay distort our choice of medication? Is there a better way to reduce prescription costs for Medicare recipients? I believe most of the federal lawmakers are interested in hearing from us, and even if they are not interested, I am interested in hearing what you think.


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