Massachusetts gets it

Massachusetts gets it

Massachusetts is the only state in the country that doesn’t allow consumers to redeem manufacturers’ coupons for prescription drugs, according to the Boston Globe. There’s a move afoot to end that distinction:

“Our consumers should have the same choice as every other state in the union,” said [Peter] Katoujian, House chairman of the Joint Committee on Public Health. “This is about consumers, not about industry.” Katoujian has introduced legislation that would allow pharmaceutical companies to offer discounts.

I’m all for consumer choice, but that doesn’t mean Katoujian’s right. Pharmaceutical companies offer coupons to neutralize the effectiveness of health plans’ formularies. As a hypothetical example, assume a health plan sets the copay of generic Prilosec (omeprazole) at $10 and brand name Nexium at $40. If Nexium offers a $35 coupon, it’s cheaper for the consumer to favor Nexium but it costs the health plan a lot more money. Nexium’s manufacturer accepts a lower overall margin than it would have earned without the coupon, but they pick up a sale they may have otherwise lost.

A Harvard Medical School professor quoted in the article says:

”This is like the pusher in the school yard saying, ‘Do you want to try some of this? It’ll make you feel good.’ People get used to being on a certain drug for their cholesterol or arthritis and then they’re on it for life,” he said.

It’s a colorful quote, which is probably why it was published, but I don’t think he has the analogy quite right. Here are two that I think are more accurate:

  • Some states outlaw radar detectors. Why? To preserve the effectiveness of radar guns as a law enforcement tool.
  • Some jurisdictions outlaw armor piercing ammunition. Why? To preserve the effectiveness of police officers’ bullet proof vests.

Same deal here. Differential co-pays help health insurers and purchasers –including governments– achieve their cost and quality goals. Outlawing drug coupons helps preserve the effectiveness of this tool. It’s a conscious tradeoff against consumer freedom.

It’s still not an open and shut case –you could even argue that health plans should be forbidden from using cost-driven formularies– but there’s nothing inherently flawed with Massachusetts standing alone on this one.

April 7, 2006

One thought on “Massachusetts gets it”

  1. Well, now, wait a minute. Aren’t we neglecting the flip side of this? Far more prevalent than manufacturers offering coupons for name-brand pharmaceuticals is the practice of health plans offering coupons for generic drugs to encourage greater use of them versus the brands. Might we not be throwing the baby out with the bathwater with such legislation as is proposed here?

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