Drug Manufacturer Coupons and Medicare

Know Before You Go

Advertising for prescription drugs has skyrocketed in recent years, promoting new brand-name drugs that treat almost every ailment known to man.  It's no secret that the pharmaceutical industry is BIG business, and drug companies spend big money to get new medications out to the masses in several different ways - one method is through the media and another method is through coupons and rebates.

To entice consumers to purchase or switch to a particular medication, drug manufacturers will often offer coupons.  However, many people don't realize that offering these coupons to consumers who are on federal drug programs such as Medicare or Medicaid is actually illegal.

The federal law; "The Anti-Kickback Statute" makes it a 'criminal offense to knowingly and willfully offer, pay, solicit or receive any remuneration to induce or reward the referral or generation of business reimbursable by any Federal health care program." 

In other words, using a coupon to purchase a prescription drug in conjunction with a Medicare Part D Plan is not allowed.  There are safeguards in place, as most of the coupons do state (in very small print) that they are not to be used by Federal program beneficiaries, and many knowledgeable pharmacy employees will not allow you to use them if you are also using your Part D plan.

A protection provided by the anti-kickback statute is that it might derail physicians from prescribing and Medicare beneficiaries from choosing brand-name drugs over lower priced generic drugs just because there is a coupon available.  However, Medicare members often feel like they are punished for having a Part D Plan when they are unable to take a generic medication.

Options Available when Your Copayments Cost too Much

There are a few options available to those who are on brand-name drugs and are being charged high copayments.

1.  Patient Assistance Programs (PAPs) - These are programs created by the pharmaceutical companies to provide free or discounted medicines to people who cannot afford them.  Each program has its own qualifying criteria.  To find out if a medicine that you are on has a PAP; call your Medicare Insurance agent (Upchurch Insurance Services), doctor's office or pharmacist to see if they can assist you.

2.  Generic drugs come on the market daily!  Be sure to check with your doctor OFTEN to see if any of your medications have a lower-cost alternative available. 

3.  Extra Help for Prescription Drugs is a program provided through the Social Security Administration for those who meet certain income and resource requirements.  Applications can be completed online at ssa.gov, by phone (800-772-1213), or in person at your local Social Security office.

4.  Do not use your Medicare Part D Plan for medications that can be purchased much cheaper through the use of coupons, rebates or pharmacy discount plans.  Although, an important note to make:  Any medication purchased without your Medicare Part D Plan will not count towards your deductible, coverage gap or catastrophic gap coverage.

Medicare Part D & January Sticker Shock

Our office phone rings…A LOT…during the month of January with folks who are in what I call pharmacy-induced sticker shock.  The general idea of the calls is the same: “I only paid $44 for my prescriptions in December, and the pharmacy said my total for January is $360.  The pharmacy said it’s because of my new insurance plan!”

Well, not exactly.

Medicare began covering outpatient prescription drugs on January 1, 2006.  Medicare administers this prescription drug benefit through private insurance plans (Part D); however, those insurance companies have to follow the rules prescribed by Medicare.  The rules that seem to have the greatest impact on our clients this year include:

1.        The drug companies must follow Medicare’s prescription drug formulary.

2.       The Medicare Part D annual drug deductible for 2016 is $360.

3.       The insurance plans can/do make changes in premiums, copayments, and coinsurance every single year.

Medicare, not the insurance companies, makes decisions about the drugs that are covered.  Medicare can deem certain drugs to be not covered, or to be covered with restrictions due to things like:

·         A much cheaper generic alternative is available.

·         The drug creates a high risk of danger in the Medicare population (danger of dependency, falls, accidents, etc).

·         Research has shown the drug to be experimental in nature or not an effective treatment.

·         The drug is prescribed for non-medically necessary reasons (often cosmetic).

Medicare also establishes the annual drug deductible ($360 in 2016; up from $320 in 2015).  This is what leads to “sticker shock’ at the pharmacy in January.   Unless your plan does not charge the deductible, the first $360 of drug costs is paid by the consumer.  Once the deductible is met, the plan begins paying a portion of the costs.

However, whether the insurance plan charges the deductible or not is a little misleading, too. 

Consumers should not look at premium and deductible when selecting a Part D plan; but instead, look at the estimated, total, annual costs.  We are finding that the plans who don’t charge the $360 deductible will often have higher monthly premiums or higher copayments for the drugs.  They are recouping that deductible; as it is paid to Medicare by the plan on your behalf.

Another trend:  Prescription drug prices are on the rise.  I’ve yet to hear anyone tell me that they are paying less for their prescriptions.  My best advice:  Find an insurance agent who will review your prescription costs with all of the available Part D plans each open enrollment (or use the Medicare Prescription Drug Plan Finder at Medicare.org), and work with your doctor and your Part D plan’s formulary to make sure that you are on the lowest cost alternatives for your condition(s).