Public Employee Press

Union welfare fund hits nine drug companies with lawsuit
The DC 37 Health and Security Plan and a consumer advocacy group charge that discount drug coupons are illegal and hurt the bottom line of drug benefits.

The union's welfare fund has partnered with a consumer advocacy coalition to sue nine drug companies, charging that their discount coupon programs are illegal.

On March 7, the DC 37 Health and Security Plan Trust and the coalition filed the lawsuit, which contends that the programs appear to save patients money while shifting the cost to insurance and benefit plans and driving up the long-term price of prescription drugs.

"The use of coupons creates an illusion of savings," DC 37 Executive Director Lillian Roberts said. "The truth is that this harms our members because it drains our resources and threatens the long-term financial health of our members' drug benefit."

Drug companies use the coupons to promote the sale of high-profi t brand-name drugs that compete with equally effective but far less expensive alternative drugs, usually generics.

The union's prescription plan is generic-based where generic drugs have very low co-pays.The lower generic co-pays encourage members to use the generic equivalents approved by the U.S. Food and Drug Administration instead of the more expensive brand drugs.

Patients who present coupons at retail pharmacies get the brand medication free or for a small fee instead of making the co-pay, and the drug plans lose out because they don't get the usual co-pays but end up paying the higher ingredient cost for the brand medications.

"The continued use of these deceptive coupons will increase the long-term costs to health plans and consumers by billions of dollars, contributing to the rise of health-care costs and the increasing loss of coverage and benefi ts for Americans," said Wells Wilkinson, director of the Prescription Access Litigation Project at Boston-based Community Catalyst, a consumer group involved in the lawsuit.

Coupons will drive up the cost of prescription drugs by $32 billion nationwide by 2021, said a recent report by the Pharmacy Benefit Manager Trade Association.

Other plaintiffs include the Sergeants Benevolent Association and New England Carpenters and Pipefi tters Local 572. Their plans provide drug benefi ts for municipal employees, plumbers and carpenters and are struggling to hold down costs as they face the relentless increase in drug prices.

The consumer coalition filed the suit in New York City, Philadelphia, Newark and Chicago against Abbot Laboratories, Amgen Inc., Astra Zeneca PLC, Bristol-Myers Squibb Co, GlaxoSmithKline PLC, Merck & Co. Inc., Novartis AG, Otsuka and Pfizer Inc.

The coupons (including time-limited discount cards) subsidize all or most of the consumer's co-payment, in effect amounting to bribery, says the lawsuit. Massachusetts prohibits the coupons under an antikickback law and the federal government bans them from Medicare and Medicaid as kickbacks.

Over the last three years, drug makers' use of co-pay coupons to promote more expensive drugs has skyrocketed. These coupons are advertised online and distributed through physicians' offices and pharmacists.

The programs create brand-name loyalty. Besides harming drug plans financially, the coupon programs may hurt patients by making them reach their caps sooner, leaving them with the choice of paying out of pocket or forgoing their expensive drugs.

Consumers are also unaware that enrolling in coupon programs online and downloading coupons from company websites may give drug firms access to their private medical history of prescription drug use.