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Drug Companies Using "Coupons" to Hike Prescription Prices

The pharmaceutical industry is increasingly using drug coupons to hike the prices for relatively inexpensive drugs. While patients may not be responsible for the true cost of the medications, the exorbitant prices set by drug companies are reflected in rising healthcare costs.

Rising Drug Prices

Drug prices have soared in recent years, leading to record profits by pharmaceutical companies. The Centers for Medicare and Medicaid Services recently issued a report on the prices of over 5 thousand drugs covered under Medicare Part B or Part D.

The data revealed that the average price of all Part D drugs on the market in both 2015 and 2011 increased 83.6 percent. The prices for many low-cost drugs skyrocketed by more than 1,000 percent. For example, the average cost of the asthma drug mannitol increased more than 2,000 percent over the five-year span.

Drug Coupons Mask High Prescription Prices

As the Los Angeles Times reports, coupons allow drug companies to raise their prices without drawing the ire of consumers. “Via a coupon, the manufacturer can make its high-priced drug look as cheap as these over-the-counter medicines,” Matt Schmitt, an assistant professor at the UCLA Anderson School of Management, explained.

Often referred to as “copay cards,” drug coupons lower or eliminate the out-of-pocket costs patients must pay for certain prescription medications. They are available via direct mail, online websites, magazine inserts, and physicians’ offices. Despite the deep discounts to consumers, the drugs, of course, aren’t really free. The patient’s insurer is left footing the bill for the expensive medication.

In one example detailed by The Times, Horizon Pharma charges $2,061 for a month’s supply of its pain reliever Vimovo. The costly prescription is a combination of the generic versions of Aleve and Nexium, both of which are available over-the-counter for a fraction of the cost of the prescription drug. After acquiring the rights to Vimovo in 2013, Horizon Pharma raised its price for 60 tablets from $115 to $799. It has instituted seven additional price hikes over the past two years. Not surprisingly, the drug company’s CEO also saw his compensation rise. Timothy Walbert’s pay package was valued at $93.4 million in 2015, which represented a 10-fold increase from the prior year.

Horizon Pharma is just one example. As reported by The Times, a recent study concluded that spending on 23 medicines sold through coupons was approximately $2.7 billion higher over five years than it would have been without the benefit of co-pay cards. The federal government prohibits the use of coupons when purchasing drugs through Medicare health insurance, and several states have also enacted bans on co-pay discounts. However, given the increasing use of drug coupons, additional steps are needed prevent pharmaceutical companies from exploiting this loophole.

If you or someone you care about has suffered serious harm due to a defective drug or other medical product, you may be entitled to compensation. To discuss your legal rights, don’t hesitate to contact a San Diego injury lawyer at the Law Offices of Robert Vaage for a free consultation.