	Introduction

U.S. pharmaceutical manufacturers spend billions of dollars annually on special assistance programs to defray the consumer cost of prescription drugs. Likewise, pharmaceutical manufacturers, along with some state governments and independent charities, operate patient assistance programs (PAPs) that provide free drugs or financial aid to help eligible individuals pay for prescription drugs based on factors including income, medical necessity, and health insurance status. Pharmaceutical manufacturers say their assistance programs are evidence of their commitment to ensure that prescription drugs remain affordable. That is especially true for people prescribed high-cost specialty drugs . However, the authors added that the increased use of coupons could increase costs for other beneficiaries in a health care plan if a payer decided to raise plan premiums, deductibles, or cost sharing to offset some of the expenses of the higher drug utilization. Other studies by industry analysts and the Department of Health and Human Services' Office of Inspector General (HHS OIG) have found that although the assistance programs expand access to drugs, they also bolster prices of prescription products. A drug discount coupon may reduce the amount an insured consumer has to pay out of pocket for a drug, but it generally does not reduce the price an insurer or government program is charged for the drug. Drug coupons may not be used in conjunction with federal programs such as the Medicare Part D prescription drug benefit because the coupons may implicate federal anti-kickback law. In the private sector, some health care payers and PBMs have barred enrollees from redeeming manufacturer coupons for certain drugs. Manufacturer coupon offers and PAP assistance grants are designed to blunt health plan cost-sharing requirements by covering a portion of enrollee out-of-pocket payments. The PBM processes the initial drug claim and determines the patient's cost-sharing obligation. Secondary payments can include another insurance policy held by the individual or a manufacturer coupon. Pharmaceutical companies may be liable under the anti-kickback statute if they offer coupons to induce the purchase of drugs paid for by federal health care programs. Regarding coupons, a targeted study of consumers using statins to control cholesterol levels found that the use of manufacturer coupons increased enrollee prescription adherence, but at the cost of higher out-of-pocket spending for consumers and higher costs to their insurance plans than for those using generic drugs or brand-name drugs that did not offer coupons.
U.S. pharmaceutical manufacturers fund a variety of programs to help consumers defray the cost of prescription drugs. Industry assistance includes drug discount coupons, as well as free drugs and cost-sharing payments for individuals with lower incomes or high medical expenses. According to one analysis, drug manufacturers tendered discount coupons for more than 600 brands in 2016. Nonprofit patient assistance programs (PAPs) offered by drug manufacturers and independent charities dispense billions of dollars in assistance annually, placing them among the nation's largest charitable organizations.
Drug manufacturers say the generous aid is evidence of their commitment to patients who cannot afford a prescribed course of medication. Many manufacturer programs are designed to reduce consumer cost sharing for high-cost specialty drugs used to treat cancer, hepatitis C, Crohn's disease, and other serious conditions. Industry analysts and the Department of Health and Human Services' Office of Inspector General say that the programs also are used to bolster prescription drug sales and prices and can increase costs for government and commercial health payers. For example, an insured consumer may use a manufacturer coupon to buy a more expensive brand-name drug even if a lower-cost generic is available. Although the coupon reduces the consumer's cost-sharing obligation for the drug, it does not cut the price paid by the consumer's health care plan.
Federal statutes, including an anti-kickback law, limit the use of coupons and manufacturer donations in conjunction with federal health care programs, such as the Medicare Part D prescription drug benefit. The anti-kickback law in Section 1128B(b) of the Social Security Act prohibits the knowing and willful offer or payment of remuneration to induce a person to buy an item or service that will be reimbursed by a federal health care program. In the private sector, some health plans have barred their enrollees from redeeming coupons for certain drugs or have chosen not to cover certain drugs that qualify for coupon discounts. Other health plans allow or encourage enrollees to redeem coupons for expensive drugs to improve the odds that the enrollees will complete a prescribed course of treatment.
This paper provides background on prescription drug coverage and consumer spending and on the role played by coupons and PAPs.