December 16, 2015

(Washington, D.C.)— The Pharmaceutical Care Management Association (PCMA), the trade group representing America’s pharmacy benefit managers, today questioned whether Valeant’s new copay offset program could increase public scrutiny since key aspects seem reminiscent of the allegations that concerned lawmakers about Philidor.

Unlike programs for the poor and uninsured, copay offset programs are designed to encourage insured patients to bypass less expensive drugs (which typically have lower copays) when multiple options are on the formulary. Such practices are illegal in federal programs and have long been under scrutiny by the Health and Human Services Office of Inspector General (OIG) because they are viewed as “kickbacks” that encourage wasteful spending for the profit of an outside third party.

As Valeant notes, “because of government regulation, the cost-sharing program will not be applicable to patients with government insurance.”

“Copay kickback schemes increase drug costs by undermining the formularies used by employers, unions and public programs,” said PCMA President and CEO Mark Merritt. Last week, Mr. Merritt testified before Congress on the issue of rising drug prices.

Copay offset programs are estimated to increase pharmacy spending by $32 billion according to earlier research commissioned by PCMA.

As details of the arrangement emerge, key questions for policymakers, the news media, and others on this new arrangement include:

  • Since copay coupons are banned as illegal kickbacks in Medicare and other federal programs, is Valeant’s program good for the commercial marketplace?
  • What incentives is Valeant offering retailers to dispense brands instead of generics?
  • Since this program only offers an “initial” zero dollar copay, is it a bait and switch?