Prescription assistance from drug companies--what's the catch?
July 15, 2013 8:20 AM   Subscribe

What do pharmaceutical manufacturers get out of "assistance" programs? Why would they give away expensive products for free or at a drastically reduced cost?

Today I stumbled on an assistance program for a very expensive medication that a family member takes on a daily basis. With insurance, he pays $10/dose, but in this "guarantee program," he would pay nothing. That's a delightful bargain for him, but I have a difficult time believing that the pharmaceutical company has anything but their own best interests at heart. What do they get from offering their product at (what appears to be) no profit? What's the catch? The only qualifications appear to be that the patient is over 18, has a valid prescription, and is not receiving any state or federal medical assistance (Medicaid, etc.)

It seems a little too good to be true.
posted by corey flood to Health & Fitness (23 answers total) 5 users marked this as a favorite
It's good marketing to encourage doctors to prescribe the drug even if a patient isn't sure if they can afford it, basically.
posted by deludingmyself at 8:22 AM on July 15, 2013

In other words: they'd rather have more docs prescribe their drug, even if they're not making money on all those prescriptions, than have docs get/stay in the habit of prescribing a competitor's alternative. Also it's good PR.
posted by deludingmyself at 8:24 AM on July 15, 2013

My sister has been on a very expensive biopharmaceutical for arthritis for about three years. She has used their assistance program a couple of times between jobs, and there was no catch. I think the companies just consider the good press they get for these kinds of programs, and it keeps patients on the drug. My sister now has insurance once again which is covering most of the cost.
posted by kimdog at 8:24 AM on July 15, 2013 [2 favorites]

Well, it may be odd, but a lot of people who work in pharmaceutical research, really get a warm glowy feeling if they know their drugs are helping people.

The drug companies may discover that their agreements with governments and insurance compaines will cover the cost of the drugs (research, advertising, development, testing, etc.) They don't want to deny the drug to people who need it just because of the expense.

Being able to say that X number of scrips for Product 7, have been written is good. The more people taking the drug is good. People getting well or staying healthy is good.

Enjoy the drug!
posted by Ruthless Bunny at 8:24 AM on July 15, 2013

Well I'm cynical and I think that it is in their best interest. American drug prices are much higher than elsewhere due to lighter regulations, which is why there is talk of seniors taking bus trips to Canada to buy medicine at cheaper prices. With a guarantee program, they can placate the biggest voting block and prevent politicians from implementing regulations that will put control over prices and lower their profit margins.
posted by I am the Walrus at 8:26 AM on July 15, 2013 [4 favorites]

They avoid political pressure to lower their prices for all consumers by offering it free to a small minority. They decrease the perception of big evil pharma. Or I am feeling cynical today.
posted by SyraCarol at 8:27 AM on July 15, 2013 [9 favorites]

Some also collect marketing information in a secondary or tertiary format - they gather basic information about your health but I don't think socieconomic status except maybe "what's your copay" ... I read a blog post about it a while back from someone who answered for that but I can't find it - to have demographics for internal information. I think they also mentioned being handed off to a third party for a "free" disposal container (marketing information provided in exchange - that might have been socioeconomic oriented questions).
posted by tilde at 8:31 AM on July 15, 2013

Generally the medication itself doesn't cost much after they've figured out how to make it. The marginal costs of making more pills are generally quite low, so they can profit on an extra sale even when the price is significantly lowered. If the insurer is still paying what they were before and the pharmaceutical company is just forgiving/refunding the copay, the drug is still costing plenty. Plus, it's good PR and they retain market share that might otherwise go to a generic competitor.
posted by jon1270 at 8:31 AM on July 15, 2013 [3 favorites]

Companies also give "assistance" to cover copays for their more expensive / profitable drugs. The copay is often negligible compared to what the insurer is paying, and the program encourages the patient to ask for it. Programs for people without insurance are cheap PR unless their production line is 100% saturated.
posted by a robot made out of meat at 8:32 AM on July 15, 2013 [1 favorite]

If you listen to Act One of this episode of This American Life, all will be revealed: "Someone Else's Money".

Essentially, as explained above: your insurer puts in a co-pay to signal to you that there is a cost associated with the medication, and the cost varies depending on which variant of nearly identical brands you choose (or your doctor prescribes). Medication X might have brand A and brand B. Brand A is $100. Brand B is $200. Your insurance may slap a co-pay on Brand B to encourage you to choose A over B. To stop this, drug manufacturer of Brand B creates programs to pay the co-pays, thus removing the incentive to the consumer to use to Brand A.
posted by girlpublisher at 8:36 AM on July 15, 2013 [9 favorites]

There's an act in this (few years old) episode of TAL that covers prescription drug coupons and their role in driving up the overall cost of insurance.
posted by gaspode at 8:37 AM on July 15, 2013 [3 favorites]

To expand on that, assume that the company sets up a production line capable of making 100k doses of the drug thinking that there will be demand for at least 80k from insured patients paying full price. As long as the other 20k don't end up in the hands of people with insurance, giving them away costs basically nothing.

There's also a not-so-subtle effect on doctors. Doctors use the medicines that they're comfortable with and have experience with. If I can give an indigent uninsured patient drug A for free (when older drugs B and C might cost them $30-100/month), that means that I will get comfortable with drug A and probably end up writing it for my insured patients. Otherwise I might believe the published data that A is no better than B or C and just never try it.
posted by a robot made out of meat at 8:45 AM on July 15, 2013

They'll also use your data and sell it to companies that compile data about people for target demographics. So in the future, if some company buys a list of "people over the age of x, living in X State, likely to suffer from X illness," you're on it.
Your doctor is bound to confidentiality about which drugs you use, they're in more of a gray area.
posted by Omnomnom at 8:58 AM on July 15, 2013 [2 favorites]

Pharma companies are big greedy corporations with big fat profit motives--but they are also dedicated to improving human health. And sometimes do that even when there is no chance of profit whatsoever. Merck has been giving away drugs to fight river blindness in Africa for 25 years.

I have no idea what other motives (marketing or otherwise) drive the assistance programs in the US, but don't rule out altruism completely....
posted by Sublimity at 9:25 AM on July 15, 2013

In economics, this would be a form of price discrimination. Basically, if you can sell the item to different groups at different prices, in many markets you can make more money than simply selling it at the same price to everyone.

Some other examples would be:
- journal subscriptions - a university pays a lot more than you or me
- 'concession/child' tickets

So, charging people who can afford it lots of money, while giving it to people who can't afford it relatively cheaply makes them a lot more money in the long run. And, as mentioned by people above, it makes doctors more likely to prescribe it, the general public and their researchers happy as the people who need it can get it, etc.
posted by Ashlyth at 9:42 AM on July 15, 2013 [1 favorite]

I used to work for a company in Canada that had a department full of Reimbursement Specialists. Their sole jobs was to help patients find any and all funding (private/public/manufactures) immediately after the prescription was written for very expensive drugs. This service was funded by drug companies. I guess the idea is, drug companies want people on their drugs because once you're on, then revenue will continue with each refill. Doctors liked this because they just had to write the prescription and they didn't have to worry about patients not being able to afford the medication.
For expensive medication (we dealt with medications that average $1000 per refill), the drug companies don't mind paying a few bucks as the bulk is covered by other sources (in your case, the insurance company). Their goal is to get people on their drug and they will do everything they can to make this happen. This includes making life easier for doctors and patients.
posted by drug_dealer73 at 10:08 AM on July 15, 2013

I have no idea what other motives (marketing or otherwise) drive the assistance programs in the US, but don't rule out altruism completely....

You all know that there are actual compassionate and caring human beings who spend their lives working in drug development: scientists, physicians, research coordinators, regulatory specialists, secretaries, lab techs, IT people, etc. Many of the physicians and scientists could have done a number of other things but wanted to apply their skills and talents to developing new medicines to help as many people as possible with as few side effects as possible.

So please don't be entirely surprised that drug companies may provide these programs because they want as many people as possible to benefit from their medicines. And as several people noted above, companies recognize that not everyone can afford all medicines (given the overall mess of our healthcare financing system), and that there's no benefit in denying access to drugs to patients who truly cannot afford them or don't have insurance that covers them.

I've been in the drug development industry for 5 years and I have yet to meet someone who doesn't want important medicines to get to as many patients needing them as possible.
posted by scblackman at 10:27 AM on July 15, 2013 [2 favorites]

A lot of patient assistance programs only cover you for a certain dollar amount per year -- by the time you use up that dollar amount, you're hooked on the drug and decide it's working so well that you'll scrape together and find a way to pay full price for the rest of the year. This is how Remicade and Humira assistance work, if I recall correctly.
posted by telegraph at 10:27 AM on July 15, 2013 [1 favorite]

I'm on an assistance program. It helps that the medication works really well for me, but I get such warm fuzzy feelings for the drug company every time I take my medication that you wouldn't believe it. It's made me more likely to recommend this particular medication to others, too (again compounded by the fact that it works really well for me). The doctor who prescribed it and got me on the assistance program also seemed very pleased with the program, which I'm guessing made him feel more positive to the medication than he did before.
posted by jaguar at 10:41 AM on July 15, 2013

Oh, and the assistance program is causing me to actively vet future insurance options to make sure they'll cover the medication. So in my case, I haven't had to switch to a cheap generic during my unemployment, and the manufacturer will eventually start getting paid for the meds they've been able to keep me on. I doubt I'm an isolated case.
posted by jaguar at 10:45 AM on July 15, 2013

I can't be certain in all cases, but I believe that at least some of these are set up so that the company donates to its own foundation, which then purchases the drugs at wholesale cost and gets it to patients. The donation is a tax write-off. Either that, or the company is able to write off the difference.

In 2005 the industry group standardized these services to a degree, making them more visible and accessible, and probably increasing peer pressure on companies to offer them.
posted by dhartung at 11:23 AM on July 15, 2013

A lot of patient assistance programs only cover you for a certain dollar amount per year -- by the time you use up that dollar amount, you're hooked on the drug and decide it's working so well that you'll scrape together and find a way to pay full price for the rest of the year. This is how Remicade and Humira assistance work, if I recall correctly.

Notice that most of the drugs in patient assistance programs are long-term, if not life-time use recommends.
posted by BlueHorse at 7:52 PM on July 15, 2013

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