Coupons for brand-name drugs are misleading, experts say

At first, price-slashing discount coupons for expensive drugs may appeal to consumers on an everyday basis, but a look behind the scenes suggests that using brand-name medications may possibly yield little, if any, net savings.

Among 2016’s most notable prescription cost headlines was the steep price hike newly attached to the life-saving, branded EpiPens, used to treat severe allergic reactions in emergencies. When the public reacted negatively to the expense, manufacturer Mylan offered coupons for up to $300 off; other companies have commonly made similar gestures.

Two new studies, however, suggest that coupons may not give as much bang for the buck as commonly thought. One, just published in the New England Journal of Medicine and another to be released by the National Bureau of Economic Research sought to quantify the results.

“[These] seemingly generous coupons may be making drug costs higher for everyone,” said Margot Sanger-Katz, a correspondent for The New York Times’ health care publication, The Upshot.

Researchers who examined brand-name drugs for which generic equivalents existed found that coupon offers persuaded consumers to stick with the pricier version, but also determined that consumer prices on those “discounted” brands rose faster than generics.

The studies concluded that the brand loyalty incentive created extra spending on drugs over a five-year period: between $700 million and $2.7 billion. Yet ingredients, and therefore efficacy, of brand-name items and generics are identical.

“These are wolves in sheep’s clothing,” said Leemore Dafny, a Harvard Business School professor and research co-author. “These efforts to help consumers bear the cost of their drugs are actually driving higher spending without commensurate health benefits.”

Worse, coupons can actually compromise coverage. One spokesman said that his company has essentially had to refuse certain high-priced drugs due to the insurance coverage structure.

“It’s one of these things where what superficially sounds like a good thing — giving patients discounts — actually in the long haul ends up costing patients more money,” Steve Miller, chief medical officer at Express Scripts, said.

Such coupon use is banned for Medicare, and the practice is also outlawed in Massachusetts, which insists on generic equivalents.