Trade union health plans sue 8 pharma companies over drug coupons

Coupons for drug co-payments are illegal and drive up long-term health-care costs for all, a consumer group and four trade-union health-insurance plans said Wednesday in announcing lawsuits against eight pharmaceutical companies.

Drug companies use co-pay coupons to entice patients to stay with higher-cost brand-name drugs and not switch to lower-cost generics.

Coupons reduce the consumer’s out-of-pocket cost at the pharmacy counter, but the payment process keeps that information from the health insurer, which still pays the previously negotiated price to the drug company. With no savings from generics, health plans will need to charge patients more to keep up with rising costs, the lawsuits say.

The lawsuits were filed in federal courts in Philadelphia, New York, Newark, and Chicago. The companies being sued are Abbott Laboratories, Amgen Inc., AstraZeneca P.L.C., Bristol-Myers Squibb Co., GlaxoSmithKline P.L.C., Merck & Co., Novartis AG, and Pfizer Inc.

A Pfizer spokesman defended the coupon program and said the company would contest the suit. Spokesmen for other companies declined comment or could not be reached for comment. A trade group, Pharmaceutical Research and Manufacturers of America, said the coupons helped patients get the best treatment and control out-of-pocket costs.

The named plaintiffs, who are working with class-action law firms, are the health-care plans for American Federation of State, County and Municipal Employees District Council 37, the Sergeants Benevolent Association, the New England Carpenters, and the Plumbers and Pipefitters Local 572.

The Boston-based consumer group Community Catalyst, which is backing the effort, does not have any 2012 funding from insurance companies, a spokeswoman said.

Wells Wilkinson, director of the group’s Prescription Access Litigation project, said health-plan beneficiaries working for self-insured private companies, or state and local governments, will also be hurt long term by coupons and noted that federal Medicare and Medicaid programs prohibit the use of coupons for that reason.

The coalition includes three of the named plaintiffs and similar organizations around Philadelphia.

“The coupon program is really one of those bait-and-switch things because people are buying the brand-name drugs without knowing that their prescription-drug plan is bearing a much higher cost than with generic drugs,” said Cathy Scott, president of AFSCME District Council 47 in Philadelphia, which is part of the coalition but not a named party in the lawsuits. “It is a serious threat to the health and welfare funds similar to ours.”

Perhaps most prominently, Pfizer has offered coupons for its cholesterol drug Lipitor. “While many health plans have raised their co-pays and/or are encouraging switching to generic medications to achieve cost-savings, these treatments may not be appropriate for all patients,” Pfizer spokesman Chris Loder said in a statement.