Class Action Lawsuits Filed Over Drug Co-Pay Subsidy Programs

Eight major drug manufacturers face class action lawsuits over popular co-pay coupon programs, which reduce the amount consumers pay for prescription drugs, but may increase the overall costs for the medical industry. 

Plaintiffs say that while it may appear that the coupons lower the cost of the drugs, they in fact raise it.

Community Catalyst, a consumer coalition group, says that the co-pay coupons will drive up the cost of prescription drugs because they work as disincentives to use generic drugs, which are cheaper overall.

The drug companies targeted by the lawsuits, include Abbott Laboratories, Amgen Inc., AstraZeneca, Bristol-Meyers Squibb Co., GlaxoSmithKline, Merck & Co., Novartis AG, and Pfizer Inc. Some of the drugs named in the complaints include Celebrex, Crestor, Enbrel, Lipitor, Nexium and Vytorin.

According to allegations raised in the complaints, the drug makers offer discounts on co-pays, but ultimately drive up the costs for insurance companies. The lawsuits define the coupons as kickbacks and charge the companies with racketeering, violation of interstate commerce laws, fraud and commercial bribery.

The complaints quote the American Medical Association, which noted that “routine forgiveness or waiver of copayments may constitute fraud under state and federal law.”

While many of the drug makers have not responded to the charges, Pfizer has indicated that it will defend the coupons in court and said the goal is to help patients cut out-of-pocket expenses, particularly for drugs that have no generic equivalent.

A report by the Pharmaceutical Care Management Association last November estimated that the coupons will increase the cost of prescription drugs by about $32 billion over the next decade.