Last week, the Wall Street Journal did a story on the CVS Caremark attack against the co-pay cards that are so popular with the industry.  I am sorry but only WSJ subscribers can read the entire story.  Jon Roberts, who will become president of the PBM in September, was very outspoken relative to their efforts to block the use of the card against selected brands.  He strongly signaled that this was going to escalate shortly.  The company started blocking about 34 product co-pay cards earlier this year and the results must have been positive enough to move forward beyond this pilot effort.

Noted in every story about co-pay cards in the report from the PBMs is the $32 billion that these cards and coupons will cost the healthcare system over the coming decade.  They also point out that the use of these cards is growing dramatically and they are forcing the use of more costly drugs when less expensive alternatives are available.  PhRMA supports the use of these cards and points out that they lead to greater patient adherence and help make the products more affordable to the patients that need them.  We also recognize this whole issue may be decided by the courts as there was a lawsuit filed against 7 major companies in our industry (view here) earlier this year suggesting that the cards are nothing more than “kickbacks and bribes.”

When doing strategic planning, it is critical to be looking for clues that could give an early indication of what changes could happen in the near future.  In scenario planning, these are referred to as guideposts and planners are instructed to keep on high alert for these signals.  Those of you that are heavily involved in public relations recognize that stories like the one in WSJ last week don’t usually happen by accident.  A writer doesn’t wake up one morning and say, “I think I will look into co-pay cards” as this may be interesting to my readers.  The odds are very high that CVS, through their agency, pushed/pitched this story to the paper.  They seem to be ready to really make an issue about the cards and wanted to begin a public campaign alerting the public and the industry that this fight was about to get much bigger.  If there is no huge outcry, they will move to the next level.

What does all this mean to the industry?  It is very important to recognize the importance of these cards to our industry.  If there are already 80-85% of all prescriptions going to generics, how much would this increase if there were no co-pay cards?  Would it go to 90%?  Could it be even more?  What percent of your brand’s business would go away if there were no cards?  Perhaps your total share would be similar to your Medicare share.  The answer to this question will be different for every brand and therein lies the dispute as to whether the cards are helping the patient or the company.

Look closely at the language being used in the fight between PhRMA and the PBMs, specifically around the use of the word alternatives.  The PBMs feel the cards are pushing patients to expensive alternatives where they as “care managers” feel there are equivalent, less expensive alternatives.  The easy part of their argument may be when a card is being used to keep a patient on a product when there is a direct generic for that product.  The tougher argument is when the PBM would rather use a different generic, or more “preferred” branded product, in the class that could easily be substituted.  PhRMA argues against this concept saying that physicians want to use that specific product, rather than the alternative, and the cards make the medicine as affordable as possible.

Where this is going is anyone’s guess at this time.  I would say that it is unhealthy to have a large customer group feel threatened by a tactic that is so critical to the near-term future of so many products.  If the system is going to work for patients, payers and pharmaceutical companies all need to feel satisfied by the financial value of every prescription.  Everyone should work to get this quickly into alignment before the courts mandate a solution that severely hurts one or two of the parties.  If nothing else, this demands careful vigilance.