AB 265 Protects Consumers from Drug Company Coupon Practices

Thursday, February 2, 2017

SACRAMENTO - Yesterday, Assemblymember Jim Wood (D-Healdsburg), a dentist by profession and chair of the Assembly Health Committee, introduced AB 265, legislation that would prohibit the use of coupons for pharmaceutical drugs when other FDA-approved drugs are available and less expensive.

Although coupons, vouchers or other discount cards offered by pharmaceutical companies may reduce the copay for the patient, he or she may be unnecessarily purchasing a higher priced drug when a lower cost alternative may be just as effective. Promoting the use of higher cost drugs that may not be needed will lead to an increase in health care costs and health care premiums.

“Drug companies provide tremendous value and have improved the quality of life to millions of people, unfortunately we have all heard the stories of individual companies that seem to care only about maximizing profits,” said its author Asm. Jim Wood. “Coupons may appear to help the consumer by reducing or eliminating their out-of-pocket costs but, in fact, are too often simply a marketing tool to drive patients to higher priced drugs that may not be a more effective treatment option for them, and eventually will result in an increase to their health care premiums.”

Medicare and Medicaid already prohibit the use of coupons and other states, like Massachusetts, banned the use of coupons in 2012 and New Jersey has introduced similar legislation to AB 265.

“A new and growing concern for me,” said Wood, “is the unintended consequences of the 21st Century Cures Act, passed by Congress last year, which speeds up the drug approval process. Certainly we want new drugs to market as quickly and safely as possible, but the growing number of ‘new’ drugs that simply combine generic and even over-the-counter medications that are outrageously more expensive compared to their individual ingredients is a real problem.”

Treximet, one of many examples of these drugs, combines two active ingredients, sumatriptan and naproxen, to treat migraines. These two ingredients can be purchased separately by consumers for less than $20, where Treximet can cost more than $700 for nine tablets. Online coupons available for this drug say that they will limit your copay to as low as $25 – which is more than the out-of-pocket price of purchasing the ingredients separately.

“There is simply no free lunch,” said Wood. “Coupon use is on the rise – more than 700 drugs now offer coupons. Growth has gone from an estimated $1 billion in 2010 to $7 billion in 2015.  The negative implications to health care costs and the consumer have yet to be fully realized and we have to put a halt to these practices when they are not in the consumer’s best long-term interest.”

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Since 2014, Assemblymember Jim Wood (D- Healdsburg) has represented the 2nd Assembly District, which includes all of Del Norte, Trinity, Humboldt and Mendocino counties, plus northern and coastal Sonoma County, including the northern half of Santa Rosa.

Visit Assemblymember Jim Wood's website