We’re all familiar with the powerful pull of a good deal. Sometimes you find yourself purchasing a product you normally wouldn’t, or eating out at a restaurant you feel lukewarm about just because you have a coupon that gives you a discount.
This marketing tactic is effective and generally harmless, but a recent article in The NY Times explores the complications that arise for both insurance companies and people purchasing medications when coupons are offered by pharmaceutical companies. When name brand drug companies offer coupons to lower the out-of-pocket cost of a medication, the consumer is more likely to opt for the name brand over an available generic medication. This initial lower cost at the pharmacy for the consumer does not result in any reduction of cost for the insurance company, which still has to pay the full amount for the brand name medication. As use of such coupons has increased, so has overall spending for the insurance company, which in turn leads to a vicious cycle of increased premiums. This article takes a look at how a small discount at the pharmacy can end in a much higher overall cost for the consumer or their employer down the road.