In the USA we seem to have lots of drug commercials. In some of them there is reference to a discount on the prescription if you have insurance.
For example [Jardiance](https://www.jardiance.com/heart-failure/savings-support), a type 2 diabetes drug offers a copay as low as $10 if you meet the qualifications.
Why does a consumer need insurance for this discount to apply? Who pays for the difference in cost?
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Manufacturer-provided savings cards often both specify a maximum possible discount and a minimum price. The maximum discount, used without insurance, often may still end up far higher than that minimum price (or this may also occur if a patient needs a larger quantity that normally is prescribed). To my understanding, these often work as a rebate from the manufacturer of the discounted amount.
For that product linked, it’s a maximum of $175/month discount. At typical dosing, this is close to a $600-700/month cash price medication.
So they cut a deal with your insurance company, the list price, what your insurance pays and what they tell you they pay are all different things.
Let’s start with a basic example: I have an insurance plan with 3 tiers of drug copays. Tier 1 is cheap generic drugs that my insurance wants me to use; the actual cost to insurance is about $5 per prescription, I have no copay. Tier 2 is moderately expensive generics and cheaper branded drugs, actual cost to insurance is $100, my copay is $20. Tier 3 is expensive branded drugs, actual cost to insurance is $1000, my copay is $100. The whole original point of deductibles and copays was to ensure that consumers share in the costs of healthcare and have a stake–otherwise, this is all Monopoly money to me and it doesn’t bother me at all whether my insurance is paying $5 or $500.
Drug companies realize that consumers would much rather pay $0 or $5 than $100. The drug company’s actual manufacturing costs for that $1000 prescription are way lower, maybe $10, so it’s more than happy to take less than sticker price some of the time. So, the drug company gives me a “$5 copay card” and offers to directly pay $95 of my $100 copay so it can get $1000 from my insurance company–that’s still a big profit. I pay $5 for something I couldn’t have afforded otherwise, the drug company gets $895 in profit instead of $990 but is fine with that, and my insurance company… is really mad about this, and may argue that because I didn’t pay the discount out of pocket, it shouldn’t count.
If I didn’t have insurance, this whole system wouldn’t work because now the drug company would be accepting a tiny fraction of its sticker price, and insurances would refuse to pay $1000 for something the drug company is selling for $5. There are often separate patient assistance programs that fulfill this role, actually discounting the price heavily as a charitable program (which I suspect means large tax benefits for a fictional discount, as the drug company is just selling something for closer to cost.)
**TL;DR: The drug company is shouldering your share of the cost, so that your insurance will still pay them a much larger sum. Drug companies say this is a godsend to patients, insurance companies say it’s a scam.**
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