A federal court recently struck down a CMS final rule slated to take effect in 2023 which would have required pharmaceutical manufacturers to ensure that financial assistance provided to patients goes only to patients and not to payers under their copay accumulator and maximizer programs. Despite the ruling, Precision’s Ryan Cox and Reta Mourad discuss how the renewed attention to these programs could spur more states to take action of their own against them.
Court Decision on Accumulator Rule Could Encourage State Bans
Under a May 17 court decision striking down a CMS final rule slated to take effect in 2023, pharmaceutical manufacturers will not have to ensure that financial assistance provided to patients goes only to patients and not to payers under their copay accumulator and maximizer programs. However, the renewed attention to these programs could spur more states to take action of their own against them, industry experts tell AIS Health.
The Accumulator Rule (CMS-2482-F), published Dec. 31, 2020, could have resulted in patients facing increased out-of-pocket drug costs and pharma companies being held responsible for ensuring they know exactly where their assistance is going, industry experts tell AIS Health, a division of MMIT.
CMS’s stance has long been that manufacturer-provided assistance given to patients is excluded from best price and average manufacturer price (AMP) calculation for prescription drugs. However, the rise of copayment accumulators and maximizers — and health insurers’ subsequent taking of this assistance rather than allowing it to count toward patients’ deductibles and out-of-pocket maximums — caused the agency to rethink its position. The Accumulator Rule, part of the Trump administration’s efforts to use regulatory means to address drug pricing issues after congressional bills failed, would have reversed that longtime approach.
The Medicaid rebate rule allows state Medicaid programs to get the same discounts on drug prices that manufacturers offer commercial plans purchasing prescription drugs. Manufacturers pay rebates to Medicaid programs that are calculated based on drugmakers’ best price, which is the lowest price the manufacturer gives to most providers of health care services or items, including hospitals, HMOs and MCOs — but not patients. It includes any price adjustments, such as discounts and rebates, but not manufacturer-provided assistance to patients.
Traditionally, when a manufacturer provides copay assistance for one of its drugs, that dollar amount would count toward the patient’s deductible and out-of-pocket maximum. But copay accumulator programs — also known as accumulator adjustment or variable copay programs — prevent those funds from applying to the deductible and out-of-pocket limit. Instead, when members have used all of the copay assistance available to them, their payments then start counting toward their deductible and out-of-pocket costs.
A similar type of approach is a copay maximizer program, also known as variable copay or copay optimization programs. Rather than using the accumulator approach of applying the maximum manufacturer assistance up front and depleting that contribution before the end of the year, maximizer programs will distribute 100% of available manufacturer copay offset funds over 12 months. This approach allows patients to pay less than they would in an accumulator program if they participate in a manufacturer’s copay offset program, never hitting their annual deductible and out-of-pocket max.
Copay accumulator and maximizer programs have proliferated in recent years. For the Managed Care Oncology Index: Q3 2021, between Aug. 24, 2021, and Oct. 11, 2021, Zitter Insights surveyed 40 commercial payers covering 114.1 million lives. Plans representing 38% of lives had implemented an accumulator program prior to 2021, while those covering 21% of lives had a copay maximizer program in place during that same time frame. In 2021, plans with 26% of lives implemented an accumulator program, and those with 28% of lives implemented a maximizer program. Plans with about three-fourths of covered lives did not differentiate the programs by therapeutic area and applied them to both retail and specialty products. Zitter Insights also is a division of MMIT. Many state legislatures also are scrutinizing accumulator and maximizer programs.
States Mandate Credit Towards Deductible
“State action most commonly takes the form of requiring payments made by a third party be applied to a consumer’s annual cost-sharing requirement or deductible,” says Colleen Becker, a project manager for the health program at the National Conference of State Legislatures. “For 2022, NCSL tracked 23 bills proposed in 14 states and new legislation passed in Illinois, Maine, Nebraska, and Washington,” she tells AIS Health. “Four states (Minnesota, Missouri, New York, South Carolina) and D.C. still have bills pending. Related to manufacturer coupons, laws in California and Massachusetts prohibit the use of coupons if a generic is available on a lower cost-sharing tier. However, neither state bars insurers from implementing a copay accumulator program.”
Currently, more than 10% of commercial enrollees live in one of 15 states that have enacted laws banning payers’ use of copay accumulator programs, according to Avalere Health.
And more states are likely to join that number. “Given the recent Federal Court decision to vacate the Copay Accumulator rule last week, the additional attention to these programs is likely to prompt additional states to take action against these programs,” says Ryan Cox, R.Ph., vice president and director of the access experience team at PRECISIONvalue.
However, he notes that the state laws apply only to fully insured commercial plans. “The fact is that 64% of covered workers are in a self-funded health plan as of 2021 so these regulations are only impacting a smaller portion of the population,” agrees Reta Mourad, Pharm.D., vice president of the access experience team at PRECISIONvalue.
The Accumulator Rule would have required that:
(1) Manufacturers ensure that their assistance programs’ benefits “are provided entirely to the consumer.… If any of the manufacturer-sponsored assistance is diverted to the plan, those amounts should be included when a manufacturer calculates its best price,” and
(2) When manufacturer assistance is not applied to a patient’s deductible or other cost-sharing obligations, “the assistance becomes a price concession to the health plan by delaying the point at which the health plan’s contribution toward the patient’s cost sharing begins, or reducing the value of the assistance to the patient, and thus should be counted in best price and, in certain cases, the calculation of the AMP.”
The Pharmaceutical Research and Manufacturers of America (PhRMA) called the court decision “a win for patients. Manufacturers provide patient assistance to do just that — assist patients and address gaps in insurance — but instead insurers are siphoning that money away for themselves.”
In its lawsuit (No. 1:21-cv-01395) filed on May 21, 2021, PhRMA had challenged the Accumulator Rule, noting that patients are not included among the providers eligible for best price, “presumably because Congress did not want to discourage manufacturers from offering discounts or other assistance to patients.” In 2007 regulations, CMS declared that “manufacturer-sponsored drug discount card programs, coupons and co-pay assistance” were excluded from best price calculation when those benefits go to patients. “Sales to patients are best price exempt,” declares PhRMA in a summary of the lawsuit. “By statute, assistance provided to patients must not affect best price for purposes of a manufacturer’s Medicaid rebates.”
Definition of Price Proved Pivotal
Per PhRMA, “In the Accumulator Rule, CMS treats assistance offered by manufacturers to patients as if it were a price discount to health insurers, just because the insurers have figured out a way to take that assistance away from the patients for whom it was intended. That is simply not what the word ‘price’ means. A ‘price’ is the amount that a seller intentionally offers and voluntarily agrees to accept from a buyer. But here, the manufacturer does not intend to offer the financial assistance at issue to the health insurers, but rather wants it to fully benefit patients. The health insurers are acting against the manufacturers’ will. That is not what the law means when it says ‘lowest price available.’”
U.S. District Judge Carl Nichols agreed. “A manufacturer’s financial as sistance to a patient does not qualify as a price made available from a manufacturer to a best-price-eligible purchaser. Rather, a manufacturer’s financial assistance is available from the manufacturer to the patient. And a patient is not a best-price-eligible purchaser. As a result, HHS lacks the statutory authority to adopt the accumulator adjustment rule. That conclusion holds true even though commercial health insurers have developed accumulator adjustment programs intended to capture some (or all) of a manufacturer’s financial assistance to a patient,” he wrote in the opinion.
“The summary judgment was clarifying,” says Mark Gooding, a principal at Avalere Health. “There was a lot of uncertainty about who would have specific responsibilities to do what” under the rule.
Insurers Control Relevant Pricing Information
Gooding notes that the court decision acknowledged that pharma companies may have been reliant on health insurers to accurately calculate pricing. As Nichols wrote, “The accumulator adjustment rule would make the calculation of the best price turn on information often in the sole possession of commercial health insurers.”
“Manufacturers might need to conduct a transaction-by-transaction investigation” that would make it more difficult to obtain timely or accurate pricing data, Gooding says.
“There were manufacturers and vendors and patient advocacy organizations, and payers as well, that were trying to think of what this new world beginning on Jan. 1, 2023, would look like,” Gooding tells AIS Health, “and if their systems for providing patient copay assistance would be sufficient or appropriate for meeting the fairly limited guidance that was provided in that final rule.”
For more information on the Zitter Insights data, contact Melody Udell at mudell@mmitnetwork.com. Contact Gooding via Isabella Paladino at isabella.paladino@finnpartners.com. Portions of this article were reprinted from AIS Health’s Spotlight on Market Access.
by Jill Brown Kettler and Angela Maas