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Court strikes down Trump-era rule that allowed health insurers to broadly use copay accumulators

A U.S. judge has struck down a Trump administration rule that allowed health insurers not to count copay assistance offered by drug companies toward out-of-pocket costs, a victory for advocacy groups that argued the rule harmed patient health.

At issue is the complex and often opaque health insurance system in the U.S., which has prompted long-running battles between drugmakers and insurers over the cost of prescription medicines. In this instance, the focus of the case was on a wonky, but significant tool called copay accumulators, which are used by health plans to blunt the cost of medicines prescribed to their beneficiaries.

The story begins with copay assistance programs, which drugmakers have offered for years to help patients afford medicines by mitigating out-of-pocket and deductible costs. Health plans counter that such assistance — generally, in the form of copay coupons or cards — is just a marketing tool used to direct consumers to higher-priced drugs, which eventually raise costs to the entire health care system.

In recent years, though, health insurers and pharmacy benefits managers — which assemble the formularies, or list of medicines covered by insurance — started striking back. As drugmakers offered more copay assistance programs, insurers and pharmacy benefits managers rolled out copay accumulators, a move that has alarmed patient advocates and confused patients.

Why? An accumulator does not count the value of copay assistance toward out-of-pocket drug costs applied to a patient’s deductible and out-of-pocket maximum. So patients are on the hook for overall higher costs — unless the copay assistance from a drugmaker is sufficiently large enough to continue covering the expense. Insurers, meanwhile, keep copay assistance funds that are used by the patient.

The situation is still more complicated because many people are unaware their health plans have accumulator programs. Every health plan differs, but few note in explicit language that they contain accumulators. And most people remain unaware since they have no reason to inquire when copay assistance from a drug company covers their expenses.

Meanwhile, some drug companies began scaling back the amount of copay assistance provided to patients. Such moves have similarly surprised patients, some of whom are left with few alternatives to afford their medicines. Last year, Vertex Pharmaceuticals became a high-profile example of a company taking such a step when it reduced copay assistance for its cystic fibrosis treatments.

The escalating tumult prompted several advocacy groups last year to file a lawsuit against the Biden administration for implementing a Trump administration rule allowing health plans to use accumulator programs. Accumulators, they argued, prevent Americans from accessing the “most promising” therapies, “harm patient health,” and undercut the notion of cost-sharing in the Affordable Care Act.

Due to high deductibles and high cost-sharing — which sometimes can be as much as 50% of the list price of a drug — patients depend on copay assistance to afford their medicines, the groups argued. They noted that the amount of copay assistance totaled nearly $19 billion last year, according to a report issued last year by IQVIA, a research firm that tracks prescription drug spending and pricing.

The lawsuit — which was filed by advocacy groups representing people with HIV, hepatitis and diabetes — cited a 2020 analysis that found patients who encountered a copay accumulator program filled their prescriptions 1.5 times less than patients in high-deductible health plans. The analysis — written by employees of the McKesson pharmaceutical wholesaler — appeared in the American Journal of Managed Care.

In his ruling, U.S. District Court Judge John Bates found the original Trump administration rule to be arbitrary and capricious, and he also found fault with some of the language in the rule regarding cost-sharing. As a result, he set the rule aside so that the U.S. Department of Health and Human Services can rework the language.

For the time being, health insurers will have to abide by the previous federal rule that governed 2020 health plans. Under that rule, copay accumulators are only permitted for brand-name drugs that have a generic equivalent, if allowed by state law. Right now, federal law prevents health plans from using copay accumulators for drugs that lack generic equivalents.

“We are thrilled that the court has taken the side of patients who have been struggling to afford their prescription drugs due to the greedy actions of insurers and their PBMs,” said Carl Schmid, who heads the HIV+Hepatitis Policy Institute, one of the advocacy groups that brought the lawsuit. The other groups that filed suit were the Diabetes Leadership Council and the Diabetes Patient Advocacy Coalition.

We asked HHS for comment and will update you accordingly.

A spokesman for AHIP, the trade group for health insurers, wrote us that, “far from working to lower the price of drugs, co-pay coupons for brand-name drugs allow manufacturers to set ever higher prices and avoid negotiating discounts with insurers to lower cost-sharing. Manufacturer coupons raise healthcare spending, which is why they are prohibited in the Medicare and Medicaid program. Coupon accumulators hold manufacturers responsible for the list price of their drugs without increasing patient cost-sharing. Accumulators let patients benefit from the coupon discount, helping constrain, not inflate, prescription drug prices.”

The trade group, by the way, had filed a brief in court arguing that drug companies offer copay assistance to patients in order to maximize their own profits and that copay accumulators are a “key tool” used to limit “distortion” in the marketplace without harming patients.

A spokesman for the Pharmaceutical Research & Manufacturers of America, the trade group for brand-name drug companies, wrote to say that “this decision is a win for patients. Copay assistance should benefit patients, not middlemen. Copay accumulators are just another barrier that health plans and pharmacy benefit managers use that make it harder for patients to access their medicines.”

The trade group had also filed its own brief with the court that detailed its reasons for using copay assistance programs and also why accumulator programs were detrimental to patients.

STAT+ Reporter: Ed Silverman, Pharmalot Columnist, Senior Writer



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