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HHS 'copay accumulator' rule struck down: Insurers must now count copay assistance

In a big victory for patients who depend on prescription drugs, a federal judge struck down a 2021 HHS rule that allowed health insurers to not count drug manufacturer copay assistance towards a patient’s out-of-pocket costs.


Patient advocacy groups are hailing a new court ruling that could significantly reduce pharmaceutical costs for some patients.


On September 29, the U.S. District Court for the District of Columbia struck down an administrative rule from the Trump era that allowed health insurers to not count drug manufacturers’ copay assistance toward a patient’s out-of-pocket costs. The rule was especially burdensome for those with chronic diseases that involve expensive drugs, resulting in more out-of-pocket costs for patients who received the copay assistance.


Three patient advocacy groups, the HIV+Hepatitis Policy Institute, Diabetes Leadership Council, and the Diabetes Patient Advocacy Coalition, along with three patients affected by the rule, took the U.S. Department of Health and Human Services to court over the issue. They argued that “copay accumulator” policies allowed health insurers to profit from copay assistance programs, without reducing the financial burden on patients, as the assistance programs were meant to do.


The Court said that the policies, which the Biden Administration had left in place, were arbitrary and capricious and rely on contradictory interpretations of the law. The plaintiffs noted that 20 states had already passed laws requiring that any payments on the patient’s behalf be considered part of cost-sharing requirements.


An increasing burden


The groups fighting the new rule said that because of high deductibles and high cost-sharing, which are sometimes as high as 50% of the list price of the drug, many patients depend on copay assistance from drug manufacturers to afford their drugs. According to the research firm IQVIA, the amount of copay assistance in the U.S. totaled nearly $19 billion last year.


In addition, the groups say that insurers and pharmacy benefit managers (PBMs) have increased the use of copay accumulators, which has affected patients who need high-cost prescription drugs for conditions such as hepatitis, cancer, arthritis, diabetes, and multiple sclerosis. In a recent survey of commercial plans, 83% of beneficiaries are enrolled in plans that employ copay accumulators.


“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, executive director of the HIV+Hepatitis Policy Institute. “We call on the Biden Administration and states to immediately enforce this decision and not take any further steps to undermine the copay assistance that allows patients to access their essential medications.”


Next steps


Schmid said since the ruling struck down the existing rules, insurers are now precluded from implementing copay accumulators for drugs that lack generic equivalents, allowing the drug manufacturers’ copay assistance to be counted as cost-sharing for those drugs. Copay accumulators are now only permissible only for branded drugs that have a generic equivalent, if allowed by state law.



The possibility of further action from the federal government exists, but Schmid said that members of health plans should see immediate changes in how their copays are counted by insurers and PBMs, and should end up paying less because of the ruling.


He added that he hoped the Biden Administration would accept the judge’s ruling and no longer side with insurers and PBMs in the dispute. “The Biden Administration has repeatedly said that this is one of their central issues; they want to make prescription drugs cheaper for people. So, this is one way to do that,” he said. “I can’t imagine why they would appeal.”


He added that employer-based plans should be aware of other attempts by PBMs and insurers to add game the system. “There are other games that the insurers are playing to take advantage of co-pay assistance,” he said. “They have to be on guard; the plans are very sneaky and they are trying to capture this copay assistance… plans have to be knowledgeable and watch out for this.”


Benefits Pro Reporter: Scott Wooldridge

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