CMS rule leaves high out-of-pocket costs, lawsuit argues
Aid programs ‘mask’ problem of prices, analysts say
High drug costs will linger for patients whatever the outcome of the latest battle between the pharmaceutical industry and health plans over drugmaker copay assistance programs, analysts say.
A lawsuit from drug industry-backed patient advocacy groups is challenging a Trump-era rule (RIN 0938-AT98) from the Centers for Medicare & Medicaid Services. The rule says pharmacy benefit managers—the entities that manage prescription drug benefits on behalf of insurers— don’t have to count drugmaker copay assistance toward patients’ out-of-pocket costs.
The patient groups say the rule allows PBMs to accept the drugmakers’ copays on behalf of patients while doing nothing to lower the amounts patients have to pay. PBMs say that they work to deliver discounts to patients, and that practices like copay assistance programs can steer patients to a drugmaker’s higher cost medication, even if that treatment may be less effective than cheaper drugs.
Drug pricing researchers and analysts say there’s merit to both sides of the debate, leaving an ambiguous future for copay assistance programs. The lawsuit is expected to take several more months, leaving uncertain the very group that both drug manufacturers and PBMs say they’re trying to serve—patients, especially those with chronic illnesses, struggling to afford needed medications.
“At the end of the day, this is a fight over money between health plans, PBMs, and the drug manufacturers,” said Antonio Ciaccia, CEO of Ohio-based drug pricing data firm 46brooklyn Research.
“While that’s happening, you have a patient stuck in the lurch. That’s the unfortunate consequence of stasis,” he added.
The Department of Health and Human Services has until March 16 to respond to an amended complaint from the patient groups, which updated their initial filing to include stories of patients who they say have been hurt by copay accumulator adjustment programs. The programs are policies by PBMs and health plans to not count manufacturer coupons as part of patients’ cost-sharing obligations.
The Case for Coupons
The HIV+Hepatitis Policy Institute, the Diabetes Leadership Council, and the Diabetes Patient Advocacy Coalition filed their lawsuit in August, alleging that the 2020 CMS rule conflicts with the definition of “cost-sharing” in the Affordable Care Act and federal regulations. Several groups have since filed amicus briefs in support of the challenge, including leading drug industry trade group the Pharmaceutical Research and Manufacturers of America and a coalition of 29 patient, provider, and consumer organizations.
Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, said he believes they have a “strong case.” He referenced the groups’ amended complaint, which argued that copay accumulator programs can harm patients like Pennsylvania resident Cynthia Regan, who pays more than $6,000 for a single month’s supply of AbbVie’s anti-inflammatory drug Humira. Regan’s health plan has a copay accumulator prohibiting her from using a $500 manufacturer coupon toward her deductible or annual out of pocket maximum, according to the complaint.
There’s merit to the argument that that copay accumulator programs can “cause disruptions in people’s access to their medications,” said Stacie Dusetzina, an associate professor in the Department of Health Policy at Vanderbilt University Medical Center.
“You’re getting your drug under this coupon at a low cost, and then suddenly, you’ve reached the limit of your coupons, and then you get hit with the full deductible amount,” which “obviously would be a tremendous financial burden for someone who expects to continue to pay this lower cost,” Dusetzina said.
Copay assistance is meant to “help fill gaps in insurance coverage that make medicines unaffordable for patients,” said Brian Newell, PhRMA’s deputy vice president of public affairs.
“But insurers and middlemen are using deceptive tactics that deny patients the benefit of this assistance and make it even harder for people to get their medicines,” he added.
Pfizer Inc. and Johnson & Johnson are among the institute’s corporate sponsors. Pharmaceutical companies like Abbott, Eli Lilly & Co., and Merck & Co. Inc. also give funding to the Diabetes Leadership Council and its affiliated Diabetes Patient Advocacy Coalition.
‘A Trojan Horse’
While patient groups and manufacturers say the goal of copay assistance is to help patients, the ban on these coupons in the Medicare and Medicaid programs and the hidden incentives that analysts say lie within these programs complicate the issue.
“Sometimes a gift is a Trojan horse,” said Robin Feldman, a law professor and researcher at the University of California, San Francisco.
“For patients struggling to pay for tremendously expensive medication, the coupons seem heaven sent. But the cost to the patient, not to mention the health-care system, are carefully camouflaged,” Feldman added.
The patient groups argue in their lawsuit that copay assistance programs “enable millions of Americans to afford the copays and deductibles for their physician-prescribed—and often critically important—medications,” and can be especially helpful to patients with chronic illnesses who rely on continuous access to expensive, specialty medications.
Currently, 95% of brand-name drugs have copay assistance programs, and roughly 75% of patient cost sharing in the commercial channel is now offset by manufacturers, where copay programs are allowed, according to an analysis from health information technology consulting firm IQVIA.
“We don’t want” patients “to be in a situation where they can’t afford to take their medications,” Dusetzina said. “But should those dollars be used to offset completely a person’s deductible and count toward their out-of-pocket spending when that spending is actually coming from a drug manufacturer?”
The HHS argued in an October filing that the CMS found manufacturer coupons “can add significant long-term costs to the health care system that may outweigh the short-term benefits of allowing the coupons, and counter-balance issuers’ efforts to point enrollees to more cost-effective drugs.”
While manufacturers can offer assistance to patients in commercial plans, these programs are prohibited in government-funded health insurance programs under the Anti-Kickback Statute. The Second Circuit defended this view last year when it ruled against Pfizer’s proposal to cover copays for its costly heart disease drug tafamidis. The Supreme Court in January declined a request from Pfizer to take up the case.
When manufacturers give discounts to patients through these programs, “they ultimately are doing so as a means to help encourage utilization,” Ciaccia said. The practice also threatens the role of PBMs in shaping a health plan’s preferred drugs, he added.
The Pharmaceutical Care Management Association, the leading PBM trade group, said in an emailed statement that the CMS rule “struck a reasonable balance between plan interests in controlling costs, the role of PBMs, and the role that individual states play in shaping their own health care markets.”
Protecting Patients
Prioritizing patients should involve examining the various facets of the health-care system that fuel high drug costs, analysts say.
“Copay assistance programs mask the real problem, and that is the high price of drugs in the United States,” Feldman said.
One essential area to examine, Feldman argued, is “the perverse incentives in which pharmaceutical companies are able to share some of their profits with players down the drug supply chain in exchange for blocking out cheaper medications.”
Second is the growth in size and influence of the PBM market, and “third is a problem with a patent system in which companies are able to continually pile on protections and create anti-competitive barriers around their products,” she added.
Overall, the battle over the legality and effectiveness of copay assistance programs at the very least helps bring attention to the need to examine the convoluted nature of the prescription drug distribution chain, Ciaccia said.
“The prices of medicines in the United States are significantly over-inflated relative to what their actual costs might be after rebates, discounts, concessions, etc., are tabulated. As such, we have a system that can disenfranchise patients who lack the finances necessary to afford medicines that need to be purchased outside of their coverage,” he said.
To contact the reporter on this story: Celine Castronuovo at ccastronuovo@bloombergindustry.com