Biden’s Inaction Leaves Copay Assistance in Limbo
Inflated prescription drug costs in the United States continue to place a significant burden on people living with chronic conditions. Copay assistance programs, designed to help people afford their medications, have become essential. Yet recent policy decisions and industry practices have put these programs at risk, potentially jeopardizing access to necessary treatments.
The Biden Administration's recently proposed 2026 Notice of Benefit and Payment Parameters (NBPP) rule omits crucial regulations that patient advocates have long been demanding. This inaction allows insurers and pharmacy benefit managers (PBMs) to continue profiting from billions of dollars of drug manufacturer copay assistance intended for patients.
The State of Copay Assistance
Copay assistance programs, primarily offered by pharmaceutical manufacturers, provide financial support to help cover out-of-pocket costs for prescription medications. As health insurance plans increasingly shift costs to patients through higher deductibles and copayments, these programs have become crucial.
According to the latest data from The IQVIA Institute, manufacturer copay assistance offset patient costs by $23 billion in 2023, a $5 billion increase from the previous year. This figure represents 25% of what retail prescription costs would have been without such assistance. Over the past five years, copay assistance has totaled $84 billion, highlighting its importance in maintaining access to medications.
Despite the significance of copay assistance, copay accumulator and maximizer programs accounted for $4.8 billion of copay assistance in 2023—more than double the amount in 2019. Implemented primarily by pharmacy benefit managers (PBMs) and insurers, these programs prevent assistance from counting towards patients' deductibles and out-of-pocket maximums. This practice effectively nullifies the intended benefit of copay assistance, leaving people to face unexpected and often unaffordable costs later in the year.
Recent scrutiny of PBMs has brought attention to these practices. As discussed in our recent article on PBMs, the Federal Trade Commission (FTC) has filed a lawsuit against the largest PBMs for alleged anticompetitive practices that inflate drug costs and limit access to medications. These developments underscore concerns about how PBM practices, including the implementation of copay accumulator programs, impact medication affordability and access.
The impact on access is serious. IQVIA reports that in 2023, patients abandoned 98 million new therapy prescriptions at pharmacies, with abandonment rates rising as out-of-pocket costs increase. This trend highlights the critical role copay assistance plays in helping people not only initiate but also maintain their prescribed treatments.
Public opinion strongly supports action on this issue. A Kaiser Family Foundation survey found that 80% of adults believe prescription drug costs are unreasonable, with broad support for various policy proposals to lower drug costs. This sentiment reflects the public's recognition of the financial challenges faced in accessing necessary medications.
The Legal and Regulatory Landscape
The regulatory environment surrounding copay assistance programs has been in flux, with significant developments in recent years. On September 29, 2023, a federal court struck down a rule that allowed insurers to decide whether copay assistance would count towards patients' out-of-pocket maximums. This ruling reinstated the 2020 NBPP rule, which required insurers to count copay assistance towards patient cost-sharing, except for brand-name drugs with available generic equivalents.
Despite this, the federal government declared that it would not enforce the court's decision or the 2020 NBPP rule until new regulations are issued. This inaction has left patients facing continued uncertainty about the status of their copay assistance.
On January 16, 2024, the Biden Administration dropped its appeal of the court decision. While this action confirms that the 2020 NBPP rule will generally apply until new rules are issued, the lack of enforcement leaves plans and insurers in a gray area regarding their copay accumulator programs.
At the state level, there has been a growing movement to address copay accumulator programs. As of 2024, 21 states, the District of Columbia, and Puerto Rico have enacted laws addressing the use of these programs by insurers or PBMs. These laws generally require any payments made by or on behalf of the patient to be applied to their annual out-of-pocket cost-sharing requirement. While these state actions provide important protections, they do not cover all insurance plans, particularly those regulated at the federal level.
The 2026 Notice of Benefit and Payment Parameters Proposal
The proposed 2026 NBPP rule, released by the Centers for Medicare & Medicaid Services (CMS), has drawn criticism from patient advocacy groups for significant omissions related to copay assistance and essential health benefits (EHB).
Notably absent from the proposed rule are regulations clarifying whether copay assistance will count toward patient cost-sharing. This omission perpetuates uncertainty created by previous conflicting rules and court decisions, allowing insurers and PBMs to continue implementing copay accumulator programs that can leave people with unexpected and unaffordable out-of-pocket costs.
The proposal also fails to include a provision to ensure that all drugs covered by large group and self-funded plans are considered essential health benefits, despite previous indications that such a provision would be forthcoming. This failure to close the EHB loophole allows employers, in collaboration with PBMs and third-party vendors, to designate certain covered drugs as "non-essential," circumventing Affordable Care Act (ACA) cost-sharing limits designed to protect people from excessive expenses.
By exploiting this loophole, plan sponsors can collect copay assistance provided by manufacturers without applying it to beneficiaries' cost-sharing requirements. This practice effectively doubles the financial burden on patients: first, by accepting the copay assistance, and second, by requiring them to pay their full out-of-pocket costs as if no assistance had been provided.
Recent research by the HIV+Hepatitis Policy Institute has revealed that over 150 employers and insurers are taking advantage of the EHB loophole. This list includes:
Major companies such as Chevron, Citibank, Home Depot, Target, and United Airlines
Universities including Harvard, Yale, and New York University
Unions like the New York Teamsters and the Screen Actors Guild
States such as Connecticut and Delaware
Insurers, including several Blue Cross/Blue Shield plans
Patient advocacy groups have reacted strongly to these omissions. Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, stated, "Every day these rules are delayed is another day that insurers and PBMs are pocketing billions of dollars meant for patients who are struggling to afford their drugs." This sentiment reflects the frustration of many who have long advocated for stronger protections.
The widespread exploitation of the EHB loophole underscores the urgent need for federal action to protect patients from these practices. The failure to address these critical issues in the 2026 NBPP proposed rule highlights a significant setback in efforts to improve medication affordability and access for people living with chronic conditions.
The Impact on Patients: Data and Experiences
The real-world impact of copay accumulator programs and the EHB loophole is reflected in both data and personal experiences. IQVIA reports that patient out-of-pocket costs reached $91 billion in 2023, an increase of $5 billion from the previous year. This rise in costs comes despite the $23 billion in copay assistance provided by manufacturers, highlighting the growing financial burden on patients.
Prescription abandonment is particularly concerning. Patients abandoned 98 million new therapy prescriptions at pharmacies in 2023, with abandonment rates increasing as out-of-pocket costs rise. More than half of new prescriptions for novel medicines go unfilled, and only 31% of patients remained on therapy for a year. These statistics highlight the direct link between cost and medication adherence.
People across the country are facing these challenges. For example, a mother whose daughter lives with cystic fibrosis shared her experience with a copay accumulator program. In early 2019, her family's out-of-pocket cost for her daughter's medication suddenly jumped from $30 to $3,500 per month when their insurance plan stopped applying copay assistance to their deductible. This unexpected change forced the family to put the cost on credit cards, creating significant financial strain and unnecessary medical debt.
Similarly, a person living with psoriasis faced steep increases in medication costs when their insurance company stopped counting copay assistance towards their deductible. The copay rose from $35 to $1,250 monthly, leaving them with only $26 from their disability payment after covering the copay.
These stories are not isolated incidents. People living with conditions such as HIV, hepatitis, multiple sclerosis, and hemophilia are facing similar challenges. The impact extends beyond financial stress, affecting medication adherence and, ultimately, health outcomes. For many, the choice becomes one between essential medications and other basic needs such as food and shelter—a decision no one should have to make.
Policy Recommendations and Advocacy Efforts
Patient advocacy groups are intensifying efforts for policy changes at both the federal and state levels. The All Copays Count Coalition, comprising over 80 organizations representing people living with serious and chronic illnesses, has been at the forefront of these efforts. In a letter to federal officials, the coalition urged for a revision of the cost-sharing rule to include clear protections ensuring that copayments made by or on behalf of a patient are counted towards their annual cost-sharing contributions. Specific recommendations include:
Maintaining the protections included in the 2020 Notice of Benefit and Payment Parameters.
Ensuring that copay assistance counts for medically appropriate medications, even when generic alternatives are available.
Limiting Health Savings Account-High Deductible Health Plan (HSA-HDHP) carve-outs to situations where using copay assistance would result in HSA ineligibility.
At the state level, advocacy efforts have led to the passage of laws restricting copay accumulator programs in 20 states, the District of Columbia, and Puerto Rico as of summer 2023. However, these state-level protections do not cover all insurance plans, particularly those regulated at the federal level, highlighting the need for comprehensive federal action.
Advocates are calling for:
Immediate enforcement of the 2020 NBPP rule, requiring insurers to count copay assistance towards patient cost-sharing in most cases.
Swift action to close the essential health benefits loophole for all plans, including large group and self-funded plans.
Increased oversight and regulation of PBM practices, particularly regarding copay accumulator and maximizer programs.
Passage of comprehensive federal legislation to protect those relying on copay assistance.
As Carl Schmid emphasized, "While they have gone on record that they will issue these rules, the clock is ticking and there isn't much time left." This reflects the growing frustration among patient advocates with the administration's delays in addressing these issues.
Policymakers must act swiftly to close the essential health benefits loophole and ensure that all copay assistance counts towards patients' out-of-pocket costs. Stakeholders across the healthcare ecosystem—from insurers and PBMs to pharmaceutical companies and patient advocacy groups—must collaborate to develop solutions that prioritize access and affordability. The health and well-being of millions depend on these critical policy changes.
FTC Sues Major PBMs for Unfair Practices Affecting Drug Costs
Pharmacy Benefit Managers (PBMs) have long been influential yet often obscure intermediaries in pharmaceutical pricing and distribution. They negotiate drug prices with manufacturers, develop formularies for health plans, and manage pharmacy networks. Today, the three largest—CVS Caremark, Express Scripts, and OptumRx—control about 80% of the market.
On September 20, 2024, the Federal Trade Commission (FTC) filed an administrative complaint against these major PBMs and their affiliated group purchasing organizations (GPOs). The complaint alleges that they engaged in anticompetitive and unfair rebating practices, artificially inflating insulin prices and impairing access to lower-cost alternatives.
The FTC's action marks a critical juncture in the struggle for fair drug pricing and access, emphasizing the need for robust enforcement and comprehensive PBM reform. The outcome could reshape the healthcare industry and significantly impact care across the United States.
The FTC's Case Against PBMs
The FTC alleges that PBMs have engaged in anticompetitive and unfair rebating practices that have artificially inflated the list prices of insulin and other essential medications. Grounded in Section 5 of the Federal Trade Commission Act, which prohibits unfair competition and deceptive practices, the FTC asserts that PBMs' rebate strategies and patient steering harm consumers and competition.
For example, the list price of Humalog, a widely used insulin product, increased from $21 in 1999 to over $274 in 2017—a rise of more than 1,200%. The FTC argues that this dramatic inflation is linked to PBMs' "chase-the-rebate" strategy, where they demand larger rebates from manufacturers in exchange for favorable formulary placement.
Another key aspect of the complaint focuses on patient steering practices. The FTC alleges that PBMs have systematically excluded lower-cost insulin alternatives from their formularies in favor of higher-priced options that generate larger rebates. This practice limits choice and forces many to pay more out-of-pocket for their medications.
Rahul Rao, Deputy Director of the FTC's Bureau of Competition, emphasized: "Millions of Americans with diabetes need insulin to survive, yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful PBMs and their greed."
The FTC seeks to fundamentally change how PBMs operate. The complaint aims to prohibit PBMs from excluding or disadvantaging lower-cost versions of drugs, prevent them from accepting compensation based on a drug's list price, and stop them from designing benefit plans that base out-of-pocket costs on inflated list prices rather than net costs.
FTC Chair Lina Khan stated, "The FTC's administrative action seeks to put an end to the Big Three PBMs' exploitative conduct and marks an important step in fixing a broken system—a fix that could ripple beyond the insulin market and restore healthy competition to drive down drug prices for consumers."
Impact on People Living with HIV
While the FTC's case primarily focuses on insulin pricing, PBM practices significantly affect people living with HIV (PLWH) and other chronic conditions. Recent cases highlight the challenges faced in accessing affordable medications due to PBM and insurer practices.
In April 2024, CVS Health failed in its latest attempt to dismiss a class action lawsuit alleging discrimination against PLWH by requiring them to receive medications via mail order, limiting access to essential pharmacy services and counseling. U.S. District Judge Edward Chen noted that CVS was on notice that this program could likely discriminate against PLWH, as plaintiffs had repeatedly requested to opt out.
In another case, the U.S. Department of Health and Human Services Office for Civil Rights (OCR) closed a complaint without penalties against Blue Cross Blue Shield of North Carolina (BCBS NC) after the insurer lowered the pricing tier for HIV medications. The original complaint alleged that BCBS NC had placed almost all HIV antiretroviral medications, including generics, on the highest-cost prescription tiers.
While BCBS NC changed its formulary, the lack of penalties raises concerns about enforcement and accountability. Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, expressed disappointment: "It was incredibly disheartening and deeply concerning to see them let the state's largest insurer get away with such blatant discrimination."
These cases illustrate how PBM practices and insurer policies create significant barriers to care for people living with HIV. High out-of-pocket costs, restricted pharmacy access, and discriminatory formulary designs can lead to medication non-adherence, resulting in adverse health outcomes and increased healthcare costs in the long term.
In North Carolina, about 37,000 people are living with HIV, with Black people representing 58% of new HIV diagnoses despite being only 22% of the state's population. Nationally, according to the Centers for Disease Control and Prevention (CDC), approximately 1.2 million people in the United States are living with HIV. PBM practices that inflate drug costs or limit access exacerbate these disparities and hinder efforts to end the HIV epidemic.
PBM Practices Under Scrutiny
The FTC's complaint has brought controversial PBM practices into sharp focus, highlighting concerns long raised by patients, healthcare providers, and policymakers.
The FTC's interim staff report reveals that PBMs often prioritize higher rebates over lower net prices, leading to exclusion of lower-cost alternatives and driving up drug prices—a practice known as "rebate walls." Patient steering directs consumers to PBM-owned pharmacies, limiting choice and disadvantaging independent pharmacies.
A Congressional hearing in July 2024 further exposed these issues. PBM executives faced tough questioning about their role in rising prescription drug costs. Lawmakers pressed the executives on how PBMs have monopolized the pharmaceutical marketplace and pushed anticompetitive policies that undermine local pharmacies and harm patients.
Representative Virginia Foxx (R-N.C.) highlighted the lack of transparency, questioning PBM executives about the pass-through of rebates and fees to plan sponsors. The executives' responses did little to clarify the complex and opaque financial flows within the PBM industry.
PBMs defend their practices as necessary for managing drug costs. Phil Blando, Executive Director for Corporate Communications at CVS Caremark, stated, "We work to negotiate the lowest net cost for drugs... driving better health outcomes and lower out-of-pocket costs for consumers." However, critics argue that these claimed benefits are not reflected in patient experiences or overall drug pricing trends.
Real-World Impact on Patients and Pharmacies
Jeremy G. Counts, PharmD, a spokesperson for Pharmacists United for Truth and Transparency (PUTT), explains that the vertical integration of the Big Three PBMs allows them to limit access through restrictive networks, under-reimbursement, and aggressive patient steering. These practices harm independent pharmacies and jeopardize health by disrupting continuity of care.
Restrictive Networks and Steering: PBMs often require patients to use their own pharmacies, frequently through mail order, misleading them into believing they have no other options. Even when plans allow the use of independent pharmacies, PBMs make it tedious to opt out, effectively limiting choice.
Under-Reimbursement and Clawbacks: Independent pharmacies that serve patients despite low reimbursements face financial strain. PBMs may pay below cost or use fees and recoupment methods to claw back margins, forcing some pharmacies to turn away patients.
Barriers to Medication Access: PBMs impose onerous prior authorization processes for medications that do not provide them with high rebates, delaying care and increasing costs. Counts notes that this has become a deadly issue in oncology care.
Aggressive Patient Pursuit: For profitable medications, PBMs aggressively pursue patients and their prescriptions, sometimes transferring prescriptions without permission or shipping medications without their knowledge.
These practices not only harm independent pharmacies but also jeopardize health by disrupting access to necessary medications.
Healthcare consultant Rita Numerof calls the FTC's investigation a "pivotal moment" in reforming the industry to serve patients' best interests.
The Need for Enforcement
The lack of punitive action in cases like the BCBS NC complaint raises concerns about the effectiveness of current enforcement mechanisms. Carl Schmid of the HIV+Hepatitis Policy Institute pointed out, "Without action to improve federal and state regulation, oversight, and enforcement, such discriminatory practices will continue." The BCBS NC case demonstrates that while policy changes can be achieved through advocacy and complaints, there is often little consequence for discriminatory practices.
Counts emphasizes that "PBMs are masters at derailing legislative attempts to rein them in." He argues that FTC enforcement is critical, as PBMs often ignore laws unless compelled to comply. Counts asserts that attacking the problem from multiple fronts is essential, and FTC action provides immediate and targeted intervention.
PBM Response and Industry Perspective
In response to mounting scrutiny, PBM executives have defended their practices. During the July 2024 Congressional hearing, leaders from CVS Caremark, Express Scripts, and OptumRx maintained that they do not engage in patient steering or discriminatory practices. They argued that PBMs play a crucial role in negotiating lower drug prices and improving healthcare affordability.
David Joyner, president of CVS Caremark, stated, "We're making health care more affordable and accessible for the millions of people we serve every day."
However, these assertions have been met with skepticism. The House Committee on Oversight and Accountability, led by Chairman James Comer (R-Ky.), has accused PBM executives of making statements that contradict findings about self-benefitting practices.
Legislative Efforts: The Pharmacists Fight Back Act
In addition to regulatory actions by the FTC, legislative initiatives are crucial for comprehensive reform. The Pharmacists Fight Back Act (H.R. 9096), introduced by Representatives Jake Auchincloss (D-MA) and Diana Harshbarger (R-TN), aims to:
Establish Standard Pharmacy Reimbursement:
Proposes a reimbursement model based on the National Average Drug Acquisition Cost (NADAC) plus a state dispensing fee and an additional 2%. This model prevents underpayment to independent pharmacies and curbs price gouging by PBM-owned pharmacies.
Prohibit Predatory PBM Tactics:
Seeks to ban practices such as steering patients to PBM-owned pharmacies, exclusionary network designs, retroactive fees, spread pricing, and reimbursement clawbacks.
Mandate Rebate Transparency and Application:
Requires that 80% of all PBM-negotiated rebates and fees reduce patients' out-of-pocket costs, with the remaining 20% lowering insurance premiums.
Counts stresses the urgency of passing this legislation to save pharmacies and reduce drug pricing: "Its immediate passage is critical to stopping the pharmacy closure and drug pricing crisis in this country."
Potential Outcomes and Industry Impact
If successful, the FTC's action could reshape the pharmaceutical industry by forcing PBMs to prioritize lower net drug prices, benefiting patients with more affordable medications and increased pharmacy choice. A ruling against PBMs could set a legal precedent, opening the door for further regulatory action or private lawsuits against PBMs and other healthcare intermediaries.
Independent pharmacies stand to benefit considerably from potential reforms. If the FTC's action results in more transparent pricing practices and limitations on patient steering, these businesses may be better able to compete with PBM-owned pharmacies.
However, given PBMs' significant resources and influence, changes may be hard-fought and take time to implement. There is the possibility that PBMs may find new ways to maintain their market position and profitability.
Impact on Independent Pharmacies
Independent pharmacies are closing at an alarming rate—nine per day, with 2,275 closures so far in 2024. This trend reduces access to personalized care and diminishes competition, further consolidating PBMs' market power.
Counts conducted a study in Virginia, matching pharmacy closures against openings using data from the Virginia Board of Pharmacy. He found that "community pharmacies are closing at twice the rate they are opening, and this rate is accelerating." Without significant reform, including FTC enforcement and the passage of H.R. 9096, the pharmacy infrastructure in the United States will continue to erode.
Conclusion and Call to Action
The FTC's actions, along with legislative efforts like the Pharmacists Fight Back Act, are critical steps toward creating a fairer pharmaceutical industry that prioritizes access and affordability.
We urge readers to:
Stay Informed: Follow developments in PBM regulation and reform efforts.
Research Legislation: Contact your representatives to inquire about pending legislation.
Engage with Advocacy Groups: Support organizations like PUTT (www.truthrx.org) and the HIV+Hepatitis Policy Institute (www.hivhep.org).
Share Experiences: Raise awareness by sharing your experiences with PBM practices. PUTT is collecting stories to highlight the real-world impact of PBM practices. Visit their PBM Horror Stories page to share your story anonymously.
Collective action is essential to ensure meaningful and lasting change in drug pricing and access. The FTC's action is a significant step, but it's up to all of us to ensure this momentum leads to a more transparent, equitable, and patient-centered healthcare system in the United States.
2023: Regulatory Items to Watch
Last week, the politically interested got to watch a preview of how the United States federal government will approach legislating for the next two years – it’s not pretty. With the narrowly divided U.S. House of Representatives barely eking out enough votes to select a Speaker, nearly coming to the time old tradition of fist fights in the process, passing meaningful legislation will be fraught, regardless of the issue at hand. None of that takes into account that Democrats still control the U.S. Senate (even if also by a narrow margin) and the priorities of both chambers are now split by party. There may be some surprising room for agreement though. As of the time of this writing, this may well be the first Republican-controlled Congress that is not riding on a platform of repealing or replacing the Affordable Care Act (ACA). That doesn’t mean potentially meaningful changes couldn’t come, it’s just highly unlikely.
That leaves the courts, which we discussed in our last blog, and the Biden Administration’s own executive authority through regulatory agencies to carry the burden of change through the 2024 election cycle. A few things to remember include the previous administration’s actions to pack the federal judiciary, including Supreme Court seats, the dynamic controls of implementation priorities between states and the federal government, and the Biden Administration’s support for insurers over the last two years will shape what we might see in terms of regulatory action.
A prime example of all of these factors playing out can be seen in Judge Reed O’Connor’s September 2022 ruling on Braidwood, wherein O’Connor ruled the ACA “preventative services mandate” was unconstitutional particularly because of the plaintiff’s objections to covering pre-exposure prophylaxis (PrEP) as violation of their religious beliefs and because of some wonky interpretation of delegation of powers or what defines an agent of the government and the process by which those agents are appointed. Notably, O’Connor has been previously overruled on highest profile rulings, mostly those with extreme anti-gay and anti-ACA positions…repeatedly. As this case makes its way through higher courts, the 5th Circuit is next, states may have the chance to implement their own versions of minimum benefits and services insurers and covered entities must provide. Much like the issue of Medicaid Expansion, this type of action would further disparities across states in terms of access to care, but would provide some protection for minimum coverages for residents of those states. Here we have the Biden Administration’s interpretation of both the law and the entity responsible for implementing the law, a federal court’s disagreement on process, and the state dynamic of “what do we do now?”
Let’s take a look at the annual Notice of Benefit and Payment Parameters (NBPP), issued to describe how insurers and providers must handle certain nuanced rules and regulations for a given benefit year. NBPPs are generally issued in the year prior to when the rule should go into effect, sometimes a little earlier but in enough time for insurers to make sure their plan offerings comply with the rule. The 2023 NBPP included provisions on the ACA’s non-discrimination rule and an effort to strengthen coverage and services to LGBTQ patients. This operated as a nod toward the Biden Administration’s aim at addressing rule-making for the ACA’s actual non-discrimination rule, known as Section 1557 (which has been subject to numerous lawsuits, including those in front of O’Connor). The 2024 NBPP, proposed rule (not final), looks to address some definitions of “network adequacy”, or making sure the benefit networks offered by insurers are meaningfully useful for patients and, with some theorized framework, hopes to make selection of a qualified health plan off the federal marketplace a little bit easier by introducing standardization. Watching NBPP final rules and processes will remain a prime opportunity to advocate with regulators, both state and federal, and read tea leaves of other regulatory actions down the road (in the 2023 NBPP final rule, which includes answers to some comments made about the proposed rule, the Biden Administration directly answered that it would be addressing Section 1557 in response to questions as to why the non-discrimination provisions did not go further to more explicitly protect transgender patients).
The Biden Administration will also get the chance to start to implement and define the rules around its prize jewel, Inflation Reduction Act (IRA), which, among other things, introduces the idea of drug price negotiation in public payer programs like Medicare.
Before we jump on some details to watch there, it’s important to note, the provisions of the IRA affecting drug pricings do not necessarily have a direct impact on what patients pay at the pharmacy counter and have zero impact on those patients not enrolled in affected public payer programs. Furthermore, when politicians of all stripes tout “saving money” in public payer programs, they’re not necessarily talking about patients saving money. Indeed, most of the time they’re not. They’re talking about reducing the costs to the federal government for operating those programs – sorta. The way it works is the federal government can’t really handle all of the medical and medication claims associated with these public payer programs, so they contract with private insurers or encourage patients to enroll in supplemented private plans to handle these claims and reduce the labor and expertise burden on the federal government. States do this too with Medicaid. However, those companies, particularly pharmacy benefit managers (PBMs) handle the costs of medications and formularies, engage in all the same dirty tricks with their public payer programs as they do with their private plan offerings, including abusive prior authorizations, step therapy, network limits, and steering patients to mail-order pharmacies which those entities then own. There’s little oversight given and limited regulatory action to prevent these private entities handle the administrative processes of these programs from abusing their role for the sake of their own profits.
Indeed, pharmacy benefit managers came about in our ecosystem promising to negotiate prices on medications already. And they have, in large part, successfully done so, either consuming dollars through rebate programs or negotiating lower prices by buying in bulk. However, PBMs haven’t shared those savings with patients, despite that being the selling promise. In fact, PBMs have been one of the fastest profit-growth businesses in the country because they’re not passing on those savings to patients.
That’s right, drug prices are already negotiated. So why haven’t we, as patients, really seen the benefit of that? Why are patients having to argue with their insurers constantly to get the medication coverage they need or watching their medication formularies shrink? Cuz PBMs are in desperate need of regulatory control. Hopefully, the Federal trade Commission’s most recent inquiry into their business practices will shed some light on these issues and well-motivated constituents can remind their Senators and Representatives we need more action. We’ll also need pressure on the Biden Administration on these issues. They’ve dodged it so far.
Back to the IRA, there’s some pretty cool stuff in the health care pieces. Particularly, the cap on insulin copays for Medicare patients is a big deal. The limit on out-of-pocket costs Medicare patients will pay on the medications is also a massively big deal. These are the provisions that will benefit affordability the most for most Medicare patients. But we’ll need to watch for our veggies on this plate, as it were. The trade-off might look like PBMs further limiting formularies and advocates need to keep an eye out for that. Cautious advocates have much to celebrate in these pieces, as they directly affect affordability of and access to care, and should remain watchful for how implementation and enforcement rolls out but also as to any unintended consequences which may need additional answers later.
Now, the drug pricing and negotiation pieces on the other hand, might dicey as time goes on. Nothing in the IRA requires any “savings” private administrators might receive or the federal government might view to be passed onto patients. Nothing. Furthermore, certain pieces of the IRA prevent judicial review, which means if patients find themselves adversely affected by a regulatory move or certain implementation of the IRA, they can’t sue to government to fix the issue. That’s never a good thing. It’s also a particularly bad thing to include in any legislation, especially as we look down the barrel of patients losing their right to private action to seek enforcement of non-discrimination and disability protection laws (again, see our previous blog). We should always retain the right to seek redress under our judiciary, even if only to give light to how “bad” legislation (or short-sighted provisions) might be hurting patients. One of the pieces affected by the non-review bit includes the “what-if a manufacturer refuses to play ball on negotiation of a particular medication?” The answer is the feds have the right then to remove ALL of that manufacturer’s medications from covered public payer programs. Now, that might seem like the manufacturer is the bad guy there. But the drugs targeted by the IRA are the highest cost medications on the market and the highest cost medications on the market are those typically designed to treat or manage rare, chronic, or life-threatening illnesses and in which there are limited or no alternatives. These areas also happen to be where manufacturers have been leading medications for quite some time, to the benefit of patients. More personalized medications mean more specific care for a patient’s needs. The “negotiation”, which is really not a negotiation when an ethical manufacturer seeking to recoup costs and generate enough revenue to reinvest in discovering and developing new medications, investing in underserved disease states, is essentially forced to take a hit or have their entire portfolio yanked out from patients. “Take the hit or we’ll hurt the people that it’s your mission to serve.”
Now, I have plenty of criticism for our industry friends. This shouldn’t be taken as “oh you’re a shill” moment. Rather, my biggest disagreement is the inability of patients who might lose access to medications to seek redress and the lie which premises the need for the federal government to “negotiate” prices. As described above, negotiation already happens and they dynamic of this law isn’t “negotiation” but hostage taking. And patient access to care is what’s being held hostage. None of that addresses what some suspect will be manufacturer responses by consolidation in the industry and increases in launch prices. Essentially, these provisions only put a bandaid on a gaping wound and it’s not even on the wound the public cares most about. It’s kinda hanging off to the side.
Ultimately, my view is the federal government should gladly invest in our care. “Cutting cost” has always and will continue to sound an awful lot like “that’s not something we really wanna spend money on or invest in”, regardless if it’s a private insurer or a politician. Our care, our health, our families matter and they should be an investment priority for political leaders.
We’ll spend plenty of time later this year discussing the other “alligators” “closer” to patients than manufacturers and why we need to address those actors first.
Future legislation that seeks to make care more affordable and accessible needs to work from the perspective of patients, not insurers.
The last thing we’re gonna touch is something that pretty much every patient advocate can celebrate, so long as it’s done right. In the later end of 2022, the Biden Administration proposed a rule to improve patient and provider experiences with the administrative burden insurers love to impose on us. Particularly aimed at addressing electronic health data exchanges and streamlining prior authorizations (PAs), a process which has been wildly abused by payers, the rule hopes to improve patient experiences in care. Often times, PAs result in denials of coverage in which a patient (or provider on a patient’s behalf) must appeal to the exact same payer that denied coverage in the first place. Those letters are often vague or confusing, or in my own situation for hormone replacement therapy, tell patients to try something they’ve already tried or was already included in the provider’s rationale for a specific medication or treatment course. The rule requires more specificity in reasons for denials, which would allow a provider to more directly address those reasons as inappropriate for the patient or, as is the case sometimes, not even based in medical science. The rule also seeks to speed up the process. Currently, many patients have to wait weeks if not months to get responses on PAs or appeals. The rule would require most PAs to be answered inside of 7 days or inside of 72 hours, if it’s urgent. The rule also forces payers to begin using more modern technology to review PAs. Rather than outdated forms, faxes, and even mail, payers would have to provide either a web portal or direct email address in which patients and providers might more securely ensure their request has been received. Lastly, the rule would require payers to post specified PA metrics. Be it care or medication, patients and providers would be able to view on a payer’s website just how often they deny care and how much burden that payer is going to place on them to receive the care they’re entitled to.
Now, the PA rule is, as many, limited in scope but not by much. It would apply to Medicaid managed care plans, ACA plans, the Children’s Health Insurance Program, and Medicare Advantage plans – nearly everybody.
Regulatory actions won’t be limited to these so keep an eye out!
CMS Sides with the Devil: Insurers’ Co-Pay Accumulators Remain…for Now
The Affordable Care Act (ACA) was revolutionary in how prescriptive statutory language was in ensuring health insurers (payers) covered costs associated with pre-existing conditions, if they accepted even a penny of federal funding. The trade off was a simple theory: “cover more people and their entire health and we’ll make sure you’re still profitable”. There were hundreds of pages of caveats, definitions, incentives for public programs, pharmaceutical research, and regulatory authority passed to state and federal agencies. Everyone got a piece of the pie to the end benefit of Americans for whom health care had been out of reach for the majority of their lives. We would be healthier together by simply providing people the care we need and reducing overall costs. However, as these things go, payers are creative and pay their lawyers handsomely to find ways around that basic agreement. As payers fight to “contain costs”, co-pay accumulator programs are one of the most disingenuous methods to limit consumer access to quality care and pad payers profit margins.
From issues of discriminatory plan design, or making consumers pay the highest cost-sharing for medications which are only used to treat certain conditions like HIV, to limiting provider networks in such a way that a patient requiring a surgery or emergency care results in surprise bills to toxic practices known as “utilization management” (including, but not limited to, abusive prior authorizations and step therapy, also known as “fail first”), payers have paid their lawyers quite well to find loopholes or design new problems in order to maintain their profits. The ACA’s medical loss ratio (MLR) rule, also known as 80-20/85-15 rule (in general requiring 80% or 85% of a plans premiums to actually be used on costs of care or pay back to balance to consumers) has resulted in a startling 2 billion dollars to be paid back to consumers in 2019 alone. But the rule doesn’t necessarily count other income payers can produce by way of cost-sharing or deductible payments, co-pays (a fixed price typically paid after deductibles are met for care and medications), and – now, more commonly – “co-insurance” (a percentage price typically paid after deductibles are met for care and medications) as part of that rule. The result is consumers and those who would like to see us get the quality, individualized care we need are being put on the hook for payers’ greed.
Patient advocacy often has interesting bedfellows. And at the intersection of our care interests and that of industry, pharmaceutical manufacturers have found what can arguably described as a somewhat socialist model by way of patient assistance programs, often enacted as co-pay card or discount programs aimed at directly benefiting patients by taking care of the patients’ share of a medication’s cost. These programs are quite frequently limited by income or if a person is insured. The idea being to make sure the most costly medications make their way into the hands of the people who need them most and can least afford them. In this, our interests as patients absolutely converge with that of manufacturers. We want quality therapies made available to us. However, when a medication “goes generic”, often these programs are no longer available as a less costly, generic medication is preferred by the payer unless a patient fails that particular medication (see: step therapy, “fail-first”). The problem is generic medications are not held to extraordinarily strict requirements for Food and Drug Administration (FDA) approval that brand name medications are held to. Indeed, earlier this year, Vice offered a fantastic explanation of the problem with preferencing generic medications by payers (both public and private) is harmful to patients and why our generics “approval” process is a threat to the health and safety of patients. It’s no wonder, with the lax oversight of generic medications and the offer of payment assistance from manufacturers that patients would want access brand name and newer medications on the market.
One of the most amazing benefits of patient assistance programs is, in theory, because they’re meant to cover the patient’s cost-sharing obligations, these out-of-pocket (OOP) costs should apply to the patient’s deductible and OOP maximums and reduce the cost burden to patients for future care throughout the plan year. Right?
Wrong.
Payers have near uniformly adopted a practice known as “accumulator adjustment programs”, or co-pay accumulators, in which a payer basically says to a patient and a manufacturer “all for me, none for thee”, taking the entirety of the benefit offered by a patient assistance program and not crediting the patient with those funds received against the patient’s deductible, co-pay or co-insurance, or out-of-pocket maximums. To boot, manufacturers have zero control over this practice and often don’t know when it’s happening until a patient complains about the experience. Payers justify this move as “cost-containment” and disincentivizing patients from seeking more costly medications – which translates to newer, more effective, safer medications (go back to the problem with generic approvals above).
So far, the Centers for Medicare and Medicaid Services (CMS), the primary authority in which payment rules are issued from the federal government to payers, have generally made extraordinary effort to ensure protect the interests of patients and those who align with our interest. In the instance of CMS’s newest rebate rule, CMS chose to side with payers for some inexplicable reason. The rule states pharmaceutical manufacturers, not payers, would have to count these direct-to-consumer assistance programs among “best price” calculations, which govern Medicaid rebate price setting or what the government pays for a medication, if a patient didn’t receive 100% of the benefit of the assistance program. Previous rules on what to consider in calculating “best price” were generally limited to prices negotiated within industry movers inside the supply chain, not that of end users. The theory goes like this: “if ultimately this assistance program is paying an insurer’s bottom line and not helping patients, then it should be considered a price you (manufacturers’) negotiated. You were planning for that in setting your prices anyways, right?” Pop quiz answer: wonky negotiations with payers is not what manufacturers were planning on in designing income limited, only-accessible-by-consumers-asking for-it assistance programs. The solution CMS offered was for manufacturers to ensure patients received the intended benefit by requiring patients to pay for a medication up front and then ask for reimbursement – a process that only makes medication access and affordability infinitely more complicated and burdensome for patients.
In the end, CMS decided that in response to an excessively abusive payer practice that disadvantages patients, the answer was to create further barriers to accessing care for patients rather than to reduce them.
Let’s make this real and “back of the envelope” this practice in terms of realized patient experiences:
Monthly Income: $2,583 (based on average US income in 2019 provided by the Census Bureau)
Monthly premium: $304 (lowest cost local silver deductible is $3,400, OOP maximum is $8550, co-insurance is 20-40%)
Absent a public payer intervention, co-pay accumulators might allow a patient assistance program to cover the estimated $600 per month co-insurance would demand for a certain medication, however, I’m not likely to meet my deductible or maximum OOP for the year at all. With local rent costing about $1000 per month, a car payment and car insurance in order to work (there’s no meaningful public transit in the vast majority of the country), food costs, utilities, etc. Even with federal subsidies provided via the health care market place, every month, I’m in the negative. Which means I can’t afford to see my doctor or get my quarterly labs, which means I can’t get my medication in the first place.
However, without the application of a co-pay accumulator, accessing just 3 month’s worth of a patient assistance program would meet my deductible and maximum OOP costs for the year. I don’t have to worry about at least $200 per month in medical costs. And one less financial strain is off my shoulders.
For the vast majority of us, our medications are not a luxury item. They’re not something we can afford to pay for up front and mail-in a rebate request and wait months for. In doing so, CMS not only suggests an increase to the paperwork burden on patients and manufacturers alike, CMS also seeks to increase barriers to accessing life saving medications to begin with.
All to the benefit (read: profit) of payers. So it’s no wonder the trade organizations, Pharmaceutical Research & Manufacturers of America (PhRMA) chose to initiate a lawsuit to halt the implementation of CMS’s backwards and punitive rule.
While patient advocates may spar readily about the role of industry among advocates, we should also recognize actions that align with our own interests on their face. Yes, PhRMA may be leading up this suit - and CMS should listen to the needs of patients, reverse course, and voluntarily pull this rule.