September 18, 2024

The battle over copay accumulator programs reached a turning point in 2023, with court decisions and state-level legislation creating a complex patchwork of regulations that pharmaceutical manufacturers and payers must navigate. This evolving landscape has forced both sides to reassess their approaches to patient assistance programs and drug pricing strategies.

Legal Landscape Update

Last September, the U.S. District Court for the District of Columbia ruled in HIV and Hepatitis Policy Institute et al. v. United States Department of Health and Human Services (HHS) that the 2021 HHS rule giving insurers discretion to operate accumulator adjustment programs was "arbitrary and capricious."¹ The court therefore set aside the 2021 rule, effectively reinstating the 2020 accumulator rule.

This decision, solidified by the Centers for Medicare and Medicaid Services (CMS) and HHS withdrawing their appeal in January, means insurers can only exclude manufacturer assistance from out-of-pocket calculations for brand-name drugs with available and medically appropriate generic equivalents.² This will certainly reverberate across the industry, particularly for pharmacies, hubs, copay vendors, and drug manufacturers.

State of the States

As of summer 2024, 20 states, the District of Columbia, and Puerto Rico, have enacted laws addressing copay adjustment programs.³ These laws generally require that any payment or discount made by or on behalf of the patient be applied to a consumer's annual out-of-pocket cost-sharing requirement.

Importantly, these state laws only apply to state-regulated health plans, including the individual, fully insured large-group, and small-group markets. This is just 19% of the total US commercial market, or 26.46 million lives, as the majority of employer-sponsored benefits are provided under self-funded plans (state bans generally do not apply to self-funded plans due to ERISA preemption).⁴

Want a deeper dive into copay accumulators? Check out Drug Channels for expert analysis and insights on these complex topics.

Payer Strategies Evolve

Despite legal and regulatory challenges, our 2024 Payer Oncology Annual Trend Report shows that payers remain committed to copay card aggregator programs. Eighty-nine percent of surveyed payers plan to maintain or increase their use of these programs over the next two years. Currently, 26% of plan members are currently enrolled, with national payers reporting slightly higher enrollment at 31%.⁵

This ongoing interest highlights the value payers see in these programs, but it also raises questions about how they’ll balance compliance with cost management in an evolving regulatory landscape.

Manufacturer Challenges and Opportunities

For pharmaceutical manufacturers, this evolution presents both challenges and opportunities. As traditional copay accumulator programs face increasing scrutiny, payers are exploring alternative approaches. Our research indicates a growing interest in maximizer programs, which spread the value of copay assistance evenly throughout the benefit year. In fact, 54% of surveyed payers expect to increase their use of maximizer programs in the next two years.⁵

These shifts could have significant implications for how manufacturers structure their patient assistance programs, particularly for specialty drugs. According to HHS, specialty drugs represented 50% of total drug spending in 2021, an increase of 43% since 2016.⁶ This trend underscores the growing importance of specialty medications in the pharmaceutical landscape.

Furthermore, the concentration of spending on a small number of high-cost drugs adds another layer of complexity to the copay accumulator debate. The same report reveals that the top 10% of drugs by price make up fewer than 1% of all prescriptions, but account for 15% of retail spending and 20%-25% of non-retail spending.⁶ This concentration of costs makes copay assistance programs particularly crucial for patients requiring these high-cost medications.

What’s Next?

As we navigate these changes, several key questions emerge:

1. How are payers and manufacturers adapting to the reinstated 2020 accumulator rule, which limits accumulator programs to brand drugs with medically appropriate generic equivalents?
2. With state-level regulations all over the map (literally), how are national payers and manufacturers developing cohesive strategies that comply with this patchwork of regulations?
3. As payers shift towards maximizer programs, how are manufacturers adjusting their patient assistance strategies to ensure patient access while protecting their bottom line?

These questions are at the heart of the ongoing debate over copay accumulator programs, a debate that has significant implications for patient access, drug pricing, and the broader health care ecosystem. As we continue to monitor these developments, it's clear that both payers and manufacturers need to remain agile, adapting their strategies to an increasingly complex regulatory environment.

For a comprehensive analysis of these trends and their potential impact on your organization, explore our 2024 Payer Oncology Annual Trend Report. This report offers detailed insights into payer strategies, market access challenges, and emerging opportunities in the evolving landscape of oncology care, providing valuable context for navigating the complexities of copay accumulator programs and other key issues in today's healthcare market.

Join me on Wednesdays as I highlight key court decisions, review notable health policies, and analyze what’s behind the bill in health care.

References

1. HIV & Hepatitis Pol'y Inst. v. United States HHS, No. CV 22-2604 (JDB), 2023 WL 6388932 (D.D.C. Sept. 29, 2023).

2. Davis JI, Hess MR, Mosey W, Wiley S. CMS & HHS withdraw appeal to recent copay accumulator federal district court decision: 2020 accumulator rule still in effect. Bass, Berry & Sims PLC. February 5, 2024. Accessed September 15, 2024. https://www.bassberry.com/news/cms-hhs-withdraw-appeal-to-recent-copay-accumulator-federal-district-court-decision/

3. Gooding M, Sikora K, Finkel M. State copay accumulator bans will affect 19% of US commercial lives. Avalere. Updated June 22, 2023. Accessed September 16, 2024. https://avalere.com/insights/state-copay-accumulator-bans-impact-11-of-us-commercial-lives

4. National Conference of State Legislatures. Copayment adjustment programs. Updated June 11, 2024. Accessed September 15, 2024. https://www.ncsl.org/health/copayment-adjustment-programs

5. HMP Market Access Insights. 2024 Payer Oncology Annual Trend Report. August 2024.

6. Parasrampuria S, Murphy S. Trends in Prescription Drug Spending, 2016-2021. Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. September 2022. Accessed September 16, 2024. https://aspe.hhs.gov/sites/default/files/documents/1ddbad7534ad85d77b7600eec414d29c/prescription-drug-spending-trends.pdf