On May 5, AbbVie Inc. filed a lawsuit (1:23-cv-02836) against Payer Matrix, LLC in the U.S. District Court for the Northern District of Illinois Eastern Division over its “fraudulent and deceptive scheme to enrich itself by exploiting AbbVie’s PAP [patient assistance program] through the enrollment of insured patients into a charitable program not intended for them.” Payer Matrix tells AIS Health, a division of MMIT, that it “vehemently dispute[s] the allegations.”
Prior to the filing and shortly before AbbVie updated its PAP language earlier this year, AIS Health conducted an interview with Michael Jordan, Payer Matrix’s chief business officer (CBO), to learn more about the company’s practices.
AIS Health: Logistically speaking, how does Payer Matrix operate?
Jordan: Payer Matrix is predominantly staffed with advocates whose background includes physicians, Pharm.D.’s, Pharmtechs, nurses, clinicians, as well as others with [a] health care background. Their role is to work closely with the patient who is on a brand specialty drug that has a program offered to the underinsured population. That advocate will assist the patient through the process in completing the application and compiling what is needed (tax documentation, pay stubs, etc.) to submit to the drug manufacturer program.
AIS Health: Why are self-funded plan sponsors adopting programs like Payer Matrix?
Jordan: Plan sponsors, whether private sector, public sector or Taft-Hartley, are struggling with overall health care costs. Drug costs have risen significantly over the past 10 to 15 years, and although nationally it only represents 10%+ of the health care dollar, many of the plan sponsors we are working with are seeing drug spend represent 25% to 30% of their overall health care spend.
Generic drugs for those plan sponsors represent 90% of the script volume. Brand specialty only comprises 1% to 2% of the population and less than 5% of the script volume, but for a self-funded plan sponsor, we continually see 50% plus of the drug spend being driven by that 1% to 2% of the plan sponsor population.
To put that in perspective, you could have a 1,000-life self-funded plan sponsor, and 10 to 20 of the lives are driving more than 50% of the overall drug cost. In many instances there are no alternatives to those products, or some of the alternatives are not as effective. Just think about that metric — if average drug cost per employee per month (PEPM) is $100 (very conservative number which includes the value of rebates) or $1,200 annually, then on a 1,000-employee life group is $1.2 million per year. Fifty percent of that, or $600,000, is being driven by 20 people, or 2% of the population.
If you ask any CFO, health benefits consultant or broker what is the at the top of their list of health care cost concerns, the answer would be (resoundingly) brand specialty drugs — what is out there now and what is in the FDA pipeline.
Lastly, remember self-funded plan sponsors’ health care dollars are funded by the actual participants. Employees or members of self-funded plan sponsors are truly “footing the bill” because they are either directly contributing through payroll contributions or an hourly rate that goes into benefits (like a labor fund), or they are contributing indirectly through loss compensation, reduced benefits, lost bonuses, lost profit sharing or a reduction or elimination of retirement benefits.
Bottom line, plan sponsors and their participants are struggling to meet financial obligations, and eliminating certain benefits such as specialty drugs is one way they can achieve significant savings.
AIS Health: How many clients does Payer Matrix have?
Jordan: 500+ plan sponsors use our advocacy service today.
AIS Health: If a patient has to switch to a different drug, how do you determine what the new drug is? Do you make sure the new drug has the same mechanism of action as the prior one?
Jordan: Payer Matrix does not suggest medication changes and relies on the PBM/provider to approve the most appropriate medication for the member. If a new medication is needed, the provider sends the prescription to the PBM, and if approved, we are asked to help. We work on the medication that is prescribed and pursue assistance if available. It’s important to note that drug manufacturer patient assistance programs many times also provide clinical oversight, as that may be one of the requirements for access.
AIS Health: Do you have one list of specialty drugs, or do you personalize a list for each client? How are drugs selected for inclusion?
Jordan: We predominantly offer one drug list although based on PBM requirements or plan sponsor needs, we can customize. We continually review the market for new products that aid with underinsured patients.
AIS Health: I see that funding is obtained through copay assistance cards, patient assistance and foundations. Can you break down how much assistance comes from each of those entities?
Jordan: The bulk of the assistance that Payer Matrix advocates for is patient assistance, whereby the plan sponsor has excluded brand specialty products. There is very little (less than 1%) that is accessed through foundations.
AIS Health: Do you ever secure products from outside of the United States?
Jordan: No. Payer Matrix will not source any product outside the United States, due to several reasons, including regulatory compliance, risk and the additional burden this places on the member.
AIS Health: How do you respond to the contention that companies like yours are taking away assistance from underinsured and uninsured patients who truly need it and are abusing charities?
Jordan: There is a considerable amount of misinformation on funding of the programs drying up. Frankly, that statement has been made to me, and my response has been please provide me with proof, evidence or documentation that can substantiate that claim. The confusion may lie in some of the foundations that help support fully insured members or government programs. When all other forms of assistance have been exhausted, they may run out of assets before the calendar year ends. We don’t access those funds or programs. Every drug on our list that we can help patients access has not run out of funding.
It is also important to note when a plan sponsor excludes products from its formulary, its participants become underinsured, which is one of the requirements of accessing a program. Remember the bulk of the programs as well have financial qualifications or maximum annual household limits to qualify. I won’t name the drug, but the No. 1 specialty drug has an income maximum of $157,600 for a family of four. The requirement for that program is you must be underinsured and fall below that income threshold.
To put that in perspective, 80% of the country makes less than $150,000 a year, and the median income for 2022 is just over $70,000. Many of the programs have income limits of 50% to 100% over the U.S. median income levels, [which] raises the question [of] are those individuals poor, needy or financially challenged?
What is important to note is that much like “free product given to physician offices,” the patient assistance programs also represent tax deductibility for the pharmaceutical manufacturer. Programs like this also impact market access — drug manufacturers compete against each other for patient volume, and this is one pathway they embrace.
AIS Health: I have been told companies like yours make money by retaining a percentage of whatever you find in savings, anywhere from 20% to 30%. Is this accurate? Do you get any other fees, such as a per-employee per-month fee?
Jordan: The range of pricing you provided is generally accurate. We know of competitors charging 30% to 50% as well. The cost basis of that savings is important as well, meaning what are [you] basing your savings from.
We are looking at hybrid pricing models. We offer several services where there is no invoiced fee for the advocacy work, and keep in mind we view this much more as an overall concierge care management service and not just “cost containment.”
AIS Health: How do you ensure that your clients do not run afoul of ERISA and IRS regulations as outlined here?
Jordan: Payer Matrix has retained outside counsel to review our advocacy model, and the opinion has been (by more than one firm) that plan sponsors are not running afoul to ERISA or IRS regulations. Beyond that with over 500 customers, our program has been vetted out by dozens of attorneys who specialize in ERISA and have come to the same conclusion. Add to that there are several other competitors offering similar services to nearly 10% of the self-funded plan sponsor marketplace, with upwards of 30% to 35% reviewing strategies like this one, [people] should find it odd that advocacy programs like this continue to grow and add value.
AIS Health: How long does it generally take for Payer Matrix to obtain alternative funding?
Jordan: The time can vary from 24 hours to three weeks. Much of it depends on how quickly the patient and provider (when needed) supply us with the information we need to finalize the patient assistance application, as well as how quickly the manufacturer program can review and render a decision.
AIS Health: How do you make sure that patients qualify financially for assistance?
Jordan: Payer Matrix can only assist the patient in compiling the needed documents to be filed. Ultimately the approval will depend on the income documentation provided by the patient. The drug manufacturer requirements are generally clear, but all we can do is help facilitate the filing of the application; we cannot guarantee or help a patient qualify.
AIS Health: How often are patients denied assistance from a third party?
Jordan: Historically we have found more than 80% of the patients we have worked with met the eligibility requirements of the product they were prescribed. When you take into consideration the U.S. population median incomes, that would make sense since the bulk of the of the programs are income sensitive.
AIS Health: Once Payer Matrix secures assistance, does that party provide the drug via brown bagging or white bagging? If not, how is that drug distributed?
Jordan: Most of the assistance we have secured on behalf of the patients we work with has been shipped directly to them via the drug manufacturer or a specialty pharmacy. The term “brown bag” or “white bag” is a term directed at products that require physician assistance — in other words, requires the physician to administer. Most, if not all, drugs dispensed on the retail side would not apply to this. For those drugs that physicians administer, the drug can be brought in by the patient (brown bagging) or shipped directly to the physician (white bagging).
The physician may push back on brown bagging because of tampering or potential quality/efficacy issues. When a physician pushes back on white bagging, it typically comes down to revenue.
Some physicians won’t accept “free drug” products often simply because it eliminates their revenue stream. Often the same specialty pharmacy they were getting the drug from can dispense on behalf of a patient assistance program — so if the physician’s office can get it from the same place they normally do, why else would they not accept that?
Further to that there are providers out there charging average wholesale price (AWP) x 5 or x 10, and if assistance is put in place, that means a significant amount of revenue is lost (on the PBM side this doesn’t happen because all specialty drug pricing is on a basis of AWP – XX%). To reiterate, when we are able to get assistance, the medication is shipped to the provider directly from the manufacturer or from a licensed specialty wholesaler…usually the same entity the physicians buy drugs from.
AIS Health: How do you handle a situation where a patient’s provider does not accept any free drug?
Jordan: We will advise the patient and plan sponsor. We will also attempt to determine the reason why they won’t accept the free drug product. Sometimes the objection could be that they are opposed to using an internationally sourced product where you cannot confirm the pedigree. Our preference is for the provider to continue to administer the medication for the member, so we explain that the medication, if approved, is coming from a reliable source — from the manufacturer or a licensed specialty distributor — that the member would have medication sent to the office and they would be able to bill for any administration or infusion codes as well as supplies.
If all else fails, we may work with the patient to find a provider who will infuse the “free drug” medication. There are also services available that are most cost effective that include home infusion.
Eventually the plan sponsor’s third party administrator and care manager will advise the provider in advance of the services they are requesting that the drug itself cannot be billed for. All other services are eligible for billing, but the cost of the drug is ineligible since the plan has excluded it from overage.
AIS Health: Is there anything else I’ve neglected to ask that you would like to add?
Jordan: I can’t underscore [enough] the financial impact that brand specialty drug products are having today in the commercial marketplace, and the cost and scope will expand significantly in the next five years, as more than 5,000 brand specialty products will receive FDA approval.
Many of the products will provide opportunities for those with rare disease conditions to improve their health and slow the progression of that disease, but that will saddle the commercial market with even greater costs.
The ability to manage and control these costs better will also have significant impact on stop-loss pricing — which for many plan sponsors is protecting them from bankruptcy and passing all that cost back onto their employee/member populations.
This article was reprinted from AIS Health’s monthly publication Radar on Specialty Pharmacy.