CMS Rule on Pharma Patient-Assistance Programs Could Cut Back on Aid

CMS’s stance has long been that manufacturer-provided assistance given to patients is excluded from best price and average manufacturer price (AMP) calculation for prescription drugs. However, the rise of copayment accumulators and maximizers — and health insurers’ subsequent taking of this assistance rather than allowing it to count toward patients’ deductibles and out-of-pocket maximums — has caused the agency to rethink its position. A rule slated to take effect at the beginning of 2023 would reverse that longtime approach, potentially resulting in increased patient out-of-pocket costs for drugs and pharma companies being on the hook for ensuring they know exactly where their assistance is going, industry experts tell AIS Health, a division of MMIT.

The Medicaid rebate rule allows state Medicaid programs to get the same discounts on drug prices that manufacturers offer commercial plans purchasing prescription drugs. Manufacturers pay rebates to Medicaid programs that are calculated based on drugmakers’ best price, which is the lowest price the manufacturer gives to most providers of health care services or items, including hospitals, HMOs and MCOs — but not patients. It includes any price adjustments, such as discounts and rebates, but not manufacturer-provided assistance to patients.

Traditionally, when a manufacturer provides copay assistance for one of its drugs, that dollar amount would count toward the patient’s deductible and out-of-pocket maximum. But copay accumulator programs — also known as accumulator adjustment or variable copay programs — prevent those funds from applying to the deductible and out-of-pocket limit. Instead, when members have used all of the copay assistance available to them, their payments then start counting toward their deductible and out-of-pocket costs.

A similar type of approach is a copay maximizer program, also known as variable copay or copay optimization programs. Rather than using the accumulator approach of applying the maximum manufacturer assistance up front and depleting that contribution before the end of the year, maximizer programs will distribute 100% of available manufacturer copay offset funds over 12 months. This approach allows patients to pay less than they would in an accumulator program if they participate in a manufacturer’s copay offset program, never hitting their annual deductible and out-of-pocket max.

Copay accumulator and maximizer programs have proliferated in recent years. For the Managed Care Oncology Index: Q3 2021, between Aug. 24, 2021, and Oct. 11, 2021, Zitter Insights surveyed 40 commercial payers covering 114.1 million lives. Plans representing 38% of lives had implemented an accumulator program prior to 2021, while those covering 21% of lives had a copay maximizer program in place during that same time frame. In 2021, plans with 26% of lives implemented an accumulator program, and those with 28% of lives implemented a maximizer program. Plans with about three-fourths of covered lives did not differentiate the programs by therapeutic area and applied them to both retail and specialty products.

Zitter Insights also is a division of MMIT.

A CMS final rule (CMS-2482-F) — referred to as the Accumulator Rule — published Dec. 31, 2020, would require that:

(1) Manufacturers must ensure that their assistance programs’ benefits “are provided entirely to the consumer.…If any of the manufacturer-sponsored assistance is diverted to the plan, those amounts should be included when a manufacturer calculates its best price,” and

(2) When manufacturer assistance is not applied to a patient’s deductible or other cost-sharing obligations, “the assistance becomes a price concession to the health plan by delaying the point at which the health plan’s contribution toward the patient’s cost sharing begins, or reducing the value of the assistance to the patient, and thus should be counted in best price and, in certain cases, the calculation of the AMP.”

The rule is set to take effect on Jan. 1, 2023.

PhRMA Lawsuit Says Rule Is ‘Invalid’

On May 21, 2021, the Pharmaceutical Research and Manufacturers of America (PhRMA) filed a lawsuit (No. 1:21-cv-01395) seeking “a declaration that the Accumulator Rule is invalid, an injunction preventing the Defendants from implementing or enforcing the Accumulator Rule, and other relief as the Court deems appropriate.”

In its lawsuit, PhRMA notes that patients are not included among the providers eligible for best price, “presumably because Congress did not want to discourage manufacturers from offering discounts or other assistance to patients.” In 2007 regulations, CMS declared that “manufacturer-sponsored drug discount card programs, coupons and co-pay assistance” were excluded from best price calculation when those benefits go to patients. “Sales to patients are best price exempt,” declares PhRMA in a summary of the lawsuit. “By statute, assistance provided to patients must not affect best price for purposes of a manufacturer’s Medicaid rebates.”

According to the lawsuit, “CMS’s final rule contradicts the plain text of the Medicaid rebate statute by improperly requiring manufacturers to treat financial assistance that they provide to patients to help defray their co-pays and other out-of-pocket costs as part of the ‘price’ a manufacturer offers to commercial health insurers. Because this portion of the rule is inconsistent with the statute’s plain text and would be harmful to patient health, it is unlawful and invalid under the Administrative Procedure Act.”

Per PhRMA, “In the Accumulator Rule, CMS treats assistance offered by manufacturers to patients as if it were a price discount to health insurers, just because the insurers have figured out a way to take that assistance away from the patients for whom it was intended. That is simply not what the word ‘price’ means. A ‘price’ is the amount that a seller intentionally offers and voluntarily agrees to accept from a buyer. But here, the manufacturer does not intend to offer the financial assistance at issue to the health insurers, but rather wants it to fully benefit patients. The health insurers are acting against the manufacturers’ will. That is not what the law means when it says ‘lowest price available.’”

A source familiar with the lawsuit tells AIS Health that “as of March 28th, the parties completed briefing on their cross motions for summary judgment, and the matter is now ready for a decision by the court. Next is for the judge to decide whether he would like to hear oral arguments or if he’ll rule on the papers submitted and issue a decision. In terms of timing, it is difficult to speculate on when the judge will take the next step.”

According to Larry Kocot, principal and national leader for the Center for Healthcare Regulatory Insight at KPMG, “CMS regulations have always required that the value of patient assistance be received or passed through to the patient in order for those amounts to be excluded from best price and AMP calculations. With the advent of PBMs being able to identify these amounts and exclude them from deductible and/or out-of-pocket accumulators, and the manufacturer complaints about these practices, CMS could no longer ignore the fact or appearance that manufacturers have not been fully compliant.”

Adds Rick Ford, chief product officer at InfinityRx, “health plans are clearly benefiting from proceeds paid by patient affordability programs that are captured by accumulator adjustment programs; this is conceded by PhRMA in its litigation. The regulation that exempts affordability programs from best price exposure clearly states that these programs are exempt from reporting only to the extent that no party other than the consumer receives a program benefit. Legal challenges to the final rule appear to center on technical matters such as the definition of ‘price,’ the extent to which program sponsors have the opportunity to control who may benefit from affordability program proceeds and whether the regulation providing for exemption properly captures the underlying statute. The merits of the CMS position supporting the final rule is not otherwise challenged in the PhRMA litigation.”

Ford maintains that “CMS’s position is well founded. CMS understands quite well that the integrity of these programs has been compromised and the sponsors of the programs are not in compliance with the CFR that allows affordability programs to be exempt from best price reporting. CMS also understands that pharma has been unwilling to address the practices that have compromised program integrity.”

What Stakeholders Are Most Impacted?

Multiple stakeholders stand to be impacted by the new rule, experts tell AIS Health.

According to Ford, “stakeholders that need to prepare include pharma, administrators of patient affordability programs, patients, providers with services funded by affordability programs, foundations that will likely experience an increased need for funding and more. These are all stakeholders that will be affected if pharma limits its offering of programs that assist cost-sharing expense. ‘How’ to prepare is an exceptionally large matter that cannot be addressed within the context of this response, except to say that pharma should be investing in the review of best price mitigation strategies. There are viable options being developed to minimize (not eliminate) best price exposure.”

“Manufacturers are the obvious stakeholders directly impacted by this rule,” says Reta Mourad, Pharm.D., vice president of the access experience team at PRECISIONvalue. “However, payers may also be impacted since manufacturers have no direct insight into whether a patient receives the full benefit of a copay-assistance benefit. In instances where there is no contractual arrangement between a manufacturer and a payer, there may arise a need for manufacturers to work directly with payers to obtain this data. This would likely lead to additional complexities and may require data-sharing agreements.”

‘Unintended Consequences’ May Occur

In addition, Mourad tells AIS Health, “there may also be some unintended consequences: Smaller biotechs may discontinue using these programs because they don’t have the administrative capacity to gather the data and report accurately, which, in turn, will impact patients and caregivers who have to pay high deductibles. Providers could also be indirectly impacted, as they may need to look for alternatives for patient support through foundations or other means.”

In the final rule, however, CMS disagrees that the policy will result in manufacturers cutting back on their patient-assistance offerings.

Still, says Mourad, “While payers are solely responsible for administering these accumulator programs, manufacturers are going to bear the brunt of the negative impact in terms of determining how to identify and gather this information. Patients and providers could potentially be negatively impacted if manufacturers ultimately discontinue these assistance programs as a result of this rule, thereby increasing inequities by limiting some patients’ ability to access the medications they need.”

“For specialty drugs with government pricing that is affected by best price reporting, patients may be required to fund more of the cost-sharing expense that is assigned by their health plan to specialty drug services,” states Ford.

Kocot explains that the rule could have a variety of effects:

  • “Reductions in patient assistance provided through manufacturer patient-assistance program (PAPs),
  • “Increased burden on eligible patients to pay for drugs upfront and then be reimbursed,
  •  “Decreased initiation of and/or adherence to more expensive prescribed therapies due to the two preceding effects,
  • “Decreases in Medicaid Drug Rebate Program (MDRP) rebates to state Medicaid programs due to decreases in best price,
  • “Decreases in Part B drug provider reimbursements due to lower AMP, and
  •  “Decreases in 340B ceiling prices due to lower best price.

In addition, he tells AIS Health, providers may prescribe less expensive therapies, resulting in decreased use of more expensive products; this would result in lower out-of-pocket patient costs and lower payer costs and ultimately have the “potential for moderated specialty drug launch prices and other price increases.”

CMS Disputes Patient Impact Comments

In response to several comments about the rule’s potential negative impact on adherence and outcomes for people with life-threatening or complex conditions who depend on financial assistance to be able to access specialty drugs, CMS replied, “We do not believe that the final policies we are adopting in this final rule will negatively impact patients with rare, life-threatening illnesses who rely on manufacturer assistance programs. Rather, we do believe that there is a corollary benefit to this proposed policy, as it might lead to reforms in manufacturer assistance programs. We understand from many manufacturers and patient groups that PBM accumulator programs are increasing in number, and that the value of these programs to the patient is diminishing. It is not clear how these programs can continue to benefit patients without some modifications and reforms.

“We believe manufacturers can implement a system to ensure the full benefit of its manufacturer-sponsored assistance passes on to the patient,” continues the rule. “By doing so, patients will continue to have access to much needed medication which will in turn increase positive outcomes and also improve adherence.”

Kocot points out that per CMS, “there may be multiple ways that manufacturers will be able to meet these new regulatory requirements to ensure that manufacturer patient assistance is passed through fully to the patient or consumer, such as being able to electronically capture information regarding the value of manufacturer-sponsored assistance that is being passed through in PBM accumulator programs through some type of feedback mechanism at the point of sale or by creating coverage criteria for the use of their patient-assistance programs.”

He notes that CMS acknowledges manufacturers’ concerns about tracking their assistance but cites the following passages in the rule as the agency’s description of a way to do this:

“Almost all prescriptions are electronically processed at the pharmacy, and when transmitted from the pharmacy, are routed through a switch to the corresponding PBM based on the information on the patient’s prescription card, such as BIN/PCN number. As noted, manufacturers do currently contract with switches and brokers that are electronically connected to this prescription claims processing ‘highway,’ and which apply manufacturer-sponsored assistance on the manufacturers’ behalf at the point-of-service to reduce the amount that a patient might have to pay for a prescription.

“Manufacturers also have relationships with PBMs, given that they pay rebates and other price concessions for formulary placement on the PBMs’ formularies. Thus, the electronic and contractual infrastructure is in place for manufacturers to better understand how the PBMs are using the manufacturer assistance. We believe and have the expectation that PBMs will work with manufacturers to provide this information to the manufacturers to help them ensure that their assistance is passed though.”

Therefore, says Kocot, “manufacturers are on notice that the previous industry ‘reasonable assumptions’ are no longer acceptable. Indeed, a 2018 National Council of Prescription Drug Programs (NCPDP) white paper indicates that while there is no standardized approach, ‘[t]he task group is aware of proprietary methods for reporting or collecting copay assistance information.’”

Does Pharma Know When Programs Are Used?

However, contends Mourad, manufacturers establishing coverage criteria around assistance programs “would be virtually impossible in the current environment, as manufacturers and consumers do not have insights into when or how the accumulator is even applied to a medication claim; they would have to obtain this data from the insurer. Significant industry changes would also have to take place for manufacturers to be able to comply with this rule.”

Considering that information around patient-assistance programs “is seldomly publicized or shared by insurers, an equal burden should have been placed on payers to provide the information about their accumulator programs with data requirements,” contends Ryan Cox, R.Ph., vice president and director of the access experience team at PRECISIONvalue. “As of now, manufacturers will have to determine how to identify and gather this information. There may be a need for manufacturers to work with payers to obtain this data, which would likely lead to additional complexities and may require new data-sharing agreements.”

“Accumulator programs are insurer-/payer-administered programs,” states Mourad. “There has been much controversy around these programs regarding who is ultimately benefiting from them. The rule does not get to the root of the potential issues and assumes that manufacturers are aware of how and when accumulator programs impact who is benefitting from the patient copay assistance. The rule should address the payer component of the accumulator programs for parties to comply, and it should be more transparent about who is actually benefitting from the manufacturer patient-assistance programs.”

Still, says Kocot, “CMS is clear that the onus is on manufacturers and the PAP intermediaries they contract with (i.e., contracted patient-assistance brokers, prescription claims processing switches, health plans and their contracted PBMs) to implement either (1) feedback loops on transactions to collect data on whether the patient’s coverage does or does not pass through the value to the patient, or (2) redesign of their programs to have the patient pay full costs upfront at point of sale and seek reimbursement from the PAP afterwards.” Without programs ascertaining 100% pass through to patients, pharma firms must include those concessions in their best price and AMP calculations.

Manufacturers that do not comply face potential risks, among them HHS Office of Inspector General (OIG) and Department of Justice (DOJ) audits and potential risks around the False Claims Act, he explains. In the rule, CMS states that it won’t require manufacturers to provide it with documentation around calculations for AMP or best price, but that companies “should maintain records regarding such calculations, including any reasonable assumptions that they use in making such calculations. Should they be audited by OIG or DOJ, manufacturers would likely have to provide such documentation, including any documentation regarding their treatment of patient assistance programs in the calculation of their AMP and best price. Under this final policy, we will not be requiring manufacturers to provide us with any additional documentation regarding the assurance that the patient assistance is passed through, but they should maintain such documentation in their records.”

CMS maintains that “the policies we are adopting in this final rule could help avoid these concerns [around patient adherence and high out-of-pocket costs] because it will improve transparency in drug pricing and will ensure that the full value of the manufacturers-sponsored assistance programs is passed on to the patient. We believe this will also help assure patient compliance and adherence with medications.”

In response, Ford asserts that “if the final rule prompts pharma to aggressively implement rules that protect the integrity of the patient affordability programs that they sponsor, the circumstances outlined by CMS are a very possible outcome. Pharma has a range of options they can implement to protect the integrity of their affordability programs; however, pharma has largely deferred for a number of reasons, many of which are tied to concerns that competing drugs will not follow suit and health plans will favor coverage of drugs that allow program proceeds to be diverted for the benefit of health plans’ interests.”

In addition, says Cox, CMS “seems to imply that the pharmaceutical manufacturers, rather than the payer, are responsible for the impact of accumulator programs. The CMS comment further appears to imply that manufacturers are using their assistance program to provide additional discounts to the payer, rather than to the patient. In my opinion, it appears that CMS does not understand how the accumulator programs work or who is responsible for administering them. If the intent of CMS is to improve transparency and help assure patient compliance and adherence with medications, they should include language that puts the requirement to ensure the full value of the manufacturer-sponsored assistance program is passed on to the patient on the payer, rather than the manufacturer. By putting a generalized, new data reporting requirement of manufacturers, CMS may be inadvertently altering or ending the programs for patients who most need them.”

“High-cost specialty drugs, particularly for rare and orphan diseases with no or limited treatment alternatives, typically offer patient assistance. Even within therapeutic areas with multiple alternatives, it’s unlikely that those brand alternatives do not also offer similar patient-assistance programs,” points out Mourad. “The implications are similar: Patient access and specialty drug uptake could be impacted across the board, since the patient copay-assistance programs are available for nearly all specialty medications.”

Cox agrees. “This rule could potentially lower the uptake of high-cost specialty drugs if manufacturers discontinue or limit patient-assistance program eligibility, leading to decreased patient access to these drugs.”

For more information on the Zitter Insights data, contact Jill Brown Kettler at Contact Cox and Mourad via Tianna Bradford at, Ford at and Kocot through Matt Weiss at

© 2024 MMIT
Angela Maas

Angela Maas

Angela has an extensive background of editing, reporting and writing for trade and consumer publications. She has written Radar on Specialty Pharmacy since she joined AIS Health in 2005 and has broad knowledge of the various issues at play within the space. She also has written for Spotlight on Market Access since its 2017 launch. Before joining AIS Health, she was managing editor at Employee Benefit News and Employee Benefit News Canada and managing editor at Hem Aware (a hemophilia publication), Lupus Living and Momentum (a multiple sclerosis publication). She has a B.A. in English and an M.A. in British literature from Arizona State University.

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