Almost two months after a U.S. district court judge struck down a federal rule allowing health plans to not count copayment assistance against members’ out-of-pocket costs, ruling in favor of patient advocacy groups in a lawsuit against HHS, the agency has signaled that it will not — at least for the time being — take action against plans based on how they treat that assistance. The agency in a recent court filing also said it plans to issue rulemaking in response to the September ruling and requested feedback from the judge on his decision. Shortly thereafter, the plaintiffs appealed the government’s move.
To help patients pay for pricy therapies — usually specialty drugs — pharmaceutical manufacturers offer assistance that can help cover their out-of-pocket costs. Companies claim that the assistance helps improve patient adherence to medications that often treat rare and deadly conditions. But critics of them say such programs incentivize drugmakers to raise prices of these agents.
Health plans and PBMs began implementing copay accumulators — and then a new iteration known as copay maximizers that declare certain drugs non-essential health benefits to avoid covering them per the Affordable Care Act (ACA) — several years ago to counter these copay assistance programs. Before these tools, manufacturer assistance would count toward beneficiaries’ annual out-of-pocket expenses. When those were reached, health plans would cover the remainder of members’ costs for the year. With accumulators and maximizers, patients can still use that assistance, but it does not help reduce those out-of-pocket costs.
Once the assistance is depleted — usually fairly early in the year with accumulators — beneficiaries must pay for often-costly drugs until they hit their out-of-pocket maximums, shifting payers’ financial responsibilities to their members and manufacturers.
While the programs began less than 10 years ago, their use is growing and will likely continue to grow for the time being. In an online poll of 2,200 adults conducted Oct. 28 and 29 by Morning Consult on behalf of the PAN Foundation, a group that provides financial assistance to people with life-threatening and rare diseases, 25% of the 215 commercially insured respondents said their health insurer told them their specialty drug is considered a non-essential health benefit. In addition, 28% responded that their insurer said the financial aid they receive for a specialty therapy will not count toward their deductible or out-of-pocket maximum.
In the 2020 Notice of Benefit and Payment Parameters (NBPP), CMS stated that plans could exclude manufacturer assistance from counting toward patients’ out-of-pocket limit for only “specific prescription brand drugs that have an available and medically appropriate generic equivalent.” That excluded many costly specialty drugs that did not have a generic equivalent.
But in the 2021 NBPP, which was finalized in 2020, CMS said plans were not required to apply manufacturer assistance toward beneficiaries’ annual cost sharing, leaving members on the hook for numerous specialty medications once assistance ran out.
That prompted the HIV + Hepatitis Policy Institute, the Diabetes Patient Advocacy Coalition, the Diabetes Leadership Council and three people dependent on copay assistance whose health plans had accumulators in place to file a lawsuit (Case 1:22-cv-02604) in August 2022 against HHS, CMS and their respective leaders challenging the 2021 NBPP. The lawsuit claimed that allowing the use of accumulators is at odds with how the ACA — as well as the agencies’ preexisting regulatory definition — defines “cost sharing,” charging that the 2021 NBPP is “arbitrary and capricious.”
U.S. District Judge John D. Bates of the U.S. District Court for the District of Columbia ruled in favor of the plaintiffs on Sept. 29, ordering that the 2021 NBPP “must be set aside based on its contradictory reading of the same statutory and regulatory language and the fact that the agencies have yet to offer a definitive interpretation of this language that would support the rule.”
CMS: ‘Government Has Not Yet Decided Whether to Appeal’
But on Nov. 27, HHS filed a conditional motion to clarify the scope of the court’s order. “Defendants do not understand this Court’s order to require HHS to take enforcement action,” it said. “The Court vacated the relevant portion of the 2021 NBPP but did not order any additional relief.…To ensure that they are not inadvertently running afoul of the Court’s Order, however, Defendants respectfully request clarification from the Court if their understanding of the scope of the Court’s Order is incorrect.”
In the motion, HHS revealed that the agency “intends to address, through rulemaking, the issues left open by the Court’s opinion, including whether financial assistance provided to patients by drug manufacturers qualifies as ‘cost sharing’ under the Affordable Care Act.”
HHS also said that until it issues a final rule, it has no intentions of taking “any enforcement action against issuers or plans based on their treatment of such manufacturer assistance.”
The following day, HHS filed a notice of appeal.
Asked about the government’s actions, a CMS spokesperson tells AIS Health, a division of MMIT, that “CMS does not comment on matters in litigation.” That said, “We continue to consider the court’s ruling and have filed a conditional motion for clarification.” In addition, they explain, “The government has not yet decided whether to appeal the district court’s decision. The government has filed a protective notice of appeal, which preserves its right to appeal. The decision whether to appeal will be made at a later date.”
Is Pushback at Odds With Other Administration Moves?
The government’s moves came as a bit of a surprise considering that HHS’s 2025 NBPP (88 Fed. Reg. 82510, Nov. 24), which was published just a few days before the government’s filings, seeks to do away with the non-essential health benefit loophole that allows copay maximizers to exclude covering certain drugs so beneficiaries could be considered uninsured for those drugs and qualify for manufacturer assistance.
It also would seem to be in conflict with the Office of Personnel Management’s March 2023 request for proposal (RFP) for federal employee health plans that noted the agency would not consider “any proposals that manipulate the prescription drug benefit design, or incorporate copay maximizer or optimizer programs, or other similar programs to capture such savings.”
“It most definitely seems contradictory” that the government is both for such programs and against them, says Madelaine A. Feldman, M.D., a clinical assistant professor of medicine at Tulane University School of Medicine and provider with The Rheumatology Group in New Orleans. Elan Rubinstein, Pharm. D., principal at EB Rubinstein Associates, says he agrees with the contradictory assessment but adds that “only a small fraction of Americans are subject to” the ACA’s essential health benefit mandate.
HHS’s pushback was “certainly disappointing,” says Feldman, who is also president of the Coalition of State Rheumatology Organizations, which was among provider and patient groups that sent a letter to HHS after the September ruling asking the agency not to appeal the decision. “I have been pointing out the ‘do as I say, but not as I do’ aspect of the Office of Personnel Management RFP for federal employee health plans, which will not consider plans that allow copay accumulator nor maximizer programs. It states that these programs ’are not in the best interest of the enrollee or the federal government.’ And yet it is just fine for the American people?”
The RFP, she says, “is frustrating because it creates the impression that federal employees are allowing insurer behavior in other markets that they would never tolerate for their own coverage.”
Feldman tells AIS Health that she does not agree with the administration’s approach in the motion to clarify. “With the 2021 regulation vacated, the administration is left with the 2020 regulation’s approach to this issue, which was that only manufacturer assistance used for a brand drug with a generic equivalent did not count toward the annual limit on cost-sharing,” she says. “That was a balanced approach, in that it would still fully credit manufacturer assistance for patients in need of expensive brand drugs without lower-cost equivalents. The 2020 regulation also made its approach subject to state law, which meant that a state could require that all manufacturer assistance count, regardless of whether a drug had a lower-cost therapeutic equivalent or not. In other words, it established a ‘floor’ but left states free to enact more expansive approaches to manufacturer assistance.
“That paradigm is what I had assumed the Administration would have to default back to, after the September court ruling. It’s my hope that the judge assumed the same, but we won’t know until he responds to that motion to clarify.”
Senator: Accumulators Are One of PBMs’, Insurers’ ‘Most Pernicious and Pervasive Tools’
Shortly after CMS’s filings, Sen. Marsha Blackburn (R-Tenn.), a member of the Senate Finance Committee, penned a letter to the HHS and CMS secretaries expressing “profound disappointment in your decision to double down on the flawed 2021” NBPP following the September ruling and urged them to “reconsider and reverse course as expeditiously as possible.”
“Prioritizing the interests of large health plans over patients runs counter to the Biden Administration’s expressed commitment to drive down prescription drug costs. Appealing an even-handed, commonsense legal opinion, in this context, risks rubber-stamping one of the most pernicious and pervasive tools deployed by pharmacy benefit managers (PBMs) and their insurer clients. As working families across the country continue to wrestle with rising costs, the Administration’s posture sends a strident and saddening signal to patients and their families losing out on copay assistance copay through accumulators and other inflationary insurance policy levers.”
One of the arguments in the government’s March motion is that insurance companies do not “‘collect’ the value of manufacturer coupons through their accumulator adjustment programs.” Instead, “accumulator adjustment programs allow issuers and plans to delay incurring coverage liability until after the enrollee has satisfied the amount of the required cost sharing without including the amount of the manufacturer assistance.”
That argument, says Rubinstein, is a logical fallacy — a distinction without a difference: “the assertion that a position is different from another position based on the language when, in fact, both positions are the same — at least in practice or practical terms.”
According to Feldman, “We need to understand that there is some entity in the drug supply chain that is collecting the manufacturers’ assistance money and some entity collecting the patient’s deductible money. I suppose it depends on your definition of the ‘health insurance company’ as to who is collecting the money.” She points to all of the vertical integration with insurers and PBMs, “who then contract with and/or own maximizer programs, allowing them to make money on these programs.”
Specialty pharmacies also are involved, she points out, and they collect “the copay assistance from the manufacturer, and then they also collect the patient cost share — and with maximizers they can sometimes triple dip the actual amount of what the patient owes. Let’s not be fooled by incessant finger-pointing of who is really making the money.”
According to Feldman, “The absurdity of an accumulator becomes easier to see when you replace the drug company with someone else. What if my sister pays my coinsurances for me? By the logic of an accumulator, the insurance company could refuse to credit her money towards my deductible. I think most people intuitively grasp the unfairness of that.”
One of the other arguments in favor of accumulators that the government and others cite is that they incentivize providers and patients to favor an expensive medication over “a medically appropriate generic drug.” But, says Feldman, “for many patients who need specialty biologics, there is no lower-cost alternative. For those patients, copay assistance makes the difference between being treated or not. Studies have shown a significant loss of adherence to needed medications when copay accumulators are implemented in an employer health plan when compared to prior implementation of accumulators. I think it is important to remember that these policies predominantly affect patients with chronic illness, who can’t afford a low deductible plan.
“Clearly it is a discriminatory policy, which disproportionately affects people who have little disposable income and have chronic illnesses, usually with multiple comorbidities, and need expensive medicines for which there are no lower cost alternatives,” she adds.
“The pharmaceutical market for complex and serious diseases is unique in that the ultimate consumer — the patient — cannot choose whether or not they need the product, but the consequences of not being able to afford the product can be devastating. That seems to get lost in a lot of these debates,” asserts Feldman, who points to the government’s March RFP, which says that assistance programs “decouple demand for a drug from the drug’s price.”
“That’s a depressing sentence for its implication that patients want these medications because they don’t have to pay for them,” she says. “Using rheumatoid arthritis as an example, ‘demand’ for the medication exists because the patient suffers crippling pain and joint damage without it. How much the patient has to pay out-of-pocket for the medication will affect whether they’re able to fill the prescription — but it has no bearing on their need for it.”
What happens next is anyone’s guess, but a Dec. 4 article by attorneys at law firm Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. says that prior actions and statements by HHS “indicate that the agency plans to use the tools at its disposal to protect copay accumulators. The most direct way to do so would be to amend the definition of ‘cost sharing’ to outright exclude manufacturer copay assistance. While HHS would likely prefer to give plans discretion over how to treat the manufacturer copay assistance rather than outright exclude it — as it did in the 2021 NBPP — it was this discretion that the District Court primarily took issue with.”
In addition, they said, as HHS “made clear in prior guidance, it believes that manufacturer copay assistance ‘can add significant long-term costs to the health care system that may outweigh the short-term benefits of allowing [it],’ a point it has reiterated throughout the government’s filings in the current litigation.”
“If anything is certain at this moment, it’s that the issue of how copay accumulators can be implemented is far from settled,” they contended. “There will likely be challenges to HHS’s future rulemaking on either substantive or procedural grounds.” And while notice-and-comment rulemaking takes time, “rushing out a regulatory fix to address the District Court’s ruling, or using a faster method of implementing a change (e.g. Interim Final Rule), could also make future rulemaking vulnerable to invalidation by a court.”
So for now, plans and PBMs are free to use copay accumulators without any changes to their policies or procedures.
In a Dec. 8 article, though, attorneys with law firm Ballard Spahr LLP recommend that plan sponsors watch out for HHS guidance related to accumulators. “The non-enforcement policy provides welcome — albeit temporary — relief for employers weighing their options following the court’s decision,” they said. “Although the filing provides only HHS’ views on the subject, plan sponsors with copay accumulator programs will likely welcome the news as an indication that those programs do not need to be abandoned, pending further agency guidance on the subject.”
This article was reprinted from AIS Health’s monthly publication Radar on Specialty Pharmacy.