Drug Pricing

While many people had closed their laptops and were gearing up to open presents, the U.S. District Court for the District of Columbia offered a gift to patient advocates that have been fighting for restrictions on private health plans’ use of copay accumulator programs.

In September, Judge John Bates ruled in favor of a challenge brought by patient advocates — including the HIV + Hepatitis Policy Institute, the Diabetes Patient Advocacy Coalition and the Diabetes Leadership Council — to provisions in a 2021 rule that allowed group and individual health plans to apply copay accumulators even when drugs have no therapeutic alternative. Such programs prevent enrollees from counting any drug manufacturer discounts, like copay coupons, toward their deductibles and out-of-pocket maximums. Insurers and PBMs argue that copay accumulators are necessary to prevent copay coupons from steering patients to high-cost branded drugs — raising costs for everyone — but patient advocates contend that those coupons are necessary to promote affordability amid benefit designs that force patients to bear the brunt of their prescription drug costs.

Entering 2024, growing health care costs are the main worry of employer plan sponsors, according to industry experts. To cope with the problem, those experts add, employers may seek novel benefit designs, while also reaching for tried-and-true cost control methodologies like narrower networks.

Brokerage WTW found in a September survey that 69% of surveyed large employers listed health care costs as a “top health and wellbeing priority” over the next three years, and that health care costs were the most frequently named priority by respondents.

“I think that the emphasis on cost is actually bigger now than it was a few years ago,” says Jeff Levin-Scherz, M.D., population health lead at WTW and an assistant professor at the Harvard School of Public Health.

CVS Health Corp.’s Caremark is the latest big PBM to offer clients new pricing models that the company claims will increase transparency and reduce overhead. Experts say that the new offerings are not as transparent as CVS claims they are, and constitute a response to various pressures including likely federal PBM reforms, scrutiny from plan sponsors and disruptive business trends like the growth of Mark Cuban Cost Plus Drug Co.

Most experts expect that the new CVS offerings, called CostVantage and TrueCost, will only make a marginal difference — if any — in either drug costs or price transparency. Industry observers point to similar product rollouts by the other two of the Big Three PBMs, UnitedHealth Group’s Optum Rx and The Cigna Group’s Express Scripts, neither of which seemed to dampen the firms' PBM earnings. Express Scripts’ ClearCareRx and Optum Rx’s Cost Clarity launched in April and May, respectively. Express Scripts also rolled out a new “cost-plus pharmacy pricing” option, called ClearNetwork, in November.

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.

About 81% of people covered by 35 insurers and PBMs representing 117.8 million lives were enrolled in plans with copay accumulators as of September 2023, compared with 89% in 2022, according to data collected by AIS Health’s parent company, MMIT. About 71% of people were enrolled in plans with copay maximizers, down from 76% in 2022. However, on average, payers anticipated a 30% increase in the number of plan sponsors opting into such programs next year and a 14% increase in member enrollment in plans with copay accumulators and maximizers.

Copay accumulators prevent any monetary assistance that pharmaceutical companies offer commercially insured patients from counting toward their deductible or out-of-pocket maximum. Copay maximizers distribute the total amount of a manufacturer’s copay-offset funds over 12 months, making that amount the new monthly copayment on any given drug over the course of a year.

About 81% of people covered by 35 insurers and PBMs representing 117.8 million lives were enrolled in plans with copay accumulators as of September 2023, compared with 89% in 2022, according to data collected by AIS Health’s parent company, MMIT. About 71% of people were enrolled in plans with copay maximizers, down from 76% in 2022. However, on average, payers anticipated a 30% increase in the number of plan sponsors opting into such programs next year and a 14% increase in member enrollment in plans with copay accumulators and maximizers.

Copay accumulators prevent any monetary assistance that pharmaceutical companies offer commercially insured patients from counting toward their deductible or out-of-pocket maximum. Copay maximizers distribute the total amount of a manufacturer’s copay-offset funds over 12 months, making that amount the new monthly copayment on any given drug over the course of a year.

In the latest version of its annual Unsupported Price Increases (UPI) report, the Institute for Clinical and Economic Review (ICER) found that eight high-expenditure drugs with substantial, unjustified net price increases in 2022 cost insurers and patients nearly $1.3 billion.

“After some reduction in net price increases last year, we're again seeing many increases in net prices for drugs with large budget impacts,” ICER Chief Medical Officer David Rind, M.D., tells AIS Health, a division of MMIT. However, Rind says that recent legislative changes could make a difference in future years.

CVS Health Corp.’s Caremark is the latest big PBM to offer clients new pricing models that the company claims will increase transparency and reduce overhead. Experts say that the new offerings are not as transparent as CVS claims they are, and constitute a response to various pressures including likely federal PBM reforms, scrutiny from plan sponsors and disruptive business trends like the growth of Mark Cuban Cost Plus Drug Co.

Most experts expect that the new CVS offerings, called CostVantage and TrueCost, will only make a marginal difference — if any — in either drug costs or price transparency. Industry observers point to similar product rollouts by the other two of the Big Three PBMs, UnitedHealth Group’s Optum Rx and The Cigna Group’s Express Scripts, neither of which seemed to dampen the firms' PBM earnings. Express Scripts’ ClearCareRx and Optum Rx’s Cost Clarity launched in April and May, respectively. Express Scripts also rolled out a new “cost-plus pharmacy pricing” option, called ClearNetwork, in November.

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.

Rite Aid Corp. has delayed the auction of its PBM, Elixir Rx Solutions, as part of its Chapter 11 bankruptcy filing. According to a court filing, the auction was moved from Nov. 20 to Dec. 21 following a Nov. 21 hearing held by the District of New Jersey U.S. Bankruptcy Court. Rite Aid filed for bankruptcy on Oct. 15, at which time MedImpact Healthcare Systems presented a $575 million “stalking horse” offer for the company’s PBM — meaning an initial bid on a bankrupt company's assets from an interested buyer that aims to avoid low bids in a court auction. Under the newly revised schedule, competitive bids for Elixir must be received by Dec. 18 ahead of the Dec. 21 auction — which is the same date as the auction being held for Rite Aid’s retail stores.