Thought Leadership

Our leading subject matter experts share their insightful analysis and points of view to help you stay abreast of industry trends

The Problem with Copay Adjustment and Alternate Funding Programs

By Seamus Cole

Payers’ use of copay adjustment programs has exploded over the past few years, and interest in them remains high. In addition, payers are now looking to bring down their drug spend by adopting newer strategies offered by companies with alternate funding programs. While many manufacturers are pushing back against these copay adjustment and specialty carve-out programs, patients remain caught in the middle.

Detrimental Impact on Patients

Normally, when a manufacturer provides copay assistance for a drug, that dollar amount of that assistance counts toward a patient’s deductible and out-of-pocket maximum. Patients benefit from reduced out-of-pocket costs for their prescription while fulfilling their deductible more rapidly.

With copay accumulators, the maximum manufacturer assistance is applied up front; once those funds are depleted, the patient must pay the full cost of the medication for the remainder of the year. The manufacturer’s payments do not count toward members’ deductibles and out-of-pocket maximums. By contrast, copay maximizer programs distribute 100% of available manufacturer copay offset funds over 12 months.

For a long time, health plans and PBMs condemned manufacturer patient-assistance programs, accusing them of inducing patients to take more costly drugs. That perception began to change with the introduction of accumulators in 2017, followed by maximizers a little while later. A 2022 PSG report found that 65% of benefits leaders believe copay assistance programs are a good strategy for helping plan sponsors save money, up from 28% four years prior.

Unfortunately, numerous studies reveal that these programs often harm patients instead of helping them. Once the manufacturer assistance dries up, many people struggle to pay their out-of-pocket obligations for treatment, driving down adherence and threatening their health. In some cases, these programs can end up costing patients more than double what they would have paid otherwise. Such programs also deplete the overall reserves that manufacturers have set aside for patient assistance programs, potentially impacting companies’ ability to offer such support.

Widespread Adoption of Predatory Programs

With the industry’s increased focus on reducing the impact of high-cost drugs, these programs are proliferating. In the fall of 2022, MMIT surveyed 35 payers covering 121.5 million commercial lives regarding their use of copay accumulators and maximizers. Payers covering 75% of lives had implemented at least one maximizer or accumulator program prior to 2022.

Payers with 16% of lives launched an accumulator program in 2022, while those covering 1% of lives said they had plans to do so in the future. While none of the respondents implemented a maximizer program in 2022, those representing 13% of lives said they planned to do so at a later date. Payers with only 10% of lives said they had no plans to implement a copay accumulator, and payers covering 11% said the same about maximizers.

Payers with these programs in place also said that about 40% of their plan sponsors have implemented an accumulator or maximizer, with that percentage expected to increase in the next year.

The Rise of Specialty Carve-Out Programs

In addition to copay accumulator and maximizer programs, specialty carve-out programs are becoming popular. Run by alternate funding companies, these programs may require payers to exclude certain specialty drugs from their coverage; these drugs are instead covered via patient assistance programs run by manufacturers or charitable foundations. If patients are denied patient assistance, coverage reverts to the company’s payer/PBM/specialty pharmacy. And if patients do not enroll in these programs, they often are subjected to exorbitant out-of-pocket costs for the excluded agents.

According to the PSG report, 8% of benefits leaders said they had an alternative funding model in place, while 31% said they were exploring their use. A survey from Gallagher Research & Insights found that 10% of self-insured employers with at least 5,000 U.S. employees used alternative funding vendors in 2022, 8% said they are planning to use them within two years, and 19% said they will be considering their use in three to five years.

But some payers responding to the MMIT survey expressed ethical concerns over the act of depleting funds that have been allocated for people who truly need them. In addition, they reported delays in therapy, which can pose a threat to patient health. As with accumulators and maximizers, the carve-outs can put the sustainability of manufacturer assistance programs at risk.

Prohibitive Legislation and Pharma Pushback

Manufacturers do not have many recourses to deter the use of carve-outs, other than educating companies that their savings may not be as substantial as they anticipate. However, both state governments and pharma companies have acted to tamp down the use of accumulators and maximizers.

Numerous states have outright banned the use of accumulators: By January 2023, 16 states had passed such legislation. But these laws are applicable to state-regulated health plans only and do not affect self-funded groups. Lawsuits over these programs have been filed, one by a manufacturer and another by three patient advocacy groups.

Some manufacturers have pushed back by changing their terms and conditions concerning manufacturer coupons, explicitly specifying that beneficiaries with a maximizer benefit design are not eligible for copay cards. One insurer estimated that the nine drugs affected by this approach from two manufacturers would affect “approximately 40% of historical savings.” Other drugmakers have begun to limit the amount of available funds.

Pharma companies are also finding ways to pay patients directly, perhaps via prepaid debit cards or checks. And some are collecting data on how accumulators and maximizers may impact adherence to get a better understanding of how these initiatives are affecting patients’ use of their prescribed medications. They hope this data can persuade payers of the drawbacks of such programs.

In the meantime, manufacturers must be aware of the growing threat posed by these copay adjustment and specialty carve-out programs and take steps to limit their financial risk. 

MMIT recently fielded a special report to survey payers on the future of copay accumulators and maximizers. Learn more via MMIT’s Oncology Index or Biologics & Injectables Index for non-oncology products.

© 2024 MMIT
Seamus Cole

Seamus Cole

Seamus Cole is a Consultant in Advisory Services at MMIT.

Related Posts

November 22

As Debate Rages Over Copay Accumulators, State Bans Proliferate

December 1

Payers and PBMs Are Excluding Cancer Drugs at a Growing Rate. How Can Manufacturers Prepare?

Read More
January 5

What’s Ahead for Market Access in 2023?

Read More


Sign up for publications to get unmatched business intelligence delivered to your inbox.

subscribe today