Pharmaceutical manufacturers offer copayment assistance programs (copay cards or coupons), which cover a portion of a beneficiary’s OOP costs for a brand-name drug. These programs support patients with commercial insurance, but they cannot be used by enrollees in government programs such as Medicare Part D. A manufacturer’s payment from a copay program counts toward a patient’s deductible and annual OOP maximum. Once these annual limits are reached, the plan pays for all subsequent prescriptions.
Several years ago, pharmacy benefit managers (PBMs) and health plans began implementing benefit designs that exclude the value of a manufacturer’s coupon/payment from the patient’s deductible and out of pocket (OOP) maximum requirements in order to limit exposure to specialty drug costs. These programs, broadly referred to as copay adjustment programs or specifically copay accumulators and copay maximizers, employ different approaches. However, both programs are designed to exhaust manufacturer copay assistance while preventing these dollars from counting toward patients’ deductible and OOP limit as they would have otherwise.
Copay accumulator programs reduce the PBM or health plan’s cost by shifting more drug costs to patients and manufacturers. The manufacturer provides funds for prescriptions until the copayment program reaches the maximum value. At this point, the patient’s OOP spending begins to count toward their deductible and maximum OOP costs. With accumulators, a patient’s OOP costs can reach thousands of dollars, particularly in plans with coinsurance and high deductibles. This can negatively impact adherence and persistency to specialty drug treatments. Furthermore, the patient’s costs for coinsurance and plan deductible are based on amounts that are similar to a drug’s undiscounted, pre-rebate price.
Copay maximizer programs extract the maximum value of the manufacturer’s copay assistance program evenly throughout the year. The patient’s OOP costs are not based on the list or net price of the drug, but instead are aligned to the maximum value of the manufacturer’s program limit. In order to implement a maximizer program, plans have to deem many specialty drugs “non-essential health benefits” in order to remove them from the Affordable Care Act (ACA) Essential Health Benefits OOP maximums required by the ACA. The drugs are still covered by the PBM or health plan, but now the plan’s cost is shifted to the manufacturer. Patients are typically protected from significant OOP costs in maximizer programs.
The increased use of these programs is the result of a continued pressure between plan benefit design, the expansion of manufacturer copay programs, and the growth of drug spending. In a recent analysis published in The American Journal of Managed Care, showed that over 80% of patients enrolled in commercial health plan have implemented a copay accumulator program and 73% are in plans that have implemented a maximizer program. The analysis also showed that 77% of the plans applied the programs to pharmacy benefit products and 36% applied the programs to medical benefit products. Copay adjustment programs are expected to continue to grow in the coming years and is driving regulatory and legislative activity at both the federal and state levels.
The Notice of Benefit and Payment Parameters (NBPP) rulemaking cycle usually provides federal guidance on how plans in the exchange (as well as large-group, small-group, and individual) markets are designed and implemented. The NBPP directly addressed the topic of copay adjustment programs in 2020 and 2021 rulemaking. In the 2021 cycle, the HHS modified the earlier language to allow commercial payers to implement copay adjustment programs for all drugs.
The use of copay adjustment programs has typically been implemented in the self-insured markets, however the most recent NBPP changes may lead to a broader adoption of these copay accumulator and maximizer programs in other markets and introduce risks to manufacturer assistance program spend and patient OOP cost responsibilities.
In December 2020, the Centers for Medicare & Medicaid (CMS) modified the method for calculating average manufacturer price (AMP) and best price (BP) included in the Medicaid value-based purchasing rule. Beginning in 2023 manufacturers must “ensure” the full value of copay assistance is passed on to the patient or else these dollars will count toward lowering the AMP and BP calculation. Little guidance was provided as to how manufacturers will “police” their programs to ensure patients receive the full value, but the CMS did state that “there may be multiple ways that manufacturers will be able to meet these new regulatory requirements.”
At the state level, legislators have introduced policies to limit the use of manufacturer assistance or, conversely, to create protections for manufacturer assistance by limiting the use of copay adjustment programs. It is likely that states will continue to introduce legislation to either limit or safeguard manufacturer assistance in the coming years.
As the policy outlook and market dynamics for copay accumulator and maximizers progress, payers and manufacturer will need to continue to actively monitor changes in terms of assessing risk while ensuring patients can access their treatments.