Expect More From... Copay Assistance Programs!

September 29, 2023

I hope many of you listened to last week’s hearing on PBM reform (https://oversight.house.gov/hearing/the-role-of-pharmacy-benefit-managers-in-prescription-drug-markets-part-ii-not-what-the-doctor-ordered/) . (Listening to these hearings is one of my favorite hobbies😊) During the hearing, JC (Juan Carlos) Scott from PCMA and Lori Reilly from PhRMA continued to blame each other for the rising pharmacy costs. We will be highlighting many of the topics raised in this hearing in our weekly post. This week, though, I wanted to discuss copay assistance, copay maximizers and copay accumulator programs.

Honestly, I am sick and tired hearing PhRMA complain about PBMs using copay accumulator/maximizer programs. I learned about these programs in 2001, when I had a consulting client that had a 50% coinsurance on specialty drugs. The client had an exception process if patients couldn’t afford the medication, and patients were not complaining. That is when we learned that manufacturers were covering 100% of the patients’ cost. Don’t get me wrong, I am not a proponent of shifting costs to patients. Ideally, employers would make medications free to their employees, but there is a direct correlation between the cost of health care and premiums that self-insured employers charge their employees. High Deductible and coinsurance plans were created to help employers keep their premiums as low as possible.

How many knee replacement DME manufacturers cover the cost of a patient’s deductible when they have replacement surgery? To my knowledge, none. So, why should patients on specialty drugs be treated any differently by the plan? Aren't we creating further divide in health equity? Is this not driving members further away from being educated health care consumers? Why should drug manufacturers be allowed to cover the deductible for patients while someone’s colleague with multiple comorbidities cannot afford their drug therapy that is ineligible for such programs?

I think it is important for people to take a step back and revisit why drug manufacturers created copay assistance programs in the first place:

1. Keep patients on their drug. This is important for people’s medical care, but without exposure to cost patients are not seeking out lower cost alternatives.

2. Limit the cost outlay by manufacturers. Manufacturers may make $50,000 available through their copay assistance programs, but they never intended to pay out that much. Now that PBMs are figuring out how to maximize the money available they are complaining and lobbying the state and federal governments.

3. Tax write-off. Copay assistance programs are technically offered by foundations created by the manufacturers. Manufacturers contribute money to these foundations. Those contributions are tax write-offs. According to a Harvard Business School analysis published in 2016 (https://www.hbs.edu/ris/Publication%20Files/DafnyOdySchmitt_CopayCoupons_32601e45-849b-4280-9992-2c3e03bc8cc4.pdf), these outwardly benevolent programs yield great financial returns for drugmakers — conservatively, about $2 for every $1 donated to copay assistance to as much as 4-to-1.

Bottom-line, drug manufacturers created copay assistance programs to undermine the cost containment strategies that employers were trying to employ.

Federal and State legislations are banning the practice of copay accumulator or maximizer programs. For the most part ERISA plans are not affected by these regulations, but they could affect them in the future. Even though I may not agree with how many of the PBMs profit from these programs, most of the savings is being put back in the pocket of employers, and the benefit being delivered by the PBM is consistent with how the plan intended it to be: both knee replacement patients and specialty drug patients have to pay their deductible. I challenge our government to look at the entire issue relating to copay assistance programs, and not just the PBM programs. I would challenge drug manufacturers to reduce the list price of the medications equal to the copay assistance program. If the cost of these medications decreases, employers will have less and less need to offer high deductible health plans.

If you want more information on this topic I recommend you read this article written by my hero, Elisabeth Rosenthal: https://kffhealthnews.org/news/article/drug-companies-copay-assistance-program-charity-or-bribe/.