In a recent federal court ruling, employers leveraging copay accumulator programs are now confronted with unexpected administrative challenges. These programs - a standard feature of prescription drug benefit plans - previously allowed plans to overlook third-party subsidies for prescription drugs when calculating an individual's out-of-pocket maximum under the plan. Plan sponsors and their pharmacy benefit managers (PBMs) are now tasked with adjusting their copay accumulator programs to conform to the court's ruling, pending further instruction from the U.S. Department of Health and Human Services (HHS).
Implications of the Court Ruling
This ruling follows the invalidation of a 2021 HHS regulation deemed arbitrary and capricious by the federal court. The regulation altered the relationship between direct financial aid from drug manufacturers and the Affordable Care Act (ACA) annual limits on cost-sharing. The judge's decision vacated the provision in the 2021 HHS regulation, as the ACA did not explicitly specify whether cost-sharing incorporated manufacturer assistance.
The Controversy of Copay Accumulators
Recent legal maneuvers suggest the question of how to implement copay accumulators remains unresolved. The Biden administration is contesting a circuit court ruling that undercut insurers' power to use copay accumulators. This is the latest indication that the contentious issue of how these tools can be executed is still undecided.
The HHS has signaled its intention to back the continued use of copay accumulator programs, as the industry has employed them since 2021. Following the District Court's order, HHS filed a motion to clarify its scope and a notice of appeal to the D.C. Circuit Court of Appeals. The HHS plans to address, via rulemaking, the questions left unanswered by the District Court's opinion, including whether financial assistance provided to patients by drug manufacturers is considered 'cost sharing' under the ACA.
Impact on the Pharmaceutical Industry and Consumers
A new study discovered that private health insurers sponsoring Medicare Part D prescription drug plans use PBMs, which inflate drug costs by overcompensating pharmacies for medications. These reimbursement practices subsequently impact patients by using those inflated prices to compute copays and deductibles.
The court ruling targeting the use of drug coupons and the unfolding saga of 'the thing nightmares are made of' have significant implications for consumers and the pharmaceutical industry. They also offer insights into the current political climate, potential futures, and the enduring influence of a revolutionary television producer.