Plans can continue to apply copay accumulators despite court ruling

December 8, 2023

Pharmaceutical company coupons can help patients afford prescriptions for serious disease, but they can also encourage patients to take expensive medications when there are more cost-effective alternatives available. That’s because the coupon makes the out-of-pocket cost the same or lower for the expensive medication. The cost covered by the coupon might also be applied to the deductible or other cost sharing for the member, which effectively decreases cost sharing on other medical services, too. 

Here is an example of how copayment coupons can cause excess cost for plans without increasing affordability of therapy. Duexis is a combination of ibuprofen (Advil) and famotidine (an anti-ulcer medication) that are both available as over-the-counter drugs that would cost well under $10 per month.  But Duexis’ retail price is over $3000 a month! With a coupon, plan members can get this with no cost-sharing – jacking up the cost of health insurance with no real benefit to members.

The Trump Administration allowed health plans to implement “copay accumulators” to track whether drugs were paid for by coupons or by members, and apply only member payments to deductibles and coinsurance. Pharmaceutical companies filed a lawsuit against this regulation, and ran a marketing campaign accusing pharmacy benefit managers of making drugs less affordable for patients. A federal court overturned this regulation in September. The Biden Administration has announced it will appeal this ruling, and will allow plans to continue to apply copay accumulators while this appeal is pending. 

There are large dollars at stake here; copay assistance programs totaled almost $19 billion last year. Many states have rules prohibiting the use of copay accumulators, although these apply only to state-regulated fully-insured health plans.

Implications for employers:

• Allowing members “credit” for payments made by pharmaceutical companies makes those patients’ medical care more affordable but increases employer spending and therefore raises future health care premiums for all plan members. It can also encourage wasteful spending.

• Those employers with copay accumulators in place, 42% according to WTW’s 2023 Best Practices Survey, can likely continue to enforce these plans, although they should check with their counsel.

Thanks for reading.  You can find previous posts in the Employer Coverage archive

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Monday: Many families have difficulty affording medical care for their children