Ensuring Compliance When Restructuring Manufacturer Co-Pay Assistance Programs in the Face of Co-Pay Accumulators and Maximizers

Drug manufacturers and patients are being negatively impacted by the increasing use of insurer copay accumulator and maximizer programs. These programs prevent manufacturer assistance, such as co-pay coupons, from being applied towards a patient’s deductible and other out-of-pocket costs, causing unnecessary financial strain for all involved. In the case of maximizers, they are designed to extract the maximum amount of annual assistance a manufacturer is willing to provider per patient. For patients, this is undoubtedly frustrating and financially counterproductive since manufacturer co-pay programs are meant to improve access to certain medications and to help patients afford the medications preferred by their physicians. Unfortunately, these programs are not restricted in their implementation or usage. In fact, some estimate that upwards of 80% of commercially-insured beneficiaries are subject to benefit plan designs which utilize accumulator and maximizer schemes.[1]

Many drug makers are now taking the offensive and seeking to implement innovative assistance programs and mitigate the impact that accumulator and maximizer programs have on patients. These have included a variety of creative solutions and workarounds, including direct-to-patient rebates, debit cards and more. But before confronting payers, drug manufacturers must be aware of the potential legal risks involved in developing alternative co-pay assistance programs.

What is a Co-Pay Accumulator? What is a Co-Pay Maximizer?

Drug makers deploy co-pay cards or coupons as a form of financial assistance to patients who face out-of-pocket expenses to receive their drugs. If an insurance plan has implemented a co-pay accumulator or co-pay maximizer program, however, those savings may be neutralized, or a manufacturer may be forced to spend significantly more money to ensure patients can receive their drugs at low out-of-pocket costs. A co-pay accumulator program is an insurer tactic designed to prevent manufacturer co-pay assistance programs from counting against a beneficiary’s deductible or out-of-pocket maximum threshold. Importantly, the insurance plan will permit the use of a manufacturer co-pay card. However, none of these funds count towards the patient’s thresholds, and once the card’s value is exhausted, the patient is left to pay its entire deductible amount before plan benefits kick in.

Co-pay maximizers evolved from co-pay accumulator programs. With a co-pay maximizer, the maximum value of the manufacturer’s co-pay assistance is evenly distributed throughout the benefit year. The program often intentionally “increases” the patient’s out-of-pocket costs to reflect the maximum availability of support offered by a manufacturer assistance program. This helps to ensure that the full value of the manufacturer’s co-pay savings program is extracted for the benefit of the plan. Like with co-pay accumulators, the manufacturer’s contribution does not count towards a patient’s deductible or cost-sharing requirements. Many companies offering co-pay maximizer programs (such as SaveOnSP and PrudentRx) may take a percentage of the plan “savings” as a fee.

Mitigating the Effects of Accumulator/Maximizer Programs

Drug makers are now taking steps to allay the effects of accumulator and maximizer programs. Abbvie, for example, recently updated its terms for its co-pay assistance programs for certain products to provide that, if a patient’s insurance company or health plan implements either an accumulator adjustment or co-pay maximizer program, the patient will no longer be eligible to participate in the co-pay assistance program. Other manufacturers have partnered with third parties to develop rebate programs that allow them to continue providing financial assistance to patients while bypassing accumulator and maximizer programs altogether.

Aside from business strategies, other drug makers have resorted to litigation and direct legal challenges against payers that implement accumulator and/or maximizer programs. In May 2022, for example, Johnson & Johnson filed a lawsuit against SaveOnSP, alleging that SaveOnSP had bypassed patients’ out-of-pocket maximums for essential health benefits set forth under the Affordable Care Act and inflated patients’ co-pay costs to extract the maximum amount of funds from Johnson & Johnson’s co-pay assistance program. According to the lawsuit, Johnson & Johnson paid $100 million more in co-pay assistance due to SaveOnSP’s actions. Frier Levitt has written extensively on the matter here.

Risks to Drug Manufacturers

As a manufacturer attempting to mitigate the impact of copay accumulator or maximizer programs—whether through creative, third-party programs or other means—there are several areas of potential risk to take into account.

For example, the Federal Anti-Kickback Statute (“AKS”) imposes criminal liability on entities that knowingly and willfully offer, pay, solicit, or receive any remuneration ““in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program.” Where a manufacturer pays a pharmacy to process the manufacturer’s patient assistance program, be it in the form of a dispensing fee or other remuneration, the AKS may be implicated.

Several states have passed laws that are similar to the AKS and its safe harbors. These state laws often do not have restrictions on the source of payment and may apply to commercial payor or cash-based business models. AKS adherence is often instructive with respect to adjacent state law compliance. Thus, it is important to conduct a state-by-state analysis before implementing a co-pay assistance program.

Furthermore, manufacturers should consider how the parameters of their co-pay assistance program fit within the context of various other areas of law, including:

(a) beneficiary inducement under the Civil Monetary Penalties Law;

(b) whether the patient assistance program is violative of the Federal Healthcare Fraud Statute;

(c) the general risk of tort claims including tortious interference with contract;

(d) data privacy protections; and

(e) relevant state copay coupon laws.

These are especially true for new and innovative approaches being implemented to mitigate the impact of co-pay accumulators and maximizers.

How Frier Levitt Can Help

Frier Levitt represents manufacturers and plan sponsors with advising on price reporting obligation compliance, negotiating and drafting rebate agreements with PBMs, and evaluating co-pay assistance program requirements and compliance. If you have questions about reporting obligations or are looking to develop compliant co-pay assistance programs, contact us.

[1] See, Adam J. Fine, Copay Accumulator and Maximizer Update: Adoption Accelerating As Pushback Grows, Drug Channels (Nov. 17, 2020), https://www.drugchannels.net/2020/11/copay-accumulator-and-maximizer-update.html.