The escalating costs of prescription drugs have led to a concerning impact on patient affordability and adherence to prescribed medication plans, compelling some individuals to choose between purchasing food or their vital medications. While in recent years co-pay accumulators have exacerbated this financial strain, the ruling issued by the U.S. District Court for the District of Columbia on September 29th, 2023, has the potential to assist in alleviating some of these burdens by reducing commercially insured patients’ annual contributions. Specifically, the court struck down a rule that impacted co-pay accumulators, which the Department of Health and Human Services (HHS) issued in 2021 through a notice of benefit and payment parameters (“NBPP”). That rule allowed health plans to determine how to utilize co-pay accumulators and whether to exclude manufacturer assistance program contributions from commercially insured patients’ cost sharing obligations each year. The Court remanded HHS to further clarify the definition of cost sharing, and to revert to a 2020 NBPP rule. The 2020 NBPP rule will cause health plans and Pharmacy Benefit Managers (PBMs) to re-evaluate both their relationships with co-pay accumulator programs and their current stances on how manufacturer assistance programs may impact patient cost-sharing obligations.
The 2021 HHS NBPP and its Correlation to Co-pay Accumulator Programs
The 2021 NBPP allowed health plans and PBMs with co-pay accumulator programs to exclude manufacturer provided co-pay assistance from the patient cost-sharing caps. As seen in our previous reporting, insurers designed co-pay accumulator programs to prevent manufacturer co-pay assistance programs from counting against a beneficiary’s deductible or out-of-pocket maximum threshold. Instead of clarifying that the definition of cost-sharing included expenditures covered by drug manufacturer coupons, HHS instead permitted insurers to decide whether or not to count support offered by drug manufacturers to enrollees toward annual cost sharing limits, which relied on two contradictory interpretations of the Affordable Care Act (ACA).
The HIV and Hepatitis Institute v. HHS Court Ruling
On September 29, 2023, the court granted the plaintiffs’ motion for summary judgment, citing the conflicting interpretation of statutory and regulatory language and the absence of a clear definition of “cost sharing” from the agencies’ rules. Consequently, the court vacated the 2021 NBPP that had effectively allowed insurers to utilize co-pay accumulators to disregard manufacturer assistance towards a patient’s max out of pocket deductibles thereby allowing the insurers to not only overextend manufacturer assistance beyond its intended purposes, but still accumulate the patients’ max out of pocket deductible contributions. In removing the 2021 rule, the court reinstated the 2020 NBPP rule, which allowed insurers to only utilize co-pay accumulators to exclude manufacturer assistance from commercially insured patients’ cost sharing obligations only when used for drugs with available generic equivalents. The rationale behind this decision stemmed from the fact that the lack of a precise definition of “cost sharing” by HHS left the interpretation to the insurers, thereby contravening the intended regulatory framework. Further, such open-ended interpretations were previously prohibited by the Supreme Court, which ruled that “the same statutory text” could not be given “different meanings in different cases.” As a result, the Court ruled to vacate and remand the 2021 NBPP, requiring the agencies to interpret the statutory definition and better define “cost sharing” in accordance with the legislative intent of the ACA.
Implications for Relevant Stakeholders
- Impact on Patient Access: The ruling is a significant win for patients that rely on co-pay assistance programs to afford and access essential medications. Manufacturer-provided co-pay assistance will now count towards a patient’s annual out-of-pocket maximum and deductible.
- Implications for Health Plans: Health plans will need to reassess their cost-sharing strategies and operations on not only co-pay accumulator programs, but also co-pay maximizers and potentially alternative funding programs (another type of co-pay adjustment program), to align with the reinstated federal rule.
- Adaptation by PBMs: PBMs play a crucial role in managing our nation’s drug benefits. PBMs must comply with the court’s decision by revising co-pay accumulator programs, which includes Co-pay Maximizers and Alternate funding programs and recalculate cost sharing obligations and communicating these changes to plan sponsors.
- Manufacturer Assistance: Manufacturers that support patients through co-pay assistance programs, may now do so without being unnecessarily thwarted by PBMs and health plans.
Compliance and Ongoing Monitoring
Health plans with co-pay accumulator programs should prioritize compliance with the court’s decision and update their cost sharing terms and conditions. Additionally, competent healthcare counsel should be retained to monitor regulatory changes as HHS is likely to revise the definition of “cost sharing.” Manufacturers should remain aware of these changes.
How Frier Levitt Can Help
Frier Levitt stays abreast of regulatory changes and represents manufacturers, plan sponsors, providers and patient advocacy groups. We evaluate each parties’ obligations, reporting obligations, and compliance with current rules, and we draft and negotiate PBM rebate agreements, and are ready to assist in litigation against PBMs that effectuate co-pay accumulator programs. If you have questions about reporting obligations, are looking to develop a compliant co-pay assistance program, or challenge an existing accumulator program impacting your program’s benefits, contact us today.
