Q&A Regarding Copay Reimbursement Programs

We see a significant “chatter” within our pharmacy client base regarding copay reimbursement programs. The legality of these programs and how the pharmacy may/should treat copay cards and/or coupons is at issue. The following Q & A is intended to provide pharmacies with useful guidance.

Are Copay Reimbursement Programs (“CRP”), such as Pfizer’s Lipitor for You® copay card program, legal? Or, are the copayments illegal “kickbacks” by manufacturers?

The legality of Copayment cards is in question. On March 7, 2012, unions and insurance plans filed eight class action lawsuits against drug manufacturers Abbott Laboratories, Amgen Inc., AstraZeneca P.L.C., Bristol-Myers Squibb Co., GlaxoSmithKline P.L.C., Merck & Co., Novartis AG, and Pfizer Inc. The lawsuits allege that the manufacturer coupon programs, which subsidize a patient’s drug co-payments, are illegal and drive up long-term health-care costs. Until now, it was widely “accepted” by many attorneys and health care providers that copayment assistance coupons were consistent with the law, mostly because the copayment coupons are system wide.

The lawsuits allege that drug manufacturers pay illegal kickbacks in the form of copayment assistance to privately insured individuals so that those health plan members choose defendants’ branded drugs instead of less-expensive alternatives. Plaintiffs allege that defendants knowingly caused health benefit providers to pay for more prescriptions of these drugs than they otherwise would have, and caused falsely inflated drug reimbursement rates to be reported to, and imposed on the members’ health benefit providers for these subsidized prescriptions. Plaintiffs assert racketeering (RICO) claims and “commercial bribery” in violation of Robinson-Patman Act. Plaintiffs have asked the Courts to declare that the copayment assistance coupons are “unlawful”.  They also seek “treble damages”, attorney’s fees, and to prevent Defendants from offering co-pay subsidy programs going forward.

Currently, these lawsuits were recently denied consolidation by a Judicial Panel on Multidistrict Litigation, and the Defendants have yet to file an Answer or responsive pleading. The result of these lawsuits, which may take several years to achieve, will provide substantial guidance as to how pharmacies should treat CRPs going forward.


While those class action lawsuits attacking Copayment reimbursement wind their way through the system, what should I do when my pharmacy is presented with a copay card or coupon?

In many cases, the agreement that your pharmacy has with an Insurer or Pharmacy Benefits Manager (“PBM”) dictates whether you are required to accept a copay card or coupon. For example, certain insurers (such as Blue Cross Blue Shield of Michigan) expressly prohibita pharmacy from accepting or otherwise participating in a copay reimbursement program in your pharmacy agreement. In contrast, other PBMs (such as Opus-ISM), require a pharmacy to participate in certain CRPs. If your agreement neither prohibits nor requires your pharmacy to participate in a CRP, then your pharmacy will have to determine whether participation would be beneficial to it. We recommend that you consult an attorney before participating in a CRP to ensure that there are no anti-kickback or other regulatory issues.


How do I know whether a particular insurer or PBM requires (or prohibits) my pharmacy to participate in a CRP?

You should review your underlying Pharmacy Agreement and Pharmacy Manual with a given insurer or PBM to determine whether you are required to, or prohibited from, accepting the card. If you do not have a copy of your Pharmacy Agreement and/or Manual handy, most insurers and PBMs have a “Help Desk” or regional representative that you may call to obtain this information. In addition, the attorneys at Frier Levitt, LLC, have sent out letters to the major PBMs requesting that the PBM take a position on this issue in order to ensure that our pharmacy clients remain compliant with the terms of their Pharmacy Agreement. We are awaiting a response to these inquiries and will update this Q&A once we’ve received a response.


Can my Pharmacy be sued if it refuses to accept a copay card or otherwise participate in a CRP? 

While nobody can prevent the filing of a lawsuit, it is not likely that the lawsuit would result in a judgment against your pharmacy unless you have an agreement (for example, with a PBM) that requires your pharmacy to participate in a CRP. However, every case is different; many PSAOs have agreed on behalf of member pharmacies to accept copay cards. If you have concerns regarding your legal obligation to participate (or not participate) in a CRP, we strongly recommend that you speak with an attorney.


What about other types of copay programs: what can my Pharmacy do to assist my patients with their copay? 

Many pharmacies are taking it upon themselves to waive or reduce a patient’s copay in order to attract that patient to continue service with the pharmacy. This can be a violation of the pharmacy’s contract with the PBM as well as a violation of State or Federal law. However, certain options do exist that may permit a pharmacy to provide assistance to certain patients who qualify financially.  In addition, recent OIG opinion letters have provided new interpretations which may allow a pharmacy to utilize in-store retail rebates in connection with copays paid by the patient. If you are interested in providing different forms of copay assistance to your patients, contact Frier Levitt to speak to an attorney.

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