Prescription drugs are often a vital part of a person’s daily health regimen, but the cost of treatment can be a barrier for some. In fact, data from a Kaiser Family Foundation poll shows 1 in 4 Americans reporting difficulty affording their medicine.
Many chronic conditions are treated with biologics (drugs made from living cells), brand-name or “specialty” drugs, which can be particularly costly. In one analysis, researchers evaluated the prices of six specialty drugs between 2014 and 2018 and found prices rose on average 57%, while prices for generics decreased 35%. Additional research shows specialty drugs make up 37.7% of retail prescription drug spending, even though they account for a small portion of prescriptions filled.
Manufacturers may offer copay assistance coupons to patients to help offset the cost of their prescriptions. These assistance programs are intended to help limit patients’ out-of-pocket costs in two ways. First, they reduce the amount a patient pays at the pharmacy counter when they fill their prescription. Second, the value of the coupon may also be applied to a patient’s annual cost-sharing requirement, like deductibles.
Opponents argue copay coupons incentivize the use of brand-name drugs over generics or lower cost brand-name drugs, contributing to higher health insurance premiums. Moreover, they say, copay coupons do not reduce the overall price of a drug but simply shift the cost to health plans, which increases premiums.
Pharmacy benefit managers (PBMs) and insurance companies offer various tools to encourage patients to choose lower cost drug options. Some health plans restrict the use of copay coupons toward deductibles by implementing copay adjustment programs. When a patient’s health plan uses a copay adjustment program, also known as a copay accumulator or maximizer program, it restricts a manufacturer’s assistance coupon from counting toward a patient’s annual out-of-pocket maximums. When the value of the coupon is exhausted at the pharmacy counter, the patient must cover the full amount of his or her annual cost-sharing requirement before plan benefits kick in.
Although copay adjustment programs might encourage patients to look for cheaper therapeutic alternatives before turning to a more expensive treatment, they can be problematic for individuals whose plans involve high cost-sharing or co-insurance—where a patient pays a percentage of the cost rather than a flat amount. Moreover, people with complex conditions, such as cancer, rheumatoid arthritis and diabetes, requiring expensive prescription drugs may have little choice.
A patient is enrolled in an insurance plan with an annual $2,000 deductible. The patient also has a $500 copay coupon.
No Copay Adjustment Policy: The $500 coupon will count toward the patient’s annual deductible: $2,000 - $500 = $1,500. The patient is responsible only for the remaining $1,500 before reaching the deductible.
With Copay Adjustment Policy: The $500 coupon will not count toward the patient’s deductible: $2,000 - $0 = $2,000. The patient has to pay the full $2,000 before satisfying the annual deductible.
As of spring 2022, laws in 14 states and Puerto Rico address the use of copay adjustment programs by insurers or PBMs by requiring any payment or discount made by or on behalf of the patient be applied to a consumer’s annual out-of-pocket cost-sharing requirement.
The Centers for Medicare and Medicaid Services in both 2020 and 2021 issued a final rule in the Notice of Benefit and Payment Parameters on the issue of copay adjustment programs. Running contrary to recent state action, the rule allows health plans to use copay adjustment programs and defers to state law on their regulation.