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Judge says patients should benefit from this copay assistance, not insurers

Federal judge rolls back ‘copay accumulators’ rule to 2020

SHARE Judge says patients should benefit from this copay assistance, not insurers
Illustration of coins in medicine bottles.

Michelle Budge, Deseret News

A U.S. District Court judge for the District of Columbia struck down a Trump administration rule that increased the cost some patients with complex medical conditions pay for medication.

The rule let health insurance companies take the value of financial assistance that drugmakers provide, but not count it toward the insured person’s copayments and maximum out-of-pocket expenses. In his decision, Judge John D. Bates wrote the rule is “arbitrary and capricious” and uses “contradictory” legal interpretations.

The judge ruled that insurers must return to the previous 2020 rule and can only use copay accumulators for brand-name drugs that have a generic version available — and then only if state law permits.

Since Friday’s ruling, organizations whose members are impacted by the high cost of medication have praised the decision.

“People rely on copay assistance to afford their medications because of high deductibles and high co-insurance,” Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, one of the organizations that sued the federal government over the issue, told the Deseret News. “Yeah, we want lower drug prices. But we also want copay assistance to help us be able to afford the drugs.”

At issue were so-called “copay accumulator” rules that let insurance companies take the drug company’s assistance without using it to provide financial relief to the person for whom the medication was prescribed. 

“What we litigated was a rule that said plans can decide themselves if copay assistance counts or not. That’s what we fought and what we won,” Schmid said.

The HIV+Hepatitis Policy Institute, Diabetes Leadership Council, Diabetes Patient Advocacy Coalition and three patients who use copay assistance sued the U.S. Department of Health and Human Services to overturn the rule. As MarketWatch reported, they argued it is at odds with the Affordable Care Act and “provides a windfall to insurers, which can collect amounts well above the cost-sharing maximum that would apply if the patients got financial assistance from another source.”

“Patients have a hard enough time affording their medication, especially in the economic situation some people find themselves in. This should relieve pressure on them and make drugs affordable for them. That’s the bottom line. We need to make sure this is properly enforced immediately,” Schmid said.

Schmid said that the help from pharmaceutical companies saved patients close to $19 billion in 2022 and nearly $80 billion over five years, based on an analysis by IQVIA Holdings Inc.

Big price tag

Alyssa Dykstra, 31, of Forest Lake, California, told the Deseret News she has arthritis and must take very expensive specialty medication.

“I am pretty well versed in the insurance hurdles. And that requires some necessary strategy when filling medications and going about your planned calendar year. I typically will get the medication very quickly once the calendar year starts, and fill it before I go to any other doctors because I have copay assistance card from the manufacturers,” she said.

That copay assistance also lets her spread out her out-of-pocket costs for care, “lessening my burden of having to pay my whole deductible at once just to get the medication.”

She said the help not only makes the medication she needs more affordable, but also “takes a lot of stress out of having to plan around it.” Stress, she said, is not good for anyone’s health, but “especially when you have an autoimmune condition like arthritis.”

The challenge patients face isn’t theoretical, according to Dykstra. She said some families must decide, “Do I fill my medication or pay my mortgage or get groceries? Questions like that are about basic needs. And people shouldn’t have to play these games. These medications are lifesaving.”

Mechanics of copay help

The institute said that a recent survey of commercial plans found that 83% of beneficiaries are insured by plans that use copay accumulators.

Each pharmaceutical company sets a maximum amount of assistance a patient can receive. In the example the judge used, a patient whose medicine costs $2,000 a month and who receives $4,000 in drugmaker assistance and has a $6,000 cost-sharing maximum in their insurance plan would pay $2,000 annually out of pocket without a copay-accumulator program. If his health insurance had a copay-accumulator policy, the out-of-pocket would be $6,000.

“The insurer thus collects $10,000 in cost-sharing payments as opposed to the $6,000 it would have collected in the absence of the copay accumulator,” Bates wrote in his decision.

Not everyone hails the court ruling, which might be appealed. AHIP, a trade group for health insurance companies, issued a statement Monday that said the copayment assistance drug companies offer patients is self-serving, letting them “set ever-higher prices and avoid negotiating discounts with insurers to lower cost-sharing.” AHIP said that “accumulators hold manufacturers responsible for the list price of their drugs without increasing patient cost-sharing.” It adds that patients are steered to high-priced drugs.

Bates’ ruling said the copay accumulators raise the out-of-pocket costs for patients and increase insurer profits. He disagreed with the assertion by the government that patients benefit from copay accumulators.

While the National Conference of State Legislatures said 19 states, Washington, D.C., and Puerto Rico require that payments to assist patients apply to annual cost-sharing, Schmid said it only applies when patients’ insurance is governed by state governments. “That’s why we need a federal solution,” he said.

“While this victory will certainly help millions of patients, it is a shame that so many have been forced to pay thousands of dollars in extra costs each year for their prescription drugs, forcing us to take this legal action,” George Huntley, CEO of the Diabetes Leadership Council and the Diabetes Patient Advocacy Coalition, said in a written statement. “It is imperative that the Biden administration now support the American people by precluding big insurers and their (pharmacy benefits managers) from denying patients the benefit of all forms of support they receive in paying for their critical medicines.” 

Schmid said that 29 patient groups submitted an amicus brief supporting the lawsuit. The final order can be found here, while all related briefs are here.