Copay Accumulator Programs Spark Debate

In the ongoing face-off over prescription drug prices, insurers and pharmacy benefit managers (PBMs) are implementing a new tactic to attempt to move patients away from costly medications. These drug payment copay accumulator programs discourage the use of savings coupons to buy brand name drugs. 

In recent years, insurers have made efforts to encourage patients to use less expensive options by requiring them to pay a greater portion of a treatment’s costs in the form of coinsurance and prescription deductibles. 

The response from drug manufacturers, in turn, was increasing the amount of financial aid offered to patients in the form of copay assistance coupons or cards that bring down the amount they need to pay for brand name prescriptions.

Traditionally, a manufacturer’s copay program payments counted toward a health plan’s deductible and yearly out-of-pocket maximum. After the limits had been met, the plan paid for prescriptions. 

Increasingly, though, copay accumulator programs are turning this setup on its head. With accumulator adjustments, patients get the same amount of financial aid from drug manufacturers as before, but the payments no longer count toward deductibles and out-of-pocket maximums. 

This means when they reach the maximum amount that pharmaceutical companies contribute for the year, consumers need to pay the full cost for drugs until they have reached their deductible or out-of-pocket maximums. 

Shifting Costs 

“My take on copay accumulators is that they are a way to blunt the effect of drug manufacturer patient assistance programs,” health economist and independent health care analyst Joshua P Cohen, PhD, explained to First Report Managed Care. “The latter were designed as ways to mitigate the impact of copayments on patients for specific specialty drugs. Payers and PBMs argued that such programs undermined their capability to pursue effective formulary management. So, in response they designed copay accumulators.” 

These programs essentially shift costs from PBMs, payers, and employers toward consumers, he added, and drug manufacturers do not like them because copay accumulators undermine their patient assistance programs.

In a January 3 Drug Channels blog post, Adam J Fein, PhD, president of Pembroke Consulting, Inc. illustrated the financial impact of a hypothetical copay accumulator program. Take a plan where a patient has 30% coinsurance on a specialty drug prescription, a $3000 deductible, and a $6,000 annual out-of-pocket maximum, for example. The patient’s specialty medication carries a monthly price tag of $3000. The manufacturer’s copay program pays 100% of the patient’s out-of-pocket costs and has a maximum annual value of $15,000. The drug company also negotiates a 20% rebate to the plan sponsor.

In a traditional scenario, the manufacturer would cover the annual deductible and coinsurance amount. Once the patient hits the annual out-of-pocket maximum, the plan pays the full cost. In an accumulator scenario, however, the total value of the manufacturer’s copay program is reached after 5 months, and at that point the patient becomes responsible for meeting the deductible and out-of-pocket maximum. In this example, the plan’s total expenses for the full year drop by 66%. Meanwhile, the manufacturer earns 38% of the drug’s list price at best. And the patient’s out-of-pocket costs jump from $0 to $6000—the type of cost difference that some say will lead to adherence issues.

Members who take specialty medications tend to have chronic and complex conditions that frequently call for the use of multiple health care resources, like office visits, lab tests, surgeries, or hospitalizations, Ami Gopalan, PharmD, MBA, vice president and director of payer access solutions for Precision for Value, explained to First Report Managed Care. Prior to implementation of an accumulator program, a member’s out-of-pocket maximum was potentially met within the first several months of the year due to drug costs alone. This, in turn, would allow for the use of other health care services with less worry about additional medical bills. 

“With an accumulator program in place, this is no longer the case,” she added, “and may result in patients foregoing necessary medical and pharmacy services because of the cost prohibitive nature of their out-of-pocket maximum.”

America’s Health Insurance Plans (AHIP)—the national trade association representing the health insurance community—defends the programs. The problem begins with the list price of drugs, AHIP spokesperson Cathryn Donaldson explained in an email to First Report Managed Care, and copay coupon programs essentially hide the true impact of rising prescription drug prices. These coupons are used by the pharmaceutical industry to steer patients toward more expensive medications, even when there might be a less costly and equally effective option available. 

The result is that health insurance providers foot the bill for the entire treatment cost, which results in higher premiums for consumers and employers. “Copay accumulators can help insurers better reflect actual patient out-of-pocket costs,” she noted. “If patients do pay more for branded drugs, it will only be because pharmaceutical manufacturers impose limits on the amount of copay assistance they are willing to provide.”

Large Employers Get on Board

So far, employers do appear to be interested in the cost savings these programs can provide. According to a Large Employers’ 2018 Health Care Strategy and Plan Design Survey by the National Business Group on Health (NBGH), 17% of respondents indicated that they are already using a copay accumulator program and another 18% are considering implementing a program by 2020. 

Pharmaceutical expenses remain a top cost concern for large employers, Steve Wojcik, vice president of public policy at NBGH, told First Report Managed Care, and there is a growing concern among the employer community that the way prescription drugs are priced is not sustainable for the economy and is not affordable for most individuals.

Accumulator programs are one way of attempting to manage these expenses. “Employers are fiduciaries managing the plan assets to the best they can as required by law for the benefit of all the plan participants—not just the people that need the medications,” he said. “So the copay accumulators help as one tool to make sure that the spend for prescription drugs by the plan as a whole gives everybody the best value.” 

If more money is spent on high-cost medications when there was a completely acceptable, lower-cost alternative available, then that raises premiums for everyone the following year. And that, he said, is not carrying out the fiduciary duty to all plan members. The copay accumulator was designed to reinforce the plan design and the formulary to point out that there is an alternative available that is less expensive for the patient as well as the plan. 

What About the Patient?

Meanwhile, there is plenty of room for patient uncertainty in all of this, and at least some of it likely has to do with the terminology used. In a copay accumulator program, for example, costs no longer accumulate the way they used to. And the names adopted by payers, like “out-of-pocket protection” or “benefit plan protection” can seem misleading, some experts point out. Furthermore, many consumers will not necessarily understand this new plan design and may be surprised when they do come to learn that a copay program no longer counts toward their deductible or annual maximums.

Still others highlight the possible fallout. For insurers, copay accumulator programs work as a way to mitigate the increased cost of specialty pharmacy products, Suzette DiMascio, CHE, CMCE, CPC, president and CEO of consulting firm CSI Specialty Group, noted, but it can also lead to “a crescendo of unintended consequences” when patients cannot afford their copay or are no longer compliant with their treatment regimen. When a patient ends up back in the hospital, the spending can be greater than the cost to fill the prescription. This affects various stakeholders in different ways, she added, but patients are the ones that really bear the brunt of it all. 

Others have argued that accumulators unfairly target consumers who are already vulnerable. The National Organization for Rare Disorders issued a statement on June 4, 2018 pointing out that rare disease therapies tend to be more expensive than other classes of drugs due to smaller patient populations and that sizable increases in prescription drug out-of-pocket costs leads to the abandonment of treatment and worse health outcomes for patients. “Therefore, the harmful effect of copay accumulators, regardless of the intent, will disproportionately impact rare disease patients and their families,” the organization said.

Similarly, the National Multiple Sclerosis Society issued a statement on June 27, 2018: 

“Medications can only save lives if people can access them—copay accumulator programs can severely limit that access and add to people’s financial burden,” said Bari Talente, executive vice president, advocacy. “We believe a dialogue about patient assistance programs, their benefits, and impact on overall health care costs is a worthwhile part of a patient-centered approach to assure people get the medications and services they need to achieve optimal treatment outcomes and cost savings.”

There is growing interest in these programs by plan sponsors because of their ability to generate significant savings, Ms Gopalan explained, but there has been limited data on the impact on adherence to therapy or the use of other health care services. Because of this, understanding the full impact on the patient in light of
maintaining affordability of the benefit is something each plan sponsor will need to consider carefully.