Members of Congress on both sides of the aisle are examining how industry middlemen known as Pharmacy Benefit Managers (PBMs) are driving up healthcare costs. Rightly so. PBMs have been manipulating the complex and opaque drug pricing system at the expense of patients for far too long and Congress must act.
PBMs work for (or increasingly are part of) insurance companies. They decide which drugs patients can access and negotiate rebates to drugs’ list prices. The term “rebates” sounds like these discounts should benefit patients, but PBMs and insurers pocket these savings while basing patients’ costs on the higher undiscounted prices.
This practice inequitably shifts more costs onto patients relative to what their insurance benefit design would indicate and, troublingly, encourages too many patients to not fill their prescribed medications. For instance, a study by healthcare data firm IQVIA found that 69 percent of patients did not start treatment when out-of-pocket costs exceeded $250. Lack of adherence worsens patients’ outcomes and increases overall healthcare costs.
To help encourage medication adherence, manufacturers and charitable organizations offer copay assistance programs that help patients who are struggling to afford their prescriptions. Essentially, copay assistance programs cover patients’ out-of-pocket costs creating a critical access lifeline.
In response, PBMs have implemented practices that prevent copay assistance funds from counting toward patients’ out-of-pocket costs. An important PBM reform would prohibit these harmful and deceptive policies.
Two of these practices are commonly known as copay accumulators and copay maximizers. While the programs work differently, both undermine the purpose of copay assistance programs. Take the copay accumulator program. These programs directly disallow copay assistance from counting toward patients’ deductibles and other out-of-pocket costs.
Consequently, even after the assistance money has covered patients’ maximum out-of-pocket costs, patients must still pay all these costs once the assistance runs out. Nationwide, nearly two thirds of all individual marketplace health plans contain a copay accumulator policy, and more and more stories are being told about how these policies put patients in dire health and financial situations.
Proponents of copay accumulators and maximizers claim that these programs allow insurers and PBMs to keep premium rates low. However, recent data from the Global Healthy Living Foundation tells us a different story. The analysis shows that, to date, there has been no statistically significant change in the rates of health insurance premium increases after the passage of state laws requiring that patient assistance funds count toward policyholders’ deductibles or out-of-pocket maximum payments.
By re-exposing patients to high pharmacy costs, accumulators and maximizers negatively impact medication adherence to the detriment of patients’ health outcomes. First, worse adherence causes patients to require more expensive emergency treatments and hospitalizations, which will drive up overall healthcare costs. Second, patients managing chronic conditions often endure a long medical journey to find the treatment that works best for them. Accumulators and maximizers create financial obstacles that directly undermine the patient-physician relationship.
While PBMs and insurers have long been allowed to engage in predatory practices that distort the health insurance marketplace, legislators at the state and federal level have taken notice of these schemes. To date, 19 states, Puerto Rico, and Washington, DC have passed legislation that requires health insurers to count the value of copay assistance towards patient’s cost-sharing responsibilities. Most recently, lawmakers in Texas passed legislation that protects patients by banning copay accumulators in June.
In Washington, DC, Reps. Earl “Buddy” Carter (R-GA), Nanette Barragán (D-CA), Mariannette Miller-Meeks (R-IA), and Diana DeGette (D-CO) reintroduced the Help Ensure Lower Patient (HELP) Copays Act in the 118th Congress. This bipartisan legislation would institute a federal prohibition on copay accumulator programs, ensuring that insurers and PBMs honor the value of copay assistance to help patients afford their medications and pay down their deductibles. In the Senate, Senators Roger Marshall (R-KS) and Tim Kaine (D-VA) introduced a companion bill in April.
Copay accumulators and maximizers are, undoubtedly, beneficial for the PBM or insurer’s bottom line, but such policies place a large financial burden on patients and the healthcare system. Addressing the problems created by accumulators and maximizers is one component of a necessary PBM reform effort that Washington has rightly undertaken to protect vulnerable consumers.
Sally C. Pipes is President, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Wayne Winegarden, Ph.D. is Sr. Fellow and Director of the Center for Medical Economics and Innovation at the Pacific Research Institute.
Reprinted with Permission from RealClearHealth – By Sally C. Pipes & Wayne Winegarden