Patient Groups Sue HHS, CMS for 2020 Rule Allowing the Use of Copay Accumulator Programs

September 8, 2022By Sophia R. Gaulkin & Jeffrey N. Wasserstein

Three patient advocate groups have sued the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS), challenging HHS’s 2020 Notice of Benefits and Payment Parameters (NBPP) rule.  As it stands, the rule allows insurers and pharmacy benefit managers (PBMs) to broadly use copay accumulator programs, which have long been criticized by patient advocacy groups as padding insurers’ pockets while leaving patients high and dry.

Recognizing the problems that high prescription drug costs pose to patient access to medications, many drug manufacturers have created copay assistance programs to help patients afford the copays and deductibles for their medications.  In a common example of this practice, the drug manufacturer issues a coupon to an insured individual to present at the pharmacy.  The pharmacy bills all or most of the individual’s copayment or coinsurance—which the patient would otherwise pay the pharmacy directly—to the manufacturer.

Insurance companies and PBMs, on the other hand, have largely resisted these programs to shift drug costs away from patients and have instead found ways to shift the cost of drugs back to the patient and away from the insurer.  By prohibiting patients from counting manufacturer-provided assistance as part of the patient’s copay obligation, insurers can collect from both the patient and the manufacturer.  These prohibitions are often referred to as copay accumulator adjustment programs.  Under a copayment accumulator adjustment program, if a patient pays the $300 copay for a one-month supply of medication using a $300 manufacturer copay card or coupon, the insurer accepts the payment but does not count any manufacturer-provided copay assistance against the insured individual’s deductible or out-of-pocket maximum in the insurer’s internal accounting systems.  The insurer receives a windfall by being able to collect payments from the manufacturer and then still collect the full deductible and copayment amounts from the patient.

The patient, on the other hand, is no closer to meeting their deductible than before.  Despite securing funds to satisfy the copay obligation, the insurer’s disregard of that payment leaves full benefits and more affordable drugs for the rest of the year the same distance out of reach.  Patients who exhaust any available copay assistance program benefits will then return to square one, facing the same, limited choice: go into debt to acquire needed medications or forgo sometimes life-saving or life-extending treatment.

During the Trump administration, HHS and CMS issued the 2020 NBPP rule, revising 45 C.F.R. § 156.130(h) to explicitly allow insurers to broadly use copay accumulator programs.  The 2019 rule allowed the use of copay accumulator programs, but only with respect to drugs for which a generic alternative was available.  The complaint alleges that “copay accumulator adjustment policies have grown in the wake of HHS’s changing policy” (internal quotations omitted).

We have blogged before on Trump-era drug pricing and payment regulations, most of which have been struck down by the courts (see here and here), including another accumulator adjustment rule (see here).  The HIV and Hepatitis Policy Institute, the Diabetes Patient Advocacy Coalition, and the Diabetes Leadership Council have similarly filed suit in the U.S. District Court for the District of Columbia, challenging the 2020 NBPP rule as plainly unlawful on the grounds that it conflicts with the plain language of the Affordable Care Act (ACA) and the agencies’ existing regulations, and is arbitrary and capricious.

Among other arguments, the complaint asserts that the NBPP rule violates the ACA’s cost-sharing cap, which mandates that cost-sharing, i.e., the part of an insured patient’s annual healthcare costs for which the patient is responsible, “shall not exceed” the result of a statutory formula.  The ACA defines “cost-sharing” to include “deductibles, coinsurance, copayments, or similar charges” and “any other expenditure required of an insured individual…”  The statute sets an annual cap on the “expenditure[s] required of an insured individual” by their health insurance plan.  The complaint argues that the rule must be set aside as contrary to the ACA because the statutory text “looks not to where the money used for a copay originates,” yet the rule permits insurers to exclude payments from the annual statutory cap on cost-sharing “just because the insured obtains assistance from the drug manufacturer in satisfying that obligation.”

The complaint further argues that the rule contradicts the statute because the ACA defines the maximum amount of funds that an insurer may receive as compensation beyond premiums, yet the rule allows insurers to collect more money than the statute authorizes by collecting the ACA out-of-pocket maximum and any manufacturer-provided copay assistance.

The patient advocate groups are requesting that the court declare unlawful and set aside the rule.  An opinion that is favorable to the patient groups would mark another defeat of Trump-era drug pricing regulations.  As it stands, 14 states and Puerto Rico have passed laws outlawing copay accumulator programs.  It remains to be seen whether copay accumulator programs will be banned throughout the nation.