CMS must withdraw a Trump-era rule on copay assistance programs under a federal judge’s order following claims that the policy has allowed health plans to increase out-of-pocket prescription drug costs for consumers. The rule appears to conflict with the definition of “cost-sharing” in the Affordable Care Act (ACA) and federal regulations, Judge John D. Bates wrote in an order filed in the US District Court for the District of Columbia. The rule said pharmacy benefit managers do not have to count drugmaker copay assistance toward patients’ out-of-pocket costs.
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For certain high-priced specialty drugs, pharmaceutical manufacturers have long offered free or reduced-cost medicine, discount cards, coupons, and other forms of assistance to help patients afford the medication. While this manufacturer assistance can come in many forms, one broad category of assistance is through Copay Assistance Programs. A Copay Assistance Program is when a drug manufacturer covers a portion of the cost-sharing of commercially insured patients during a given calendar year until the patient’s out-of-pocket maximum is met. After a patient’s out-of-pocket maximum is met, the health plan is responsible for covering the full cost of the drug for the remainder of the plan year. As such, plans have long complained that manufacturers’ copay assistance programs, despite being presented as a way to help patients access expensive prescription drugs, are really a marketing tool to steer patients towards their medications while shifting the bulk of the cost of these medications to the patient’s insurance plan.
In August of 2022, three patient-advocacy groups sued CMS and HHS to invalidate rulemaking that allowed health plans to operate copay accumulator and maximizer programs, arguing that the rule violated the ACA. On September 29, 2023, the court vacated the 2021 rule based on both its contradictory reading of the same statutory and regulatory language and the fact that the agencies have yet to offer definitive interpretation of the term “cost sharing” that would support their authorization of copay accumulators.
In particular, the court focused on the fact that based on the agencies’ interpretation, health insurers would have the ability to choose the meaning of the same statutory and regulatory provisions at their discretion. Judge Bates’ decision represents a turning point in the landscape of healthcare affordability. The court deemed the 2021 rule unlawful and has mandated that insurers adhere to the 2020 federal rule governing health plans. According to this rule, copay accumulators are permissible only for branded drugs that have a generic equivalent, if allowed by state law.
The striking down of the 2021 rule on copay accumulators represents a significant development that necessitates adaptation from health plans and PBMs, who will need to adjust their operations on not just copay accumulator programs, but also copay maximizers and potentially alternative funding programs, to align with the reinstated federal rule.