Popular drug discount coupons get a reprieve

Patients with serious illnesses and advocacy groups like the Arthritis Foundation breathed a sigh of relief last month when a judge blocked a government rule that would have cut the use of popular drug discount coupons.

The controversial rule, announced by the Centers for Medicare and Medicaid Services in December 2020, would have discouraged pharmaceutical manufacturers from issuing the coupons, which reduced what people pay for medicines by $12 billion in 2019.

But the May 17 U.S. District Court decision to overturn the Notice of Benefit and Payment Parameters for 2021, known as the “NBPP Final Rule,” is unlikely to be the last word in a campaign by insurers, pharmacy benefit managers and their allies in Washington to slash copay assistance.

In recent years, insurance policies have placed a heavier burden on patients who pay out of their own pockets for medicines. Between 2009 and 2021, the proportion of workers enrolled in plans with deductibles of $2,000 or more for individuals quadrupled.

In response to higher out-of-pocket costs, drug manufacturers began providing discount cards or coupons for patients hard-pressed to meet insurance deductibles, copays or co-insurance.

Most Americans with commercial insurance, mainly through employers, pay $10 or less out of their own pockets for medicines each year. But people with serious illnesses, such as diabetes and cancer, face much higher out-of-pocket costs: Nearly 10% of all such patients pay more than $500 a year, and about 2% pay more than $1,500. The average copay for an advanced drug prescription is $123, and the average coinsurance is a lofty 29%.

Half of commercially insured patients fail to fill prescriptions that cost them

$125 or more. The results of this lack of adherence are illness and higher costs for the health system.

Enter coupons. Coupons allow patients to reach their deductible while shelling out less of their own money. This can mean paying a copay or co-insurance rather than the full price of medicine.

Insurers and pharmacy benefit managers don’t like that, so they came up with a Co-Pay Accumulator Adjustment program, which prevents manufacturer assistance from counting toward annual deductibles or out-of-pocket maximums.

For a sophisticated medicine that costs $12,000 a year, coupons can reduce out-of-pocket costs dramatically — from perhaps $3,000 to only a few hundred dollars. But when an accumulator program is applied, a patient is forced to pay close to the original $3,000. The insurer, not the patient, gets the benefit of the coupons.

In 2021, 80% of commercial plans had accumulators. But states are pushing back. Fourteen of them require that coupons or discounts be applied to deductibles and maximums.

However, the federal government expressly permitted accumulator programs in 2021 and suggested that coupon assistance not be counted at all in determining whether someone has satisfied her deductible in high-deductible health plans.

The rule also required manufacturers to ensure that the full value of the assistance is passed on to the consumer. If not, then Medicaid could apply the discount to determine the “best price” for a drug and calculate what the Medicaid program pays. In other words, if a medicine is $150 but a coupon cuts out-of-pocket costs to $40, then $40 becomes the “best price” for Medicaid.

This put manufacturers in an impossible situation. They lack the insight into accumulator programs to know how much of a coupon’s value would accrue to patients, and the penalty is a huge price cut for their Medicaid drugs. They would have little recourse but to eliminate coupon programs.

Judge Carl Nichols was sympathetic. He ruled it was “infeasible” to conduct the analyses the rule required and that Medicaid regulations did not permit a patient’s out-of-pocket payment with a coupon to be designated a “best price.” Nichols said the federal government’s new rules contradicted federal law and struck them down. The government has until mid-July to appeal, and it’s clear this story isn’t over.

Copay assistance is a necessity for millions of Americans. Rather than undermining a system that helps needy people stay healthy, the federal government can follow states by demanding that copay assistance from a pharmaceutical company be treated the same way financial support from a concerned relative would be. That is, it should count toward meeting deductibles and maximums that are becoming more and more onerous for the sickest Americans.