Reprint of AISHealth.com article June 2022
A U.S. district court judge has struck down a CMS rule that would have narrowed the exclusions from Medicaid best price for manufacturer-provided patient-assistance programs. The rule, which was set to go into effect on Jan. 1, would have required drugmakers to determine exactly where their patient assistance is going. If 100% of it was not reaching the patient — particularly via copayment accumulators and maximizers when payers are taking this assistance rather than allowing it to count toward patients’ deductibles and out-of-pocket maximums — that assistance would need to have been included in Medicaid best price and average manufacturer price (AMP) calculations for prescription drugs. This decision, as well as a recent pharma lawsuit against a maximizer company, may spur more pushback against these copay programs, one industry expert tells AIS Health, a division of MMIT.
The Medicaid rebate rule allows state Medicaid programs to get the same discounts on drug prices that manufacturers offer commercial plans purchasing prescription drugs. Manufacturers pay rebates to Medicaid programs that are calculated based on drugmakers’ best price, which is the lowest price the manufacturer gives to most providers of health care services or items, including hospitals, HMOs and MCOs — but not patients. It includes any price adjustments, such as discounts and rebates, but not manufacturer-provided assistance to patients.
Traditionally, when a manufacturer provides copay assistance for one of its drugs, that dollar amount would count toward the patient’s deductible and out-of-pocket maximum. But copay accumulator programs prevent those funds from applying to the deductible and out-of-pocket limit. Instead, when members have used all of the copay assistance available to them, their payments then start counting toward their deductible and out-of-pocket costs. A similar type of approach is a copay maximizer program, which will distribute 100% of available manufacturer copay offset funds over 12 months. These payments also do not count toward members’ deductibles and out-of-pocket max.
A CMS final rule (CMS-2482-F) — referred to as the Accumulator Rule — published Dec. 31, 2020, would have required that:
(1) Manufacturers must ensure that their assistance programs’ benefits “are provided entirely to the consumer.…If any of the manufacturer-sponsored assistance is diverted to the plan, those amounts should be included when a manufacturer calculates its best price,” and
(2) When manufacturer assistance is not applied to a patient’s deductible or other cost-sharing obligations, “the assistance becomes a price concession to the health plan by delaying the point at which the health plan’s contribution toward the patient’s cost sharing begins, or reducing the value of the assistance to the patient, and thus should be counted in best price and, in certain cases, the calculation of the AMP.”
On May 21, 2021, the Pharmaceutical Research and Manufacturers of America (PhRMA) filed a lawsuit (No. 1:21-cv-01395) seeking “a declaration that the Accumulator Rule is invalid,” among other things.
In its lawsuit, PhRMA noted that patients are not included among the providers eligible for best price. In 2007 regulations, CMS declared that “manufacturer-sponsored drug discount card programs, coupons and co-pay assistance” were excluded from best price calculation when those benefits go to patients.
Per PhRMA, “In the Accumulator Rule, CMS treats assistance offered by manufacturers to patients as if it were a price discount to health insurers, just because the insurers have figured out a way to take that assistance away from the patients for whom it was intended. That is simply not what the word ‘price’ means. A ‘price’ is the amount that a seller intentionally offers and voluntarily agrees to accept from a buyer. But here, the manufacturer does not intend to offer the financial assistance at issue to the health insurers, but rather wants it to fully benefit patients. The health insurers are acting against the manufacturers’ will. That is not what the law means when it says ‘lowest price available.’”
District Court Judge Sided With PhRMA
Judge Carl J. Nichols of the U.S. District Court for the District of Columbia agreed with PhRMA in a May 17 ruling setting aside the Accumulator Rule. “A manufacturer’s financial assistance to a patient does not qualify as a price made available from a manufacturer to a best-price-eligible purchaser,” he wrote. “Rather, a manufacturer’s financial assistance is available from the manufacturer to the patient. And a patient is not a best-price-eligible purchaser. As a result, HHS lacks the statutory authority to adopt the accumulator adjustment rule. That conclusion holds true even though commercial health insurers have developed accumulator adjustment programs intended to capture some (or all) of a manufacturer’s financial assistance to a patient.”
The rule, Nichols wrote, “would make the calculation of the best price turn on information often in the sole possession of commercial health insurers. Under the proposed rule, manufacturers would need to conduct transaction-by-transaction investigations into the operations of accumulator adjustment programs even though manufacturers have no control over (and sometimes no information concerning) those programs.”
“There seemed to be too many unknowns in the proposed ruling for it to be put into effect at all, let alone to be put into effect by Jan. 1, 2023,” Reta Mourad, Pharm.D., vice president of the access experience team at PRECISIONvalue, tells AIS Health. “Manufacturer copay-assistance programs have long been criticized by PBMs and payers, viewing these programs as manufacturer strategies for patients to continue using higher-cost, branded drugs in therapeutic areas where lower-cost and clinically appropriate alternatives are available.
Source: ‘Decision Makes Complete Sense’
“On the other hand, payers who have implemented accumulator and maximizer programs have been criticized for these programs as ultimately taking the benefits away from the patients who are directly impacted by these programs. Fundamentally, the conversation is around the high cost of drugs, but the CMS ruling, in trying to address some of these issues, did not provide enough detail and guidance on how the manufacturers would need to prove that patients were receiving the full benefit of the financial assistance when manufacturers are not at all privy to the inner workings of such accumulator programs. The judge’s decision makes complete sense based on the information set forth in this case.”
According to Rick Ford, chief product officer at InfinityRx and president of Biocel Access Solutions, “the intent of the Medicaid Drug Rebate Program (MDRP) is to ensure that Medicaid receives drug pricing that is not more than pricing available from drug manufacturers to best price-eligible entities for affected drugs. ‘Medical spend’ is a well-defined term that is used in a broad range of health care regulation and generally defines health plan direct costs for covered services. The court’s decision provides an unintended pathway for medical spend incurred by Medicaid to exceed medical spend incurred by best price-eligible entities for affected drugs. This decision likely exposes deficiencies in regulatory processes or judicial interpretation; it is unlikely that the intent of the MDRP is consistent with outcomes that will result from this decision.”
Fifteen states have enacted laws banning accumulator programs, and at least one industry expert expects that number to rise due to this decision. “I would expect more states to begin banning the use of copay accumulator programs, given the attention this case raised,” says Ryan Cox, R.Ph., vice president and director of the access experience team at PRECISIONvalue. “Furthermore, there was a lawsuit filed by Johnson & Johnson against SaveOnSP, ESI’s [i.e., Express Scripts’] copay maximizer partner. It will be interesting to watch how this case develops and if additional manufacturers and/or PhRMA joins in or files additional lawsuits.”