Patients continue to benefit from copay coupons, while accumulators mitigate market distortion created to drive up Big Pharma profits
Washington, D.C. – (March 23, 2023) – AHIP filed an amicus brief today in HIV and Hepatitis Policy Institute v. United States Department of Health and Human Services (HHS), which is before the U.S. District Court for the District of Columbia. AHIP supports HHS’s defense of its copay coupon accumulator rule, which allows health insurance providers to determine whether to count direct financial assistance from drug manufacturers toward a patient’s annual cost-sharing limitation. AHIP’s brief provides context that demonstrates both the reasonableness and importance of the accumulator rule.
Here are the highlights.
The Problem Is the Price
“AHIP recognizes that many Americans struggle to afford prescription drugs. Escalating drug prices are a leading driver of rising health care costs, and they are an increasing financial burden for hardworking American families. AHIP is committed to practical solutions that reduce consumer costs and increase patient access to needed medication. Substantial research, and AHIP’s members’ experience, show that unbounded drug manufacturer co-pay coupons are part of the problem—not the solution—to out-of-control drug prices. In fact, co-pay coupons are so problematic that the federal government considers them an illegal kickback in federal programs like Medicare and Medicaid.”
“Americans pay the highest prices in the world for medications, by a large margin, and the problem gets worse every year. Ever-higher drug prices, in turn, necessarily lead to higher insurance premiums and cost-sharing amounts that impact hardworking American families. And while health insurance providers are strictly regulated to both cover costs and pass on savings, prescription drug prices are left wholly unconstrained based on unilateral price setting by drug manufacturers.”
“High drug prices are … directly correlated to higher deductibles and cost-sharing requirements; deductibles do not go up simply due to health insurance provider pricing decisions. … When increases in drug price drive up health care costs, some mix of premiums, deductibles, and cost-sharing for silver plans must go up, too...”
“The bottom line is that health insurance providers work hard within this regulated system to keep premiums and out-of-pocket costs as low as possible given the underlying medical costs, and to give consumers a full range of plan options that carefully balance premiums against anticipated cost-sharing. But unlike premiums, those underlying costs—and especially the brand-name prescription drug prices that are the primary driver of such costs—are wholly unconstrained.”
Copay Coupons Distort the Market for Big Pharma Profits
“No one should need a coupon to afford a life-saving drug. Far from working to lower the price of drugs, co-pay coupons for brand-name drugs are profit maximizers for drug manufacturers that raise health care costs (and thus health coverage premiums) for everyone, including the patients who are ostensibly helped. ... As drug manufacturers themselves recognize, co-pay coupons are strategic marketing tools designed to generate ‘significant returns on investment … in the form of increased sales, particularly for drugs approaching loss of exclusivity.’”
Coupons are carefully structured, moreover, to foster this sort of distortion. They are not need-based subsidies. Instead, they are marketing tools designed to maximize profits, crafted to ensure that health plans maximize spending for prescription drugs, while minimizing the amount of manufacturer assistance. This results in drug prices going up for all consumers, including coupon recipients, who ultimately pay higher health insurance premiums. “
In short, coupons are profit centers, not charity. One company’s estimated rate of return for a co-pay assistance program was ‘$8.90 for every dollar invested.’ … Another company’s co-pay assistance program ‘had an average return on investment of 451%.’”
Accumulator Programs Allow the Savings While Mitigating Market Distortion
“Co-pay accumulator programs have been developed to mitigate the market distortion that coupons cause. Accumulators operate on a simple premise: when a manufacturer discounts its price through a co-pay coupon, the discount does not require the patient to incur any cost, so it does not count toward a patient’s cost-sharing. This preserves important cost-sharing incentives that help nudge patients toward lower cost, higher value choices.”
“Accumulators thus let patients benefit from the coupon discount—the patient’s out-of-pocket spending is still reduced or eliminated whenever a coupon is available, and the accumulator does not change that. Nor does the accumulator provide a windfall to health insurance providers, because the manufacturer pays the value of the co-pay coupon to the pharmacy (not the health insurance provider). The accumulator program simply preserves the benefit design of the health plan, including cost-sharing that encourages high-value, clinically appropriate choices across the board. The proof is in the pudding. Although states can prohibit co-pay accumulator programs under the rule, most opt to allow them. This is because co-pay accumulators work to help constrain, not inflate, prescription drug prices. “
“While the rule permits states flexibility to use co-pay accumulators to mitigate the price inflation caused by co-pay coupons, the rule does not stand in the way of drug manufacturers assisting patients with prescription drug access and affordability. For starters, drug manufacturers could reduce or discount their list prices, and have ample room to do so given their high profit margins. They could also provide co-pay coupons that continue throughout the year, or without capping the maximum assistance at deductible levels. Drugmakers generally don’t provide open-ended cost-sharing support because the point of coupons is to reap large profits from a small investment by paying co-pays only up until the full cost of the drug shifts to the health insurance provider. This tactic in fact shifts the full cost back to patients, but the cost shifting is concealed.”
AHIP is the national association whose members provide health care coverage, services, and solutions to hundreds of millions of Americans every day. We are committed to market-based solutions and public-private partnerships that make health care better and coverage more affordable and accessible for everyone. Visit www.ahip.org to learn how working together, we are Guiding Greater Health.