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Trends to Watch through 2023: Copay Accumulator Adjuster Programs
Mar 21, 2022
As we launch into 2022, it’s time for our stakeholders to look ahead and begin making and adjusting their yearly goals. It will be important to explore what trends in pharma are developing and how they may impact those working in the industry. In this blog series, we will explore the top seven trends we see emerging in 2022 and 2023, and how our customers should respond.
A major trend we see emerging in 2022 and 2023 are Copay Accumulator Adjuster Programs. IQVIA expert, Luke Greenwalt dives in to share how these programs will affect our pharma stakeholders.
Copay Accumulator Adjuster Programs
The more patients are asked to pay, the less likely they are to do so. As more patients become exposed to co-insurance and deductibles, and specialty product utilization grows, cost sharing requirements have increased. One common mechanism for pharmaceutical manufacturers to help with rising patient costs has been to offer copay offset programs to reduce patient burden. The prevalence of this approach is so great that today 95% of branded products offer copay assistance, and approximately 75% of patient cost sharing in the commercial channel, where copay programs are allowed, is now offset by manufacturers.
One of the responses to these trends has been the introduction of copay Accumulator Adjuster Programs (AAPs) and copay maximizers by the large Pharmaceutical Benefit Managers (PBMs). These programs are designed to shift more financial burden indirectly to the manufacturer by extracting more out-of-pocket from the patient. These programs work because the PBMs have visibility through their vertically integrated pharmacy systems to see when a secondary payer (the copay card) is being used. For AAPs, the program then disallows the patient copay, which is offset by the manufacturer, to count towards their deductible or out-of-pocket caps.
Many patients under these programs get surprised as they realize they don’t get the copay assistance they had expected and are stuck with a higher bill for their drug than they are used to. This “copay surprise” happens as a patient hits the maximum-allowed manufacturer assistance after their benefit runs out. This in turn, can prompt patients to discontinue treatment, which may lead to negative health outcomes and drive-up future costs of healthcare1 (figure 1).
Patients experiencing copay surprise have been observed to be more than 13 times as likely to discontinue therapy as patients who experience consistent copays.
Figure 1
These efforts by payers have been met with push-back from chronic disease patient groups, and several states have passed laws prohibiting or limiting the use of accumulator adjusters for all individual and small group plans. There are also growing concerns that copay accumulators have the potential to shift costs from plan sponsors to patients, and that these programs adversely impact patient medication adherence.
Adding complexity to AAPs and copay utilization are recent CMS rule changes. As of January 1, 2023, according to a newly published CMS rule, AAPs will impact Medicaid prescription drugs’ so-called “best price.”2 The change was intended to ensure that when a patient uses a copay assistance card provided by a drug manufacturer, the value is passed through to the patient’s deductible or cost sharing obligations in full. This means that for specialty products where benefits are paid under an accumulator plan, that those funds will be treated as a de facto rebate, thereby setting a new lower threshold when filing Medicaid best price. The new lower best price will now become the manufacturer’s price for that brand broadly in the Medicaid channel.
Further compounding the best price challenges are the growing use of AAPs and the removal of the Average Manufacturer Price (AMP) cap on Dec 31, 2023. An industry survey has found that more than 75% of payers expect that healthcare plans utilizing copay accumulator programs will increase in the future.3 In the Biden administration’s COVID-19 American Rescue Plan Act of 2021, the passed legislation included the removal of the maximum allowable AMP discount cap of 100%. That means that starting in January 2024, Medicaid rebates will no longer be capped at 100%, and manufacturers may find themselves paying more than the value of the product sold in the channel. Like the aforementioned policy changes, the implications of a negative Medicaid price are far-reaching and long-lasting.
For example, AAPs under this new Medicaid rule could potentially lead to manufacturers seeing the value of a prescription being 50-100% under water. Consider a brand that is currently at the maximum allowable AMP discount of 100% (also referred to as penny pricing). If the benefits paid under an AAP, which could range from 20-100% of the prescription value, are added on top of that 100% discount, a manufacturer will easily find itself with a negative margin on every prescription filled in the Medicaid channel.
Manufacturers will likely respond in different ways to stem the tide of the negative impact of these new regulations. While some may try to mitigate the impact through copay program design, all will need to link copay and rebate data to ensure they can comply with these new requirements. Other manufacturers may even consider pulling products off the market to prevent financial losses driven by the rule changes, which would have a direct negative impact on patients who may be reliant on those medications today.
In our next blog, we will explore the 340B Drug Discount Program.
References
1 Accumulator adjustment programs lead to surprise out-of-pocket costs and nonadherence, analysis finds, PhRMA, November 19, 2020, Migliara, G.
2 CMS Issues Final Rule to Empower States, Manufacturers, and Private Payers to Create New Payment Methods for Innovative New Therapies Based on Patient Outcomes, CMS, Dec 21, 2020.
3 Copay accumulators: Shifting Cost of Care from Plan Sponsors to Patients?, MME, January 27, 2021, Patterson, K et al
Top Issues for Pharma to Watch in 2022 and 2023
Coming out of the global COVID-19 pandemic, the future holds both opportunity and increased complexity for the pharmaceutical industry. There are many important issues for pharma to watch in the near future as economic factors will continue to put pressure on revenue and margins. Seven important issues for pharma to watch in 2022 and 2023 that focus on policy, payer, and patients are explored during this webinar.