Court strikes down HHS rule allowing insurers to exclude co-pay assistance

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A federal judge has struck down a Trump administration rule that allowed health insurers to exclude drug manufacturer co-pay assistance towards a beneficiary's out-of-pocket costs.

Under the Trump rule, these "copay accumulator" policies meant patients generally paid more out of pocket for their prescription drugs.

The case was brought against the U.S. Department of Health and Human Services by the HIV+Hepatitis Policy Institute, Diabetes Leadership Council, Diabetes Patient Advocacy Coalition, and three patients who depend on co-pay assistance and whose insurers implemented co-pay accumulator policies.

Under these co-pay accumulator policies, patients are still able to use manufacturer discounts to pay for medications, but the value of this assistance is not credited toward patients' deductibles and annual cost-sharing maximums. 

The 2021 Notice of Benefit and Payment Parameters rule, enacted during the Trump administration, authorized these practices.

The court ruling means insurers will now have to abide by the federal rule that governed 2020 health plans. Under that rule, co-pay accumulators are permissible only for branded drugs that have a generic equivalent, if allowed by state law. Insurers are now precluded by federal regulation from implementing co-pay accumulators for drugs that lack generic equivalents.

WHAT'S THE IMPACT?

Due to high deductibles and high cost-sharing – sometimes as high as 50% of the list price of the drug – patients often depend on co-pay assistance to afford their drugs. According to IQVIA, the amount of co-pay assistance totaled nearly $19 billion last year.

At the same time, the suit claimed insurers and PBMs have increasingly implemented co-pay accumulators that have greatly impacted patients who need high-cost prescription drugs, such as those with HIV, hepatitis, cancer, arthritis, diabetes and multiple sclerosis. In a recent survey of commercial plans, 83% of beneficiaries are enrolled in plans that employ co-pay accumulators.

Judge John D. Bates of the U.S. District Court for the District of Columbia said that co-pay accumulators increase patients' costs while simultaneously enhancing insurer profits. The court dismissed health insurers' claims, echoed by the government, that drug company co-pay assistance translates into a reduction in how much an enrollee pays for the drug.

The court agreed with the plaintiffs that the rule was arbitrary and capricious because it allows insurers to decide for themselves whether co-pay assistance is included in the definition of "cost-sharing" based on contradictory interpretations of the same law and regulations.

The court agreed that, based on the arguments the plaintiffs presented, co-pay assistance would be required to be included as part of cost-sharing, since the regulation states that cost-sharing is "any expenditure required by or on behalf of an enrollee." The court ultimately remanded to HHS in the event the agency wishes to offer further views as to the legality of co-pay accumulators under the ACA.

ON THE RECORD

"We are thrilled that the court has taken the side of patients who have been struggling to afford their prescription drugs due to the greedy actions of insurers and their PBMs," said Carl Schmid, executive director of the HIV+Hepatitis Policy Institute. "We call on the Biden administration to immediately enforce this decision and not take any further steps to undermine the co-pay assistance that allows patients to access their essential medications."

"While this victory will certainly help millions of patients, it is a shame that so many have been forced to pay thousands of dollars in extra costs each year for their prescription drugs, forcing us to take this legal action," said George Huntley, CEO of the Diabetes Leadership Council and the Diabetes Patient Advocacy Coalition. "It is imperative that the Biden administration now supports the American people by precluding big insurers and their PBMs from denying patients the benefit of all forms of support they receive in paying for their critical medicines."
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com