Johnson & Johnson sues benefits company for allegedly overusing drug cost assistance program

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Drug manufacturer Johnson & Johnson has filed a lawsuit against drug benefit company SaveOnSP for allegedly taking advantage of a J&J program that covers out-of-pocket costs for patients who use some of the more expensive prescription drugs.

Buffalo, New York-based SaveOnSP, which is run by PWGA Pension & Health Plans, describes itself on its website as "a service that negotiates prices for specialty drugs and, in exchange for the exclusive right to do so, guarantees that the recipients of those covered prescriptions will pay $0."

In the civil lawsuit filed in federal court in New Jersey, J&J said it overpaid in copay assistance by at least $100 million due to the services provided by SaveOnSP. This, said J&J, is due to contract interference and deceptive trade practices by the company.

The drug giant is seeking damages and is requesting that the court order SaveOnSP to halt its program. SaveOnSP did not immediately respond to a request for comment.

WHAT'S THE IMPACT?

According to The Wall Street Journal, the crux of the issue is the financial assistance patients can receive to mitigate their out-of-pocket prescription costs. To help patients with commercial health insurance afford their copays, SaveOnSP helps employers and drug benefit plan sponsors save on pricey specialty drugs by enrolling them in copay assistance programs.

J&J has its own copay assistance program, Janssen CarePath, geared toward patients with private or commercial insurance; it covers patient copays and, in some instances, can reduce a patient's financial responsibility to about $5 per month, including for psoriasis drugs like Stolera, which has a list price of more than $12,000 per month. Out-of-pocket assistance through the program varies by drug but can be as much as $20,000 annually.

Health insurers have been critical of copay assistance programs, saying they drive up costs while steering patients toward higher-priced brands. In response, many insurers have negotiated rebates, and they have shifted some of the costs to patients in the form of copays or coinsurance, which can add up to annual expenditures in the hundreds or thousands of dollars.

J&J's argument in the lawsuit is that SaveOnSP increases copays for some drugs and then bills J&J's copay assistance program, steering its payments to the drug benefit plan while taking a commission for itself. This results in the drug benefit plan reducing what it pays for each prescription.

In a statement shared with Healthcare Finance News, J&J said that SaveOnSP's model "inflates patients' copay costs in order to reduce what health plans have to pay to the pharmacy, and ultimately, health plans are able to extract patient assistance support away from programs like Janssen CarePath for the financial benefit of SaveOnSP and its partners."

According to a J&J spokesperson, SaveOnSP has extracted nearly $100 million in patient assistance support from Janssen CarePath alone and charges the payer "25% of the savings that's achieved." 

"What they call 'savings' is from patient assistance program funds," said J&J.

To facilitate this payment, payers sign "a 25% joinder agreement," which allows insurers to bill patients for that fee on a patient's administrative invoice.

J&J alleges that SaveOnSP intentionally circumvents the Affordable Care Act's patient protections by reclassifying critical medications as nonessential, regardless of the patient's actual needs as determined by their doctor. In deciding which drugs to include in its program, SaveOnSP targets drugs that have the most lucrative co-pay assistance programs, which include programs like CarePath, J&J claimed.

Once drugs are included in the SaveOnSP Program, J&J said the drug's copay is inflated to ensure the payer captures the total amount of copay assistance available regardless of the number of times the patient fills the prescription.

"SaveOnSP uses this threat of significantly inflated copay costs to coerce patients into enrolling in SaveOnSP in violation of the terms and conditions of the CarePath Program at a very vulnerable moment – just as they are seeking to access their copay assistance-eligible medication – for the sole purpose of reducing costs to the insurer," said J&J.

"Like other maximizer and accumulator programs, SaveOn blocks these funds from counting towards the patient's annual deductible burden, which exposes patients to the surprise risk of paying higher-deductible costs for other healthcare services and medication for themselves or for family members on the same health plan," the drugmaker claimed. "This also could lead to higher out-of-pocket costs for other healthcare services for these patients."

In certain cases, alleged J&J, SaveOnSP will increase a copay to J&J's maximum benefit. In 2021, the drug company paid almost $1,200 per prescription in copay assistance to Stelara patients not enrolled in the SaveOnSP program, and paid about $4,300 per prescription for those who were enrolled, J&J claimed in the lawsuit.

THE LARGER TREND

At the core of the issue is prescription drug costs – which, according to data published this year from GoodRx, have increased 2.5% since the beginning of the COVID-19 pandemic.

The price of prescription medications has increased at a far faster rate than inflation over the past seven years. Since 2014, all goods and services have increased in price by 19% while prescription drug prices have increased by 35%. Prescription drug prices have also outpaced wages, gas, food, tuition, transportation, telephone and internet services, personal care, and new and used cars prices.

Typically, drug costs go up every January and July, said GoodRx. This January, 810 drugs increased in price by an average of 5.1% – a mild gain compared to other goods and services, but still troubling.

Meanwhile, total drug spending in the U.S. grew 7.7% in 2021 compared to 2020, hitting $576.9 billion in total spend, and this trend is expected to continue, with an estimated 4% to 6% increase in national drug spending in 2022, according to an April report from the American Society of Health-System Pharmacists.

The 7.7% increase in pharmaceutical expenditures was driven by a 4.8% increase in utilization, a 1.9% increase in price and a 1.1% increase in new drugs, the report found. Adalimumab was the top drug in terms of overall expenditures in 2021, followed by apixaban and dulaglutide.

Drug expenditures were $39.6 billion (an 8.4% increase) and $105.0 billion (a 7.7% increase) in non-federal hospitals and in clinics, respectively.

Linking the cost of prescription drugs in the U.S. to the prices paid in other high-income nations could have reduced American spending for the drugs by at least half in 2020, a Rand study found this past September.

Modeling a proposal that would cap U.S. prices at 120% of what is paid in six other nations, researchers found that such a move would have cut U.S. spending on insulins and 50 top brand-name drugs by 52% during 2020 – a savings of $83.5 billion. These savings are on top of already-lower U.S. "net" prices after rebates negotiated between drug companies and insurers.

According to data from the U.S. Department of Health and Human Services, Americans pay more than $1,500 per person for prescription drugs, far higher than other comparable nations. Since prices for brand-name drugs are rising faster than the rate of inflation, it has led many not to take their medications as prescribed due to their cost. HHS has identified lack of competition as a key driver of these rising drug costs.
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com