Accumulators, Maximizers, Alternative Funding Models Contribute to ‘Doom Loop of Specialty Drug Benefits’

As plan sponsors continue to grapple with the high costs of specialty drugs, they have undertaken various strategies to deal with them. The use of copayment accumulators, copay maximizers and alternative funding companies has been a fairly recent trend, noted longtime industry expert Adam J. Fein, Ph.D., CEO of Drug Channels Institute, during a recent webinar. But as that use continues to increase, multiple questions exist around the practices and what the future holds for them.

Fein explained that he chose the focus of the June 23 webinar, titled PBMs and the Battle Over Patient Support Funds: Accumulators, Maximizers, and Alternative Funding, because the entities are a hot industry topic currently. “And I think this is a topic of great relevance to manufacturers, to PBMs, to plan sponsors, to patients, to pharmacies, to everyone in the channel. And it’s one that I found is not well understood,” he stated.

The topic mainly affects specialty drugs, which now represent more than half of payer spending on drugs due to two main reasons, he asserted. The first is the specialty drug pipeline and the costly prices of those agents, while the second is the dramatic growth in generic dispensing over the past 20 years.

Copay accumulators, maximizers and alternative funding programs are relatively new trends that have started over the last four or five years, but “they’ve been growly quickly,” he noted, which has led to their creating “so much disruption for people.”

Changes in benefit design have contributed to the rise of these programs, Fein maintained. “More and more of us face very significant deductibles,” he said, citing an increase from 2008 to 2022 in the share of employees covered by a high-deductible health plan (HDHP). “The presence of deductibles means that more and more people are exposed to health care costs, particularly prescription drug expenses for specialty drugs.”

In addition, benefit designs have shifted from copayments to increasingly coinsurance. In formularies for employer-sponsored plans, the second tier, which is usually for preferred drugs, has seen growth in this practice, but the fourth tier — “where a lot of the specialty drugs live” — has also experienced a large increase in coinsurance, which often is 25% to 30% of a drug’s list price.

‘Bimodal Benefits’ Exist

These developments have resulted in “a world of…bimodal benefits,” he pointed out, in which “most people pay very little for prescription drugs, but a small number of people pay a lot.” And the latter group is mostly those people taking specialty drugs. “My best guess is that about 60% of all out-of-pocket spending now is coming from coinsurance or deductibles,” he said.

“So these kinds of benefit designs obviously encourage the manufacturers to step in,” Fein noted. Companies can do this in a couple of different ways. One way is via commercial copay programs, which “sometimes used to be called coupons, but I’d call copay support, because it sort of doesn’t matter how it’s delivered. It could be electronically now vs. a physical coupon.” He cited data from MMIT showing that in 2022, 749 copay offset programs existed and were used by more than 700 brands.

AIS Health is a division of MMIT.

Manufacturer spending on these programs has more than doubled in the last six years, he noted. Traditionally, patients would access a few thousand dollars to reach their deductible, but the programs had much more money available beyond that. “Many of these programs were established years ago and set up with very high limits, so potentially there could be $20,000 or $30,000 or $40,000 in the program for a patient.”

The second type of program is patient assistance programs, which can be a few different kinds: manufacturers or independent charities may fund them, and even state-registered patient-assistance programs exist. “These are generally means-tested, typically with something like the federal poverty limit, and often assume a patient either doesn’t have insurance, so they’re uninsured, or dramatically underinsured.” In 2023, he explained, “the federal poverty limit for a family of four is $30,000. So if you have a means-tested program, often that will be a multiple of three or four times the federal poverty limit.”

Fein estimated that manufacturer funding available through copay offset programs and patient assistance programs combined is about $40 billion. “So that’s a big pool of money.…That’s a lot even in American health care.” And this, he said, is why accumulators, maximizers and alternate funding companies exist.

“What some enterprising people have done is say, ‘Well, how can the plans get access to that money?’ Now, typically, when plans think about managing specialty costs, or offsetting specialty costs, they think about the things that we’re probably more familiar with, like the cost shifting of benefit designs or utilization management or channel management to lower cost or, of course, formulary rebates, which have become bigger and bigger in specialty drugs,” he explained.

But plan sponsors now are also using these newer offerings. Copay accumulators apply the maximum manufacturer assistance up front and deplete that contribution before the end of the year. Because these models — which are operated by PBMs — exclude copay support from a person’s deductible, plans “effectively get the value of two deductibles,” pointed out Fein. The next-generation copay maximizer model sets a patient’s out-of-pocket spend to the maximum value of a copay program. These programs are usually offered by a third-party vendor separate from but partnered with the PBM, he explained, and work via what some consider a “loophole” in the Affordable Care Act. And alternative funding programs — which are sometimes referred to as specialty carve-out programs and are not usually affiliated or partnered with PBMs — eliminate coverage for specialty drugs so patients are uninsured for those agents, and then the vendors reach out to the patient assistance programs on patients’ behalf to secure coverage for them.

The big three PBMs each offer accumulators: Express Scripts has the Out of Pocket Protection Program, CVS Caremark’s program is True Accumulation and OptumRx’s offering is known as Copay Card Solutions: Accumulator Benefit, although the names “seem to change a little bit over time,” Fein noted. For maximizers, Express Scripts works with SaveOnSP, CVS Caremark works with PrudentRx, and OptumRx has its in-house Variable Copay Program. And while multiple alternative funding companies exist, three of the largest include Payer Matrix, Paydhealth and Sharx. Such entities, he stated, are “small, private, very secretive companies.”

Maximizers Now Are More Common Than Accumulators

In 2018, accumulators outpaced maximizers, but by 2022, maximizers had overtaken them, Fein revealed, noting that there are a few reasons for PBMs’ maximizer preference. They “sustain specialty dispensing,” as patients usually are not aware of what’s going on, as opposed to accumulators, where once funding runs out, patients are facing huge out-of-pocket costs, which can result in discontinuing a medication. In addition, PBMs can retain formulary control with these models. And finally, “it is possible, hypothetically, that the PBMs may share in some of the fees that are earned by these external vendors,” although he added that no evidence one way or the other exists on this issue.

He shared IQVIA data on the growth of both accumulators and maximizers in three specialty drug-treated therapeutic classes, noting that “you’re seeing a dramatic growth in these programs.”

“But there’s a new kid in town, and that’s the alternative funding programs, and this one is the most controversial and has been growing the most quickly over the last two to three years really,” said Fein. “It started a few years ago, but it really has accelerated in the last couple of years. And I call it a scheme — that’s pejorative, but that’s just what I think of it.”

Data from Pharmaceutical Strategies Group (PSG), an EPIC company, shows that use of alternative funding programs by employers more than doubled from 2021 to 2022, with typically smaller employers using them. “The number of plans that are looking at this has actually declined a little bit, probably because of some of the controversy,” he suggested. “But this is clearly a thing; it’s clearly starting to get momentum. And the size of some of these companies, some of these vendors, and the amount of money there, shows that they are significant players.”

Fein offered multiple reasons why issues exist around alternate funding companies. Among those is that “these people are not necessarily uninsured. They’re simply selectively uninsured for particular products that happen to have a certain kind of patient assistance program. So you’re really kind of using a program that is designed for one purpose — charitable assistance — and applying it to a program with insurance. Now, do we have a crazy insurance system? We sure do. Is this the right thing to do? I don’t know. That’s a judgment.”

“I expect that in the next couple of years, we’ll be seeing more and more lawsuits about this,” he said, noting that some already have been filed against all three types of programs. “But I think that there could be a lot more from patients potentially, especially ones who might have been harmed by this.”

Fein estimated that the overall value of patient support funds directed to accumulators, maximizers and alternative funding last year was approximately $8 billion. With these models, “you’re seeing the manufacturer becoming a much more significant source of funding for its own products. Is this a maturing market? I think it is. So if any of you watching are saying, ‘Hey, this sounds like a great business; I should start an alternative funding vendor,’ it might be too late. But who knows? I’m not I’m not in that business. But it does seem to be maturing. And there is some pushback on this.”

What Does Future Hold?

So what happens next? Fein added that there are several outstanding questions about the programs. These include whether changes to benefit designs lead to accumulators’ and maximizers’ development — or do those programs lead to changes in benefit designs?

And how will manufacturers’ responses to these programs affect benefit designs? Some companies already have reduced their annual copay assistance value, while others specifically exclude patients who are in plans that use these programs.

How might lawsuits impact the cost offset business? Three already have been filed against these companies:

1. Johnson & Johnson Health Care Systems Inc. v. Save On SP, LLC (case 2:22-cv-02632) concerning a copay maximizer;
2. AbbVie Inc. v. Payer Matrix, LLC (case 1:23-cv-02836) concerning an alternative funding company; and
3. HIV and Hepatitis Policy Institute, Diabetes Patient Advocacy Coalition, and Diabetes Leadership Council v. Chiquita Brooks LaSure et. al. (case 1:22-cv-02604) concerning copay accumulators.

“They are allegations,” he pointed out about the cases. “They are not a guilty verdict; they are a one-sided perspective on the story. So your mileage may vary. I do think they’re interesting to look at. And they’re going to play out; it’s going to take potentially a long time to play out.…But I think they’re indicative of where we’re going with some of these.”

Overall, Fein wondered, “Is this sustainable? This seems totally insane, right? The whole way we’ve developed this drug channel with these crazy prices and everything going on, is it actually sustainable? We have the scrutiny of these practices by legislators and patient groups; we have an increasing number of state laws and potentially some federal laws that eventually will come about. We have the manufacturers changing the strategies. We have manufacturers engaging in legal activity. You know, we have a lot of things going on here. And there’s kind of the ickiness that we’re seeing with some of these alternative funding vendors where they’re clearly doing something that’s not kind of what the patient assistant programs were designed for.”

“The whole way this has developed…exemplifies many of the worst aspects of our system,” asserted Fein, calling the drug channel’s actions, reactions and counter-reactions the “doom loop of specialty drug benefits.”

“We have high list prices for these specialized therapies that treat very small patient populations.…Many of these products now have rebates that are often kept by the plan sponsors” and PBMs. But patients are responsible for high out-of-pocket costs based on undiscounted list prices, so “patient support programs are needed” to help them. “And as that pot of money got bigger,…we saw more and more of these patient support funds starting to be absorbed, not by the patients, but by the plans” and intermediaries. Manufacturers, in response, are pulling back on their patient assistance, as this was not how they expected it to be used.

“And the patients find themselves kind of with these confusing, opaque benefit designs, unexpected costs, and they’re right back where they started.”