Copay Accumulator Lawsuit Comes to an End; Will Ruling Be Enforced?

An ongoing lawsuit over the use of copay accumulators is drawing to a close following the defendants’ and plaintiffs’ motions to dismiss their appeals. The ball is now in the federal government’s and state insurance commissioners’ courts to enforce a district court judge’s ruling, which states that manufacturer assistance must be counted toward patients’ out-of-pocket responsibility unless a brand-name drug has a medically appropriate generic equivalent.

Health plans and PBMs several years ago began implementing copay accumulators — and then a new iteration known as copay maximizers that declare certain drugs non-essential health benefits to avoid covering them per the Affordable Care Act (ACA) — to counter manufacturer copay assistance programs. Before these tools, that assistance would count toward beneficiaries’ annual out-of-pocket expenses. When those out-of-pocket maximums were reached, health plans would cover the remainder of members’ costs for the year. With accumulators and maximizers, patients can still use that assistance, but it does not help reduce their out-of-pocket costs.

Once the assistance is depleted — usually fairly early in the year with accumulators — beneficiaries must pay for often-costly drugs until they hit their out-of-pocket maximums, shifting payers’ financial responsibilities to their members and manufacturers.

At the crux of the lawsuit was the 2021 Notice of Benefit and Payment Parameters (NBPP). The 2020 NBPP stated that plans could exclude manufacturer assistance from counting toward patients’ out-of-pocket limit for only “specific prescription brand drugs that have an available and medically appropriate generic equivalent.” That excluded many costly specialty drugs that did not have a generic equivalent.

But in the 2021 NBPP, CMS said plans were not required to apply manufacturer assistance toward beneficiaries’ annual cost sharing, leaving members on the hook for numerous specialty medications once assistance ran out.

In August 2022, the HIV+Hepatitis Policy Institute, the Diabetes Patient Advocacy Coalition, the Diabetes Leadership Council and three people dependent on copay assistance whose health plans had copay accumulators in place filed a lawsuit (Case 1:22-cv-02604) against HHS, CMS and their respective leaders challenging the 2021 NBPP. The plaintiffs claimed that allowing the use of accumulators is at odds with how the ACA — as well as the agencies’ preexisting regulatory definition — defines “cost sharing” and charged that the 2021 NBPP is “arbitrary and capricious.”

On Sept. 29, 2023, U.S. District Judge John D. Bates of the U.S. District Court for the District of Columbia ruled in favor of the plaintiffs, ordering that the 2021 NBPP “must be set aside based on its contradictory reading of the same statutory and regulatory language and the fact that the agencies have yet to offer a definitive interpretation of this language that would support the rule.”

In response, on Nov. 27, HHS filed a conditional motion to clarify the scope of the court’s order. “Defendants do not understand this Court’s order to require HHS to take enforcement action,” it said. “The Court vacated the relevant portion of the 2021 NBPP but did not order any additional relief.…To ensure that they are not inadvertently running afoul of the Court’s Order, however, Defendants respectfully request clarification from the Court if their understanding of the scope of the Court’s Order is incorrect.”

In the motion, HHS revealed that the agency “intends to address, through rulemaking, the issues left open by the Court’s opinion, including whether financial assistance provided to patients by drug manufacturers qualifies as ‘cost sharing’ under the Affordable Care Act.”

HHS also said that until it issues a final rule, it has no intentions of taking “any enforcement action against issuers or plans based on their treatment of such manufacturer assistance.”

The following day, HHS filed a notice of appeal, which was followed on Dec. 11 by the plaintiffs’ filing of a notice of appeal, as well as a brief outlining why the court should deny HHS’s motion for clarification.

On Dec. 22, Bates responded to HHS’s motion for clarification, explaining that the 2020 NBPP is in effect.

Less than a month later, on Jan. 16, the U.S. Department of Justice filed a motion to dismiss the government’s appeal. That was followed on Feb. 1 by the plaintiffs’ filing to dismiss their cross-appeal.

How Will Ruling Be Enforced?

As for enforcing the ruling that manufacturer assistance must be counted toward patients’ out-of-pocket responsibility unless a brand-name drug has a medically appropriate generic equivalent, the government’s role is to issue guidance for health plans and PBMs saying exactly that, says Carl Schmid, executive director of the HIV+Hepatitis Policy Institute.

CMS did not respond to a request from AIS Health, a division of MMIT, for comment on whether it will do so.

AIS Health reached out to the National Association of Insurance Commissioners about whether the NAIC is taking any kind of action in response to the lawsuit. A spokesperson says that CMS would be the entity taking enforcement action. “The NAIC is not a regulator, so we will not be taking action,” they clarify.

That enforcement, says Schmid, would fall mainly to state insurance commissioners, who “can enforce this [ruling]. Actually, they should be doing it now.”

Similarly, he says, the U.S. Department of Labor can enforce the ruling under the Employee Retirement Income Security Act (ERISA), although “it may take filing additional complaints with DOL, class-action suits and other legal action. We are speaking to lawyers now.”

Schmid says that he has already heard of people “this year who are being stuck with thousands of dollars in costs for their drugs even though they have copay assistance from the drug manufacturer. One father told me that he received a $4,000 bill for his child’s infusion that he must get monthly. Another woman is putting thousands of dollars on her credit card. And a man with HIV recently learned his copay assistance did not count.”

He says that he expects insurers and PBMs to turn to alternate funding methods, such as copay maximizers.

While CMS did not comment on whether it would still issue a rule addressing copay assistance, Schmid says that “there really is no need to, but guidance would be useful. We will just have to wait and see. I can’t imagine the Biden administration would issue a rule that said copay assistance would not count. That would substantially increase patient cost sharing. People are already having trouble paying for their drugs due to insurance benefit design.”

He points to IQVIA data showing that in 2022, copay assistance totaled almost $19 billion. “That is a lot of money patients would have to come up [with] for them to afford the drugs their provider prescribes.”

“Because the 2020 Accumulator Rule is currently in effect per the Court’s decision, hubs, copay vendors, and drug manufacturers should prepare to comply with the rule and only utilize Accumulator Adjustment Programs, where allowed by state law, for branded drugs with a generic equivalent,” recommend attorneys from Bass, Berry & Sims PLC. in a Feb. 5 publication.

As of press time, 20 states have enacted legislation banning the use of copay accumulators for state-regulated health plans, including individual, fully insured large-group and small-group plans.

“While this decision may not have a direct impact on pharmacy operations, it may affect the ability of a pharmacy’s patients to afford expensive prescription drugs and purchase from the pharmacy, indirectly affecting the pharmacy’s bottom line,” they continue. “We recommend monitoring for future rulemaking to gain additional clarification on the use of Accumulator Adjustment Programs and for any action taken on the plaintiff’s appeal.”

Contact Schmid at cschmid@hivhep.org.

This article was reprinted from AIS Health’s monthly publication Radar on Specialty Pharmacy.