In March 2019, Virginia and West Virginia became the first states in the nation to ban copay accumulators—an increasingly common benefit adjustment that prevents manufacturer drug coupons from paying-down patient deductibles and out-of-pocket maximums. Many employers and managed care organizations adopted these programs for the 2019 benefit year, and more are expected to follow in 2020. At the heart of the issue is the high cost of prescription drugs, particularly specialty drugs that have few, if any, alternatives available. Copay accumulators grant insurers a mechanism for shifting some of the cost burden for these drugs away from their own wallets and onto patients and drug manufacturers.
It was this cost-shifting approach that drew the ire of patient advocacy groups, including organizations for patients suffering from HIV and other costly diseases. The outcry around the programs was expected to lead to some legislative action around the issue, and while Virginia and West Virginia are the only two states to adopt laws against copay accumulators, more states are considering bills that would ban the programs. Arizona, Indiana, Kentucky, Connecticut, and Rhode Island each have bills pending in their respective state legislatures that would outright ban copay accumulator programs by requiring insurers to apply manufacturer copay assistance toward deductibles and out-of-pocket maximums.
Obviously, copay accumulator bans are a major win for drug manufacturers and patients that rely on coupons and their insurer to afford high-cost specialty drugs. That being said, it is vital to remember that state regulations apply only to fully insured policies sold within a state; they do not apply to self-insured employer health benefits. Self-insured plans are governed by the Employee Retirement Income Security Act, which preempts state insurance regulations. Thus, patients exposed to a copay accumulator through a big, self-insured employer like Walmart or Home Depot, will not be protected if their state bans the programs.
That such a huge component of the commercial market relies on self-insured plans means copay accumulator programs still pose a substantial threat to patient therapy adherence and, by extension, drug manufacturer income and market share. Patients taking autoimmune, dermatology, HIV, hepatitis C, and multiple sclerosis drugs are particularly vulnerable to the impacts of copay accumulators, due to the extent that patients in these therapy areas rely on drug coupons. Per DRG’s Coupon Analysis Threat Assessor dashboard, there can be substantial differences in risk across brands, with some manufacturers eliminating their risk through debit card programs, which are hard for PBMs and insurers to track, or by simply offering generous coupons that are difficult for patients to max-out, even with the steep bills they already encounter at the pharmacy.
As more employers adopt copay accumulators, manufacturers that fail to implement effective mitigation strategies will still see drops in therapy adherence during the year, especially among patients that must satisfy deductibles of $1,300 or higher if they exhaust their coupon programs. The state-level bans in Virginia, West Virginia, and any states that follow are certainly a benefit to pharma, but by and large manufactures are not out of the woods yet.
Tyler Dinwiddie is a Principal Analyst for Market Access Insights. Follow Tyler on Twitter @TylerDinwiddDRG