CMS Allows Copay Accumulator Programs to Encourage a Shift to Generic Drug

CMS’ final 2020 Payment Notice will allow insurers to stop counting the value of manufacturer drug coupons for branded drugs towards a beneficiary’s maximum out-of-pocket (OOP) costs in order to promote the use of generic drugs.

CMS says the effort is aimed at encouraging the use of appropriate, less-expensive drugs when they are available.

“We expect this change to support issuers’ and plans’ ability to lower the cost of coverage and generate cost savings while also ensuring efficient use of federal funds and sufficient coverage for people with diverse health needs,” the rule reads.

The drug coupons are used to help patients who have high drug copays for rare or costly conditions; they are also offered to compete with another brand in the same class or when a generic is released.

It is that last category that CMS is trying to dissuade, although it said it realizes that the coupons may help promote adherence.

But from its point of view, CMS said the coupons shield patients and providers from the true cost of the drugs, and that the market is distorted when “manufacturers are relieved of a market constraint on drug prices.” As a result, healthcare costs wind up rising overall in the long term.

The policy is opposed by groups such as the American College of Rheumatology, who say the policy can lead to a patient stopping treatment, often in the middle of the year when the coupon runs out. The resulting full-price copays catch patients by surprise and are unaffordable for many.

Some specialty drugs are in a higher-priced tier, making the patients’ share of the drugs even more costly.

Not surprisingly, the lobbying groups for drug makers and insurers are on different sides of the drug coupon/copay accumulator issue.

Agreeing with CMS, America’s Health Insurance Plans (AHIP), the lobbying group for insurers, says it’s the high cost of drugs that is the real problem and that the coupons drive up costs for everyone.

The Pharmaceutical Research and Manufacturers of America (PhRMA), which advocates for drug companies, say the copay accumulator programs leave patients bearing the burden of ever-increasing OOP costs and that the coupons help with affordability.

But the situation with drug coupons is more nuanced, said a report last year from the Leonard D. Schaeffer Center for Health Policy Economics at the University of Southern California. After examining the availability of copay coupons and to what extent generics were available, the report said proposals to restrict coupons should ensure that patients who currently rely on them are not harmed.

Of the top 200 drugs by spending in 2014, 132 were brand drugs, and 90 of those had coupons available.

Of the 90, 49% had a generic equivalent or close generic substitute available at lower cost. But 51% were for drugs with no generic, including 12% for drugs with no close therapeutic substitute of any kind. The authors said the results suggest that most copay coupons are not affecting generic substitution and may help patients afford therapies that have no good alternatives.