A district court sided with three patient groups and three individual patients who challenged a federal rule allowing insurers to use copay accumulator programs.

On September 29, the U.S. District Court for the District of Columbia struck down the 2021 federal rule, which had allowed health plans to decline to credit manufacturers’ coupon assistance programs against patients’ deductibles or out-of-pocket thresholds. 

Effective immediately, insurers may no longer apply copay accumulators in instances where the couponed brand lacks a generic. They can still use the programs on brands that have a generic alternative, however. The Biden administration has 60 days to appeal the decision.

“We hope that will not happen,” said Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, one of the groups that brought suit against the Department of Health and Human Services in 2022. “We know that the Biden administration keeps saying, ‘This is one of our priority issues, to make prescription drugs more affordable for patients.’ Well, this [decision] really does.”

Cost-sharing or deductibles can sometimes run as high as 50% of a drug’s list price. That can amount to several thousands of dollars in the case of high-cost prescription drugs for conditions such as hepatitis, cancer, arthritis, diabetes and multiple sclerosis, the plaintiffs argued. 

As such, many patients rely on copay assistance from manufacturers to afford their drugs. The amount of such assistance totaled nearly $19 billion in the U.S. last year, per IQVIA figures cited by the groups.

At the same time, insurers and pharmacy benefit managers have increased the use of copay accumulators. According to a 2020 survey by Guidehouse Primary Research Analysis, 83% of beneficiaries were enrolled in commercial plans that employ copay accumulators. In 2021 IQVIA estimated the figure at 43%.

The rule that the court vacated, the 2021 Notice of Benefit and Payment Parameters, had authorized wider use of the practice. It was promulgated by HHS and the Centers for Medicare and Medicaid Services in 2020 during the Trump administration. 

Under the rule, insurers could decline to credit financial assistance when calculating whether patients had met their cost-sharing obligations. After exhausting their available copay, patients would typically be left with the full deductible. Whereas an earlier version of the rule limited accumulators to branded prescriptions where a generic is available, in the final rule HHS sanctioned their use in all situations, regardless of generic availability. 

Giving insurers latitude to decide where and when to apply accumulators was “arbitrary and capricious,” the plaintiffs contended. Moreover, the rule conflicted with the statutory definition of “cost sharing” in the Affordable Care Act and “clashes even more starkly” with the way that term was defined in federal agencies’ preexisting regulation, they argued.

Judge John D. Bates agreed, noting that the ACA defined cost sharing as “any expenditure required on or behalf of an enrollee.” The 2021 NBBP, which relied on that definition in its approval of accumulators, conflicts with the description, Bates wrote, adding that HHS has “yet to offer a definitive interpretation of this language that would support the rule.” 

AHIP, the trade group representing insurers, had filed an amicus brief in support of HHS’ defense of its accumulator rule. When a manufacturer discounts its price through a copay coupon, AHIP countered, “The discount does not require the patient to incur any cost,” and thus should not count toward a patient’s cost-sharing. Manufacturers pay the copay coupon’s value to the pharmacy and not the insurer, the group pointed out.

But in his opinion, Bates said accumulators increase patient costs, the amount manufacturers pay and how much insurers get paid.

In the decision’s wake, insurers will have to fall back on the federal rule that governed 2020 health plans. That rule, which the plaintiffs did not dispute, permits copay accumulators only for branded drugs with a generic, if allowed by state law. Since most copay assistance is for brands lacking a generic, the ruling essentially leaves insurers open to apply the program in a smaller subset of brands. 

The Diabetes Leadership Council and Diabetes Patient Advocacy Coalition, which had joined as co-plaintiffs in the suit, hailed the decision as a victory for patients and their ability to afford prescription drugs. Some 29 other patient groups, spanning a rage of diseases, jointly submitted an amicus brief.

“This ruling will significantly help patients who have been forced to pay unnecessary and extremely costly over charges on critical prescription drugs,” said Michael Eging, executive director of the Rare Access Action Project.  

Schmid cautioned, however, that “it was not a clear victory.” 

The judge left the door open for HHS to seek further clarifications and issue new regulations in accordance with the ACA. And the patient groups will be looking to HHS and state health insurers to make sure health plans abide by the ruling.

“We’re calling for the administration to issue an FAQ or some guidance for plans,” Schmid said.

Moreover, while Judge Bates’ decision will “hopefully kill accumulators,” Schmid noted that insurers may “have other games up their sleeves. There’s [copay] maximizers and alternative-funding programs” that aren’t affected by the decision. “We still need legislation and further attention on these issues, because … they’re very sneaky.”

Added Schmid, “It’s an ongoing game of cat and mouse, it seems.”