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Federal courts tackle questions surrounding copay accumulator adjusters

While HFA and allies continue advocating for sound laws and regulations regarding copay assistance, we are also monitoring a couple of noteworthy (if weedy!) court cases relating to copay accumulator adjusters (CAAPs) and copay maximizers.

On May 4, drug manufacturer Johnson & Johnson filed suit in federal court against SaveOnSP, a drug-benefits middleman that operates 鈥渃opay maximizer鈥 programs, a sort of cousin to CAAPs.

Here鈥檚 how copay maximizers work, as implemented by SaveOnSP and similar drug middlemen:

  • In concert with the patient鈥檚 health plan and/or PBM, the middleman reclassifies one or more drugs as 鈥渘on-essential,鈥
  • thereby carving out the drug(s) from Affordable Care Act protections limiting patient cost-sharing for the drug, and
  • allowing the plan to charge copays far above ACA limits;
  • then requiring the patient to enroll in the middleman鈥檚 maximizer program (which in turn enrolls the patient in the manufacturer copay assistance program), in order to afford the elevated copays, but
  • steering all the cost-sharing dollars (provided from the manufacturer copay assistance program) to the health plan, with none of that spending credited toward the patient鈥檚 deductibles or OOP maximums.

SaveOnSP and similar entities operate copay maximizer programs that target bleeding disorder medications, as well as the drugs listed in J&J鈥檚 lawsuit.

J&J in its lawsuit details how SaveOnSP promotes these copay maximizer programs, noting that 鈥渨hile SaveOnSP engages in these wrongful courses of conduct to increase profits, it unfortunately comes at great cost to patients.鈥 J&J seeks damages for contract interference and deceptive trade practices.

In unrelated litigation, a U.S. District Court on May 17th overturned a federal Medicaid rule that (according to plaintiff PhRMA) could have caused some drug manufacturers to eliminate their copay assistance programs. At issue in the case: how to interpret a federal law that requires drug manufacturers to sell their products to Medicaid at the 鈥渂est price鈥 that they offer to any commercial purchaser. The rule recognized that CAAPS redirect the value of copay assistance from patients to health insurers; therefore, the rule concluded, those dollars should be viewed as price concessions from the manufacturers to commercial purchasers. This position would have required drug manufacturers to lower the prices they charge when selling to Medicaid by an amount equal to the value of their copay assistance programs.

In overturning the rule, the judge wrote that it is unreasonable to put manufacturers on the hook for information and transactions outside the manufacturers鈥 control, i.e., whether any given patient鈥檚 health plan has subjected the patient to a copay accumulator adjuster. In a statement, PhRMA declared the court decision 鈥渁 win for patients.鈥

Neither of these cases is the last word on copay accumulator adjusters or copay maximizers 鈥 but both trend in a positive direction. HFA will continue to follow and provide updates about legal proceedings affecting copay assistance.

Quick Hits:

  • Health policy experts, health insurers, and House lawmakers reiterated calls for the Senate to pass legislation extending ACA subsidies (which were made more generous by the 2021 American Rescue Plan Act, but only through the end of 2022). If Congress fails to act quickly, insurance premiums could soar for millions of Americans. HFA and allied patient groups echoed this call, urging Congress to extend the subsidies and act to close the Medicaid coverage gap.
  • The U.S. Department of Health and Human Services signaled that it will once again renew the declaration of a public health emergency, rather than allowing the PHE to expire on July 15th, as currently scheduled. (HHS has promised state governments that it will give 60 days notice ahead of ending the PHE; when May 15thcame and went with no announcement, stakeholders concluded that the PHE will likely be extended for another 90-day period, until mid-October.) While the PHE remains in effect, states generally cannot disenroll existing beneficiaries from their Medicaid programs. However, HHS has started planning for the return to regular Medicaid renewals and redeterminations at the PHE鈥檚 eventual end 鈥 whenever that may come. In May, HHS鈥檚 Centers for Medicare and Medicaid Services launched enhancements to medicaid.gov to make it easier for beneficiaries to renew their coverage.
  • HFA, with NHF (and, additionally, as part of the All Copays Count Coalition), submitted comments to the U.S. Federal Trade Commission in connection with an FTC inquiry into the operations of pharmacy benefit managers (PBMs). More than 500 stakeholders submitted comments, including pharmacists; employer groups; medical associations; members of Congress.
  • Maine鈥檚 copay accumulator bill (LD 1783) was enacted into law in May. Maine becomes the 14th state with copay accumulator adjuster protections in place. Also in May, New York鈥檚 copay accumulator protections passed both Houses of the state Assembly, on their way to the Governor鈥檚 desk. Kudos to the Maine and New York advocates who worked so tirelessly toward passage of these bills! Meanwhile, CAAP bills remain pending in several other states; additional states (Kentucky, Virginia, and soon Louisiana) have passed amendments to their CAAP laws to include a savings clause protecting consumers in high deductible health plans.

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