Justice Department Drops Appeal in Copay Assistance Case

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A 2020 rule stands in which copay assistance from pharmaceutical companies counts toward deductibles for brand name drugs without a generic competition.

The U.S. Justice Department has dropped its appeal of a September 2023 ruling by a U.S. District Court for the District of Columbia regarding copay assistance from pharmaceutical companies. Insurance companies and pharmacy benefit managers now have to follow a 2020 rule in which copay assistance that patients receive from pharmaceutical manufacturers counts toward deductibles. As a result, copay accumulator programs, in which any copay assistance would not count, or accumulate, toward patient deductibles, can only be applied to brand name drugs that have generic equivalents available.

Carl Schmid

Carl Schmid

But clarification of the September ruling and next steps by the U.S. Department of Health and Human Services are needed, said Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, a plaintiff in the case, along with Diabetes Leadership Council and the Diabetes Patient Advocacy Coalition.

“We really want an enforcement and clarification guidance,” he said in an interview. “We need to know whether the government is going to enforce the 2020 rule. The judge in the lower court in 2021 didn’t rule on the regulatory definition of cost sharing. What he ruled is that insurers can’t have two different definitions. He ruled that the insurers applied the accumulators in a way that was ‘arbitrary and capricious.’”

He worries that without clarification or enforcement, PBMs and insurance companies will still be able to not count copay assistance toward deductibles and patients will continue to have higher costs.. In total, the pharmaceutical industry provided almost $19 billion in copay assistance in 2022, according to IQVIA.

“Doctors prescribes the drugs they believe meet the patient’s needs,” he said. “And sometimes there are no generic drug alternatives. That happens in the HIV space, as well as in the cancer and in MS space. These are also very expensive therapies.”

Additionally, Schmid said that HHS could release a new rule about cost sharing and copay assistance. (HHS has not responded to questions about the possibility of a new rule). He worries that pharmaceutical companies will stop offering copay assistance if it doesn’t count toward patients’ deductibles.

Related: Court Ruling Takes Aim at Copay Accumulators

According to a 2023 report from The AIDS Institute, at least two-thirds (64%) of health plans in the country include a copay accumulator policy. And more than half (55.7%) of American private-sector workers were enrolled in high-deductible plans in 2021, the highest on record and the eighth straight yearly increase, according to a survey by ValuePenguin, a LendingTree company that provides analysis for consumer financial decision making.

Copay accumulators can mean that patients are not adherent to their medications, according to a brief submitted by TrialCard — which now goes by the name Mercalis and provides patient support services. Patients, Mercalis said in the brief, often don’t know their assistance has not counted toward deductibles. Then when assistance runs out, patients may have to pay high cost to access their medications.

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