President Joe Biden, Vice President Kamala Harris, and U.S. Department of Health and Human Services Secretary Xavier Becerra have a historic opportunity to slash prescription drug costs for millions of Americans living with HIV, cancer, arthritis, and other chronic conditions.
If they don't take this opportunity, they'll be enabling greedy insurers intent on raising costs at the pharmacy counter for America's most vulnerable. The White House has made an admirable commitment to lowering healthcare costs for everyone. Now it's time for them to honor it.
Last year, Americans paid a staggering $91 billion for their medicines. It's no wonder that reducing prescription drug costs has become a bipartisan priority in Washington.
While drug manufacturers do set the "list" price of medicines, insurance companies and their pharmacy benefit managers (PBMs) determine what patients actually pay when they pick up their prescriptions at the pharmacy.
Health insurance can seem complex, but practically all plans share the same basic structure.
Patients typically have an annual deductible -- an annual dollar amount in spending that patients are responsible for before insurance kicks in. After the deductible, insurers cover a portion of a person's healthcare costs and patients pay the rest, often in the form of a flat copay or "coinsurance," which is a percentage of the list price of the drug and can be as high as 50%. Eventually, patients reach an annual out-of-pocket maximum, after which insurance finally kicks in.
Out-of-pocket costs, which are determined by insurers and PBMs, can be the difference between filling a prescription and skipping treatment altogether. Unfortunately, 25% of people do not pick up their brand-name drugs if their out-of-pocket costs are between just $50 and $75. When out-of-pocket costs are $250 or more, prescription "nonadherence" increases to 55%.
Last year, patients starting a new therapy abandoned 98 million prescriptions. That's obviously bad news for those individuals, but it also doesn't bode well for our nation's overall health, and could lead to higher costs down the road. When patients don't take their medicines, manageable health conditions can evolve into costly health emergencies.
To help people afford copays and other out-of-pocket costs, many drug companies have established copay assistance programs.
The total value of this assistance hit $23 billion in 2023, an increase of more than $4 billion from just the year before. Patients living with chronic or life-threatening illnesses that require expensive medications are particularly reliant upon this aid. Without that assistance, many Americans would have to cut spending on other necessities, or even go into debt just to stay alive.
That brings us to the decision the Biden-Harris administration must now make. In recent years, many insurers have collected the copay assistance manufacturers provide to patients -- only to refuse to count it toward those same patients' annual deductibles or out-of-pocket maximums.
These harmful "copay accumulator" programs can leave patients stuck with thousands of dollars in unexpected costs.
It's a scheme that is tantamount to theft. Insurers eagerly pocket copay assistance intended to offset patient costs, but then turn around and bill patients for money they've already collected. Last year, copay accumulators and copay maximizers, which have similar harmful effects, ate up $4.8 billion in copay assistance.
In 2022, several patient groups, led by the HIV+Hepatitis Policy Institute, sued the Department of Health and Human Services for allowing this scheme to continue. We asked the court to invalidate these predatory practices, which clearly violate the definition of cost-sharing in the Affordable Care Act. Fortunately, the court ruled in our favor.
But in a surprise to patients and the legal system, the Biden-Harris administration, including Secretary Becerra, declared that they would not enforce the court's ruling!
Instead, the White House said it would issue a new rule determining whether copay assistance counts as cost-sharing. That rule is now pending at the White House and could be released any day.
If the Biden-Harris administration chooses to support Big Insurance over patients, it will result in Americans paying billions of dollars more for medications.
Patients who depend on prescription drugs can't fathom such a stance. But for the past couple of years and in their court filings, that is what has occured.
The federal government's posture on this issue has prompted many states to take matters into their own hands. In fact, twenty-one have passed laws stating that copay assistance must count toward cost-sharing requirements.
That's real progress, but it only applies to state-regulated insurance plans and leaves millions who receive their insurance from their employers struggling against insurance company malfeasance.
For years, greedy insurers and PBMs, who have been in the news lately, have used copay accumulators and other nefarious tactics to inflate patient costs and increase their profits. It's time for President Biden, Vice President Harris, and Secretary Becerra to do something about it.
Carl Schmid is executive director of the HIV+Hepatitis Policy Institute.
