White House Puts Drug Discount Coupons – and Patients’ Health – in Jeopardy
As insurers have shifted more of the cost of medicines to the sickest patients, payment assistance from drug manufacturers has become a godsend for millions of Americans. But now, the Trump Administration has put that assistance, which comes in the form of popular co-pay coupons and cards, in serious jeopardy.
The Centers for Medicare and Medicare Services (CMS) has proposed a convoluted rule in the Federal Register that will discourage drug manufacturers from providing billions of dollars’ worth of help with deductibles, co-pays, and co-insurance. While the rule would apply to calculations of Medicaid drug prices, the burden would fall on commercial plans, which insure half of American families. Unlike more visible proposals the White House announced July 24 with great fanfare, this one could actually be enacted in the next few months.
The move, which has gone largely unnoticed, will put an enormous burden on America’s families at a time of high unemployment and mounting health costs because of COVID-19. Families need help because their out-of-pocket spending has soared as the design of insurance policies has changed. For example, the average deductible has risen 176% in just 10 years, and under the Affordable Care Act, the limit on a family’s annual spending jumped this year to $16,300, fully one-fourth of median income.
To meet their full deductible, two-thirds of families say they would have to go into debt. Beyond the deductible, co-pays (flat fees) and co-insurance (a percentage of a drug’s price) can require outlays of thousands of dollars more. A study last year in the American Journal of Public Health found that two-thirds of the 530,000 annual personal bankruptcies involved medical costs.
If you don’t have the money, you can’t fill your prescriptions. So you get sicker and often end up in the hospital, raising overall costs in the health care system, as dozens of studies have shown. The “abandonment rate” -- that is, the proportion of patients who do not fill new prescriptions – is 69% when the out-of-pocket cost was $250 or higher.
Co-pay coupons have come to the rescue. The coupons have been especially valuable for patients needing expensive diabetes, HIV, multiple sclerosis, and cancer medicines under their commercial insurance plans. A study in Health Affairs found that co-pay coupons defrayed about 60% of annual out-of-pocket costs in a sample of 16,000 patients. “In the vast majority of cases,” wrote the researchers, “coupons reduced cost sharing to less than $250, a point at which patients were far less likely to abandon therapy.”
The CMS proposal, however, threatens to kill coupons indirectly through Medicaid. In buying drugs for 74 million low-income Americans, Medicaid pays either the lowest price negotiated by any buyer (best price) or about three-quarters of the average manufacturer price (AMP). Currently, co-pay coupons aren’t counted in calculating these prices, but CMS would change that.
Lately, managers of drug plans are refusing to let co-pay coupons apply to deductibles – a scheme called an “accumulator adjustment program.” Consider a coupon valued at $400 that pays most of the cost of $500 monthly prescription. This would mean a patient meets her $2,000 deductible in four the deductible, so the patient still has to lay out $1,600 before the exhausting the deductible. A study in the American Journal of Managed Care found that patients aggressively discontinued prescriptions when accumulator programs were instituted.
In a boon to insurance companies, the CMS rule would require manufacturers to subtract a coupon’s value in computing the best price and AMP -- unless a drug company “ensures the full value of the assistance or benefit is passed on to the consumer or patient.”
With accumulator adjustments, that assurance is impossible. As a result, the best price and AMP will drop sharply. How will manufacturers react? Almost certainly, many of them will cut back or end their co-pay coupon programs, and the losers will be patients.
It’s no wonder that 100 patient groups – including the American Cancer Society, the National Kidney Foundation, and the Latino Commission on AIDS – wrote a letter last month to CMS Administrator Seema Verma asking her to withdraw the proposal.
“This impossible burden of proof,” they wrote, “will undermine manufacturers’ ability to continue offering patient assistance programs to individuals in the larger commercial market. This is extremely troubling from our perspective, as many patients rely on these programs in order to afford vital drugs and treatments.”
If the Trump Administration really wants to cut out-of-pocket expenses for the sickest patients, it should outlaw accumulator adjustments entirely. In fact, that’s what the White House proposed in 2019, but then inexplicably rescinded the policy three months ago. Now, CMS has taken another giant step in the wrong direction. The burden of this error will be borne by innocent patients and, as an election nears, perhaps by President Trump himself
James K. Glassman, formerly Under Secretary of State for Public Diplomacy and senior fellow at the American Enterprise Institute, is an advisor to health care and other businesses and non-profits.