What Pharmacy Executives Need to Know About Copay Accumulators

By PokitDok Team,

high costs of expensive medication concept

By now, maybe you've heard about copay accumulator programs. You may even have one in place yourself, or you've at least seen one in action.

Scott Dulitz, who recently attended Asembia18, noticed that "if this topic was hot last year, it was on fire by comparison" this year. Indeed, you don't have to look very far to see countless thinkpieces, expert analysis, and even rants about copay accumulators. People are quick to voice their concerns regarding this model and how it will affect patients, drug manufacturers, and pharmacies alike.

But for all the talk about this topic, it's still a fairly new one. That's why we'd like to attempt to shed some light on the subject.

Below, we take a look at copay accumulator programs, how they work, and why so many people are concerned about them. Finally, we will discuss why you need to know about them and what effects they're likely to have.

What is a Copay Accumulator?

To understand why copay accumulators were created, it's important to understand the programs they are designed to replace.

Traditionally, CNBC reporter Angelica LaVito writes, pharmaceutical companies have helped to make their specialty drugs more affordable for patients by providing coupons and copay cards. These programs cap how much a pharmaceutical company will contribute, but those contributions would count toward the patient's deductible and out-of-pocket costs.

In practice, that typically meant insurance would kick in once the copay card limit was reached, as the patient would have already hit their out-of-pocket costs quota.

Those traditional copay assistance programs work well for consumers and pharmaceutical companies, but not so well for payers who are faced with a mounting number of plan members who are meeting their deductibles and out-of-pocket maximums (translation: they are on the hook to underwrite more claims).

To offset the shift in financial burden from consumers to payers, pharmacy benefit managers (PBMs) -- third party administrators who negotiate drug prices on behalf of insurers and pharmacies -- have introduced copay accumulator programs. Under these programs, the contributions from pharmaceutical companies do not count toward patients' deductibles or out-of-pocket costs. That leaves patients to pay the full cost of a drug until they reach their deductible or out-of-pocket maximums, LaVito says.

"Those costs can be eye-popping because they're based on list prices, not the rates payers negotiate," she writes. "Experts have said the practice could cause drug costs to fall because drug manufacturers will kick in more money to help buffer the sticker shock patients experience when their copay cards run out of money and they must pay out of pocket."

portrait of a pharmacist at work in his shop - copay accumulators

Why Are People Concerned?

This tug-of-war between patients, pharma companies, PBMs, and payers leaves pharmacies in a bind. They must either require that consumers absorb a larger proportion of a prescription's out-of-pocket costs and risk their noncompliance with the treatment plan, or pick up the slack by sacrificing some of their own profit margins.

No matter what the pharmacies choose, though, it is the patients themselves who will have to deal most directly with the repercussions. And patients are sensitive to these changes. After all, 42 percent of adult Americans stay informed on their treatment options through research, as Kantar Media notes. They understand how copay accumulator programs end up causing them to pay more, and they aren't happy about it.

They aren't the only ones. People like Stephen J. Ubl, president of the Pharmaceutical Research and Manufacturers of America, criticize these programs. "Copay accumulator programs are nothing more than an insurance scheme that leaves patients financially exposed while benefiting payers' bottom lines," he said in a statement to the LA Times.

Opinions like Ubl's aren't uncommon, even if they aren't quite as sharply phrased. Ami Gopalan at Precision for Value, for example, notes that these copay accumulator programs can result in unintended consequences, such as "patients forgoing other health care services that they can no longer afford or decreasing adherence to drug therapy."

Not surprisingly, the advent of copay accumulators has resulted in a lot of finger pointing by all sides. "Payers point the finger at pharma for high drug prices," notes Jason Poquette, author of the blog The Honest Apothecary. "Pharmaceutical manufacturers point the finger at PBMs and high deductibles and copays which are not affordable without these coupon programs." With no easy answers, the blame often gets passed back and forth with no real solutions being offered.

That said, not everyone believes that copay accumulation programs are the culprit.

For example, Steve Miller, MD, chief medical officer of Express Scripts, blames the struggles of patients on the high cost of drugs, not the copay accumulation programs themselves. "We believe all patients should have access to affordable prescriptions and care, not just those using a medication with drug maker copay assistance. To that end, lowering the cost of drugs to increase access is the best thing pharmaceutical manufacturers can do."

customer - copay accumulators

What Happens Next?

Recently, the National Business Group on Health conducted a survey of about 140 multistate employers with at least 5,000 workers. Of those polled, 17 percent claimed to have a copay accumulator in place. Fifty-six percent were considering them for 2019 or 2020. Peter Pitts, former FDA associate commissioner and president of the Center for Medicine in the Public Interest, reports that copay accumulators could be built into 20 percent of programs by the end of this year.

With such a proliferation of copay accumulators, more and more industry experts are taking the time to weigh in.

Many have their own predictions as to what will happen next. For example, Drug Channels Institute CEO Adam J. Fein, Ph.D., anticipates that copay accumulators will draw the ire of consumers and lead to a drop in revenue for pharmaceutical manufacturers. "Patients don't decide to forgo cancer or HIV treatment because they now have a 'consumer-oriented' incentive," he writes. "More likely, they will just stop filling their specialty drug prescriptions."

As copay accumulator programs continue to grow in popularity, expect to see more of the ripple effects that industry experts have warned are coming.

Mark Bouck, president and CEO of TrialCard, notes: "Pharmaceutical manufacturers will see inflated program reimbursement budgets and lost revenues as patients prematurely stop therapy due to out-of-pocket costs."

Not every industry analyst agrees with that scenario, however. Some argue that the downward pressure on demand could lead to pharmaceutical companies dropping prices. But Vivian Ho, a healthcare economist at Rice University, thinks this is unlikely, especially for expensive specialty drugs. She notes that unless patients are genuinely unable to afford those drugs, the manufacturers will feel no pressure to lower prices.

That said, research indicates that drug prices are already being affected. Sector & Sovereign research analyst Richard Evans notes that US drug prices fell 5.6 percent in the first quarter of 2018. This is significant. The same quarter in 2017 only saw a 1.7-percent drop. He attributes this decline directly to copay accumulator programs.

Whether you believe copay accumulators are unfair, or you believe their effect is indicative of a bigger issue with the price of drugs, Dan Gorenstein, senior reporter for Marketplace's Health Desk, notes that it is the patients who have to buy specialized medicine who will be caught in the crossfire.

"A solution that's going to financially cripple families like mine and many others is the wrong solution," one consumer tells Gorenstein.

PokitDok offers pharmacy solutions that enable real-time access to pharmacy benefits verification, price transparency, and copay information across all government and commercial health insurance plans.  

Images by: mayamaya©/123RF Stock Photo, stocking/©123RF Stock Photo, dolgachov/©123RF Stock Photo

The opinions expressed in this blog are of the authors and not of PokitDok's. The posts on this blog are for information only, and are not intended to substitute for a doctor-patient or other healthcare professional-patient relationship nor do they constitute medical or healthcare advice.

  Tags: Pharmacy, Providers