Feds and states diverge on patients’ use of drug coupons

May 14, 2019

A final regulation issued by the Centers for Medicare and Medicaid Services (CMS) is at odds with state policies over whether to limit drug coupons. At issue are coupons and copay assistance programs that drug companies offer patients to help cover the cost of expensive drugs, usually so-called specialty drugs often used for chronic conditions such as arthritis. Insurers and employers say that this type of assistance is often only offered when a patient is close to meeting their deductible and thus pushes the cost onto the insurer once the patient has met the threshold. Instead, insurers and employers argue that drug manufacturers should lower their costs.

One way that insurers and employers can restrict the use of coupons is by refusing to count them toward the patient’s deductible. For example, suppose a patient needs a drug that will cost $200 out of pocket on his insurer’s formulary, but he uses a $50 coupon from the drug’s manufacturer and pays $150 out of pocket. Although the patient has “spent” $200, the insurer will only count $150 toward the patient’s deductible.

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This process is called an “accumulator,” as the accumulated amount of coupons, discount cards, or other patient assistance programs are not counted towards a patient’s out-of-pocket costs that are applied toward deductibles. According to a report by the National Business Group on Health, 29 percent of employers surveyed said they would be adopting an accumulator this year, up from 17 percent in 2018. Insurers and employers argue that coupons and similar third-party arrangements may entice patients to stick with higher-priced drugs over lower-priced alternatives such as generic drugs. Additionally, insurers and employers argue that couponing hurts other customers: if coupons can count toward a patient’s deductible, then it’s more likely that the patient will reach the deductible and have all of her costs covered entirely by the insurer. However, the insurer spreads that patient’s costs across its entire pool of customers, meaning their insurance premiums will rise.

But several patient advocacy groups argue that coupons may be the only reason that a patient can even afford to purchase a drug. Further, they note that coupons do not change the patient’s share of a drug’s cost—they only make it easier for a patient to afford his share. These groups successfully convinced Virginia and West Virginia to pass bans on accumulators in state insurance marketplaces, and bills are pending in at least seven states, including ERC states Massachusetts, Rhode Island, and Connecticut. Last year, patient groups engaged in a letter writing campaign to urge state insurance commissioners to investigate the effect of accumulators on individuals with chronic conditions.

However, in its regulation for insurance plans under the Affordable Care Act, CMS indicated that it shared employers’ and insurers’ concerns about drug coupons. Under the final regulation, CMS will allow insurers beginning in 2020 to establish an accumulator but only in instances where a generic alternative existed: “insurers can, but do not have to, count any form of direct support from a drug manufacturer towards the deductible or annual maximum limit on out-of-pocket costs if a brand-name drug has a generic equivalent. Insurers cannot adopt accumulator adjustment programs for brand name drugs when no generic equivalent exists.” While this regulation would not preempt state laws that prohibit accumulators, the different approaches to couponing demonstrate how complex it is for policymakers to address the drug pricing debate.

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