Americans have problems affording many drugs at pharmacies and doctors’ offices. About half of those who are sick have trouble paying for their medications, according to a recent poll from the Kaiser Family Foundation.
When patients stop filling their prescriptions because of high out-of-pocket costs, the consequences can be grave. One study found that drug non-adherence causes about 125,000 deaths each year.
The Biden administration will soon have a chance to slash out-of-pocket costs, improve drug initiation and adherence, and thus boost public health by using the “Notice of Benefits and Payment Parameter,”a massive rule that sets the standards for many of the health insurance plans sold across the country.
Right now, the rule allows insurers to shift costs onto America’s most vulnerable patients through “accumulator adjustment programs.”
To help people take their medicines, drug companies routinely provide “co-pay assistance coupons” to patients. The coupons work just like coupons at grocery or department stores.
These coupon programs have become increasingly popular. As of 2018, nearly one in five commercially insured Americans who takes a brand-name drug used coupons.
Co-pay coupons traditionally have counted towards patients’ out-of-pocket maximums, the most insurance plans can require patients to pay in a given year, before the insurer steps in and covers the rest.
Accumulator adjustment programs, however, don’t count these coupons towards a patient’s out-of-pocket maximum. Thus, their full insurance coverage never kicks in, and their out-of-pocket health costs remain high throughout the year.
Accumulator adjustment programs cancel out the financial benefits of the drug coupons and essentially amounts to patients paying twice to qualify for plans to cover them, first through coupons and again on their own.
The main claim used to justify these programs is they prevent drug companies from incentivizing patients to take brand-name drugs instead of cheaper generics. But IQVIA data showless than half a percent of prescriptions filled through commercial insurance plans involve brand-name drugs paid for with coupons, even when generic competitors are available.
Recognizing the problem, the Department of Health and Human Services issued a rule in 2019 that required insurers to count manufacturer coupons towards out-of-pocket maximum most of the time only to change course in 2020, permitting insurers to effectively charge twice for their services by use of accumulator adjustment programs.
The Biden administration would be wise to once again ban these programs when it updates the next Notice of Benefit and Payment Parameters.
It makes no sense to needlessly inflate patients’ out-of-pocket costs. It will merely lead to lower use of medicines and more preventable hospitalizations and deaths.
Tomas J. Philipson, the former acting chairman of the White House Council of Economic Advisers, is the Daniel Levin Professor of Public Policy Studies at the University of Chicago Harris School of Public Policy