Drugmakers, health insurers battle over coupons for high-cost medicine

If you ask New Jersey state Sen. Jon Bramnick which industry exerts the most influence in Trenton, the answer is a no-brainer: health insurers.

So Mr. Bramnick felt like he notched a big win when then-Gov. Phil Murphy in January signed his bill prohibiting “copay accumulator” programs, a policy in which insurers do not count drugmaker-provided coupons toward a patient’s annual deductible and out-of-pocket maximum.

With the new law, New Jersey joined roughly half the country in restricting use of accumulators, an issue that doesn’t dominate headlines but is a major fault line in the battle between drugmakers, which say insurers are hoarding copay dollars, and health plans that say costs are high because drugmakers refuse to lower them.

The regulatory, legal and legislative history behind the accumulator debate is a mess, but the contours of the debate are straightforward.

Patients with cancer, HIV, cystic fibrosis or conditions with high-cost medications often use coupons from drug manufacturers to help them pay for the drugs. That assistance runs out, however, and patients learn the money was not counted toward their deductibles, the set amount of money a patient must pay for a drug or service before insurance kicks in.

“You still have to meet the deductible despite this discount program, which didn’t make any sense,” Mr. Bramnick said. “I think even the insurance companies sometimes have a hard time justifying it.”

Industry groups counter that accumulators are not only justified, but also economically necessary because drugmaker coupons amount to a kickback for manufacturers.

“Copay accumulator programs are necessary because drug manufacturers’ copay coupons, which are illegal in Medicare and Medicaid, are a marketing tool used by Big Pharma to steer patients toward a more expensive drug instead of an equally effective, more affordable generic option, which leads patients and employers to pay higher drug costs,” said Greg Lopes, a spokesman for the Pharmaceutical Care Management Association, a major lobby for pharmacy benefit managers, or PBMs, which manage prescription drug benefits for insurers and employers.

Congress passed a series of health reforms in this year’s spending bill that were related to transparency and other topics. The lawmakers left the copay accumulator issue untouched, leaving a state-by-state jumble.

Twenty-six states, plus the District and Puerto Rico, have moved to restrict the use of copay accumulators, either through new laws or by enforcing their bans through insurance regulation.

The laws vary in scope, ranging from outright bans to statutes that prohibit copay accumulators only when there is no cheaper generic alternative to a brand-name drug.

Several states are debating whether it is a good idea to restrict accumulators or side with industry groups that say drug companies’ coupons only exacerbate high costs.

The HIV+Hepatitis Policy Institute, a Washington-based nonprofit, recently fired off letters to lawmakers in California, Michigan, Missouri and Rhode Island urging them to pass proposed bans.

Advocates point to Wisconsin as another holdout state where some lawmakers championed a ban on copay accumulators. The state legislature considered a series of health overhauls during the last session, but the issue did not make the cut.

Wisconsin State Senate President Mary Felzkowski, a Republican, said she will try again.

“This is an issue that I have been actively trying to address for multiple legislative sessions and will continue to work on moving forward,” she told The Washington Times. “Common-sense changes that will provide relief for Wisconsinites need to be prioritized, and I look forward to continuing to educate individuals on the positive impact that this legislation can have.”

Advocacy groups and lawmakers say it is tough to ban copay accumulators because the issue does not get priority in state capitals or industry lobbyists are effective at fighting it off.

“They are the strongest lobbying group, bar none, in New Jersey,” Mr. Bramnick said of health insurers.

State restrictions on copay accumulators reach only state-regulated plans, such as those in the individual market and fully insured large and small group plans.

Self-funded insurance or ERISA plans, which are popular with large and midsized employers, are exempt from state regulations, meaning the bans do not touch a big swath of the commercial market.

“That leaves a huge gap, considering the majority of people have insurance through their employer,” said Stephanie Hengst, manager of policy and research at the AIDS Institute, a nonprofit advocacy organization that tracks the debate closely.

The institute said it is hard to obtain accurate data on how many patients are affected by copay accumulators.

Nearly 1 in 5 large employer-sponsored health plans had a copay accumulator program in their largest plan, increasing to about one-third when looking at companies with 5,000 or more workers, according to a 2024 survey by KFF, a nonpartisan health-policy research organization.

The copay accumulator debate has been simmering for years.

“In 2017, advocates began to hear that patients were suddenly receiving large bills for their prescription medications despite using the copay assistance they had always used,” Ms. Hengst said, adding that advocacy groups realized it was a policy called the “copay accumulator adjuster program.”

“At the time this was a new phenomenon, but it snowballed quickly in 2018 and beyond,” she said.

The Health and Human Services Department wrote regulations under the first Trump administration that would have allowed copay accumulators in some instances, though a federal court invalidated those rules in 2023, effectively ruling against copay accumulator programs.

The Biden administration and federal policymakers since then have done little to enforce the ruling, leaving states to decide whether to restrict accumulator programs.

“It’s still not really been resolved how these things are regulated, if they’re regulated at all, under federal law,” said Kaye Pestaina, director of the Program on Patient and Consumer Protection at KFF. “It’s definitely in limbo.”

HHS did not respond to a request for comment.

Carl Schmid, executive director of the HIV and Hepatitis Institute, said the “easiest thing to do” would be for the government to enforce the 2023 ruling against accumulators.

Some Capitol Hill lawmakers want to deal with the issue.

Sen. Roger Marshall, Kansas Republican, and Sen. Tim Kaine, Virginia Democrat, are pushing the Help Ensure Lower Patient (HELP) Copays Act, which requires insurers to count third-party copay assistance toward patient deductibles and out-of-pocket maximums.

“Copay assistance programs are often the one thing standing between patients being able to afford their medication and having to go without it,” Mr. Kaine said.

The measure has not moved out of the Senate Health, Education, Labor and Pensions Committee.

The bill would go further than state bans by impacting ERISA plans.

House lawmakers from both parties filed a companion bill, saying it is essential that payments “made directly by a patient or with support from nonprofit organizations or prescription drug manufacturers, contribute toward a patient’s annual deductible and out-of-pocket limit as intended.”

Industry groups that oppose the bans are urging lawmakers in states and in Washington to hold firm.

“We oppose legislation that increases drug costs, which is what these laws will do,” Mr. Lopes said. “Lawmakers should examine drug manufacturers and drug wholesalers to seriously address high drug costs.”

PCMA said health plan sponsors, not PBMs, decide whether to use a copay accumulator, and that its organization supports use of patient assistance programs, which are means-tested programs that help people who lack insurance or cannot afford their medicines.

On the other side of the debate, a major drugmaker lobby said it supports measures that ensure patients receive “the full benefit of copay assistance.”

The Pharmaceutical Research and Manufacturers of America said drug manufacturers help 10 million patients get medicines for free or at reduced cost each year.

“It is deeply concerning that insurers and PBMs undermine that support through copay accumulator and maximizer programs — which pocket manufacturer assistance while refusing to count it toward patients’ cost sharing — leaving patients facing unexpected costs and making it harder for some patients to afford and stay on their prescribed treatment,” said PhRMA spokesman Chanse Jones.

AHIP, a major lobby for the health insurance industry, said drugmakers are the ones who need scrutiny.

“Drugmakers alone set and repeatedly raise the price of their products, and they are responsible for the affordability challenges patients face at the pharmacy counter,” AHIP said.