The U.S. healthcare system has become a game of chess with each player strategizing their next move to stay in the game.

It is not uncommon for prescription drugs to play an essential role in a person’s daily health routine – and unfortunately for some, those daily, vital drugs come with a high price tag. A poll conducted by the Kaiser Family Foundation, showed that one out of four Americans experience difficulty in affording their life-saving medication ¹. Many chronic conditions are treated with drugs known as “specialty drugs.” These specialty drugs are much more expensive.

To counterbalance the cost of patients’ prescriptions, many drug manufacturers offer copay assistance programs intended to help limit patients’ out-of-pocket expense in two ways:

This is a great solution to increasing access and adherence to many life-saving therapies. However, the complex U.S. healthcare and pharmaceutical system has become a game of chess with each player strategizing their next move to stay in the game.

Insurance Companies Make the Opening Move
Most insurance companies employ assorted tools and strategies to encourage patients to choose lower priced drug options, thereby keeping their payouts low. To this end, in recent years, some health plans began restricting the application of copay assistance toward deductibles by implementing copay adjustment programs, also known as copay accumulator programs, which prevent a manufacturer’s copay assistance from counting toward a patient’s annual out-of-pocket maximum. This is unfortunately not used as a tool to help patients save on drug costs, but is used to increase insurers’ revenue.

This impacts patients when the full value of the copay assistance program has been redeemed at the pharmacy and they are required to cover their annual cost-sharing requirement before plan benefits kick in. This can become very challenging for those whose plans involve high-cost sharing or co-insurance, and especially for people with complex conditions and rare diseases, such as cancer, diabetes, or HIV, that require more expensive brand-name or specialty drugs.

Government Regulations Change the Game
The Centers for Medicare and Medicaid Services (CMS) recently finalized a rule permitting the use of accumulators. They went on to add a new stipulation, effective January 1, 2023, that places the responsibility on drug manufacturers to determine whether health plans are applying copay accumulators and to ensure the full benefit goes to the patient. Otherwise, they will be subject to Medicaid Best Price calculations. Currently, there is no known method for a manufacturer to be able to determine if a patient is being affected by an accumulator, which will result in manufacturers needing to remove or alter their patient affordability programs to make sure they do not incur a best price impact.

While CMS intended these rules to reduce costs for both patients and for government-funded healthcare programs, they have the potential to cause the opposite outcome.

PBMs Maintain Their Foothold
High drug costs are known to be caused by supply chain middlemen driving up prices through kickbacks known as rebates. The most prevalent (and most inflationary) middlemen are PBMs (pharmacy benefit managers). These groups inflate the prices of prescription drugs by negotiating rebates from manufacturers in order to bring their products to market². These prices then get passed along to the patients in the form of higher overall costs of prescription drugs.

Staying under the radar is easier for them because these middlemen aren’t usually on lawmakers’ or patients’ agendas when it comes to regulating healthcare and prescription drug costs. PBMs have become the predominant partners to insurance companies, with their pay-to-play model attributed to the rising cost of life-saving medications like insulin.

These groups like to operate with as little transparency into their business practices as possible and remain unregulated in most states.

How are Manufacturers and Patients Faring?
Drug manufacturers are usually the first ones to get blamed for a lot of the financial barriers that come with prescription costs. However, manufacturers must carefully mitigate the widespread impact of copay accumulators placed on their patients and programs. Accumulators have led to significant patient abandonment once the full value of the affordability program has been redeemed. The CMS ruling on accumulator and best price calculation give manufacturers a lot to deal with and think about as they maneuver through 2023.

Lack of access to prescribed therapies – attributed to out-of-pocket expense, dissatisfaction, and frustration maneuvering the copay process – has a direct impact to patient lives. They may blame the manufacturer, instead of insurance companies or PBMs, when there is a bad experience. When it takes more time for patients to start a drug or therapy, they tend to face more barriers to stay on the therapy, which could be life sustaining for them³. Sadly, the stories of patients suffering or dying because they couldn’t afford their treatment are becoming more common.

So, What Is the Endgame?
Now, when one of these key players’ position is exposed as the culprit responsible for skyrocketing drug prices, far out of step with other countries, different reasons are cited as to how and why.

Pharmaceutical companies and PBMs debate the role rebates (usually negotiated by PBMs) play in pricing and the lack of transparency around the system⁴. PBMs say that drug companies have chosen the rebate system over lowering list prices, while drug companies argue that PBMs are using the savings from discounts to line their own pockets.

Without fundamental changes to the structure of our current system, the game will continue with each player countering the last move. The end result may be the disappearance of patient affordability programs as we know them.

Paysign Has New Strategies
We know how frustrating this new ruling has become for our pharmaceutical partners as they analyze impacts and race to create new programs that ensure patient access. As a fintech company with roots in patient affordability and other healthcare payment solutions, Paysign has defined a new model that will address the issues coming to the forefront of affordability programs as of January 2023. If you are looking for a partner that offers customized solutions, visit paysign.com/rx.

1. NCSL: Copay Adjustment Programs. https://www.ncsl.org/research/health/copayment-adjustment-programs.aspx#:~:text=When%20a%20patient’s%20health%20plan,out%2Dof%2Dpocket%20maximums

4. Fierce Healthcare: Pharma Companies, PBMs Play Blame Game Over Drug Prices at Hearing: https://www.fiercehealthcare.com/payer/pharma-companies-pbms-play-blame-game-over-drug-prices-at-hearing