The American Health Insurance Plans (AHIP) has submitted an amicus brief in favor of the Department of Health and Human Services (HHS) copay coupon accumulator rule, allowing states to decide whether pharmaceutical manufacturers’ copay coupons should contribute to patient cost-sharing. AHIP argued that copay coupons only contribute to high prescription drug spending, with pharmaceutical manufacturers benefiting from increased sales while payers and consumers suffer from higher costs. The organization proposed copay accumulator programs as a solution, which do not allow coupons to count towards a member’s cost-sharing limit, preserving important cost-sharing incentives that encourage lower cost, higher value choices.
AHIP Argues In Favor of the Copay Coupon Accumulator Rule: A Payer Organization’s Perspective on the Impact of Copay Coupons on Prescription Drug Spending
The American Health Insurance Plans (AHIP) submitted an amicus brief in favor of the Department of Health and Human Services (HHS) copay coupon accumulator rule, which would enable states to decide whether pharmaceutical manufacturers’ copay coupons should contribute to patient cost-sharing. AHIP emphasized that the industry group supports efforts to lower drug costs for members. In particular, the payer organization argued that copay coupons only contribute to high prescription drug spending, with pharmaceutical manufacturers benefiting from increased sales, while payers and consumers suffer from higher costs.
The Problem of High Prescription Drug Spending
The United States pays the highest prices in the world for medications, which is a significant problem that exacerbates every year. While health insurance providers are strictly regulated to both cover costs and pass on savings, prescription drug prices are left wholly unconstrained based on unilateral price setting by drug manufacturers. As a result, prescription drug spending is a significant contributor to high healthcare costs, which impact hardworking American families. Policymakers and payer organizations have been working on various solutions to lower prescription drug costs.
The Problem with Copay Coupons
Copay coupons are intended to reduce members’ cost-sharing, which is a goal that payers share. However, the payer organization argues that copay coupons only contribute to high prescription drug spending. They are viewed as marketing tools that boost sales. In particular, they draw consumers’ attention to drugs that have waning exclusivity. Instead of basing assistance on financial need, the coupons are attached to specific drugs.
AHIP argued that the coupons are most often applied to drugs that are gaining more competition from generics, therapeutic substitutes, and other branded drugs. The coupons dissuade consumers from seizing on the more price-conscious choice because they do not get an accurate portrayal of the drug’s cost. As a result, payers end up paying more. For example, a brand-name drug might cost a health plan $400 and the member $100 for a total of $500, while its generic counterpart typically costs the health plan $95 and the member $5 for a total of $100. But with the coupon copay, the pharmaceutical manufacturer strikes out the patient’s $100 copay so that, for the patient, their choices are to pay $0 or pay $5 for the generic.
However, the price of the drugs has not changed. The brand-name drug still costs $400 for the health plan while the generic costs $95. When consumers pick the brand-name drug because of a coupon, payers have to compensate for that higher cost in the form of premium increases. Ultimately, the payer organization argued that copay coupons increase the amount that health insurers have to pay, which leads to higher health insurance premiums. Meanwhile, pharmaceutical manufacturers turn a profit from copay coupons, with one company attesting it saw a 451 percent return on investment on average.
AHIP’s Proposed Solution: Copay Accumulator Programs
Copay accumulator programs were designed to combat the effect of copay coupons. Copay accumulators do not allow the coupon to count toward a member’s cost-sharing limit, since the manufacturer, not the member, is paying the cost of the coupon to the pharmacy. Accumulators operate on a simple premise: when a manufacturer discounts its price through a copay coupon, the discount does not require the patient to incur any cost, so it does not count toward a patient’s cost-sharing. This preserves important cost-sharing incentives that help nudge patients toward lower cost, higher value choices.
Specifically, the law in question allows states to determine if they want to permit the use of copay accumulators. AHIP pointed
