How biopharma is meeting the next payer challenge

With their higher costs co-pay accumulators could be a step backwards for reducing patients' drug price burden.

In the tug of war between biopharma and US payers over the price and use of speciality drugs a new force has emerged: copay accumulator programmes.

Pharmacy benefit managers (PBMs) have imposed accumulators as a response to big pharma’s payment assistance schemes, which help patients cover the cost of expensive medicines but, payers claim, raise overall drug costs. In reality, however, accumulators are increasing costs for patients, risking more bad public relations at a time when PBMs are already under political scrutiny. It seems that few winners will emerge from the expansion of these schemes, though they may very well become more common.

Papers, please

Assistance programmes sponsored by big pharma companies allow patients to show a card to pharmacists and receive expensive speciality medicines with minimal payment or none whatsoever – that cost is covered by the drug maker. They have been a point of contention for some time, with payers arguing that they drive up spending on prescription drugs by making it easier for patients to access expensive new drugs when perhaps a cheaper therapeutic equivalent or generic drug would do.

Payers have struck back with accumulators, applied most frequently in high-deductible plans with out-of-pocket maximums. Accumulators no longer apply the assistance received from pharma-sponsored programmes towards patients’ out-of-pocket maximums for total medical costs, making patients potentially pay thousands of dollars more for their drugs before reaching that maximum.

Critics fear that, as a result of shifting costs to patients, some could choose to skip taking necessary medications, which could in the end backfire for the payers if coverage leads to patients simply not taking drugs that they need, and their conditions spiral out of control, resulting in a costly hospital episode. In addition, many chronically ill patients have disabilities that limit their ability to work.

Predictably, there has been a war of words over accumulators, with PhRMA launching a campaign at the end of March, blaming “middlemen” for leaving patients financially exposed. The big PBM Express Scripts hit back with an argument that having special assistance in place to cover drugs is unfair to patients who require, for example, surgery and have no help covering their out of pocket costs. Express Scripts, of course, glosses over the difference between chronic treatment with a drug and acute treatment with a medical procedure.

Big pharma on alert

With patients taking longer to get to so-called “catastrophic coverage” big pharma sponsors have signalled that they are considering shifting their approaches.

Lilly executives, for example, suggested that the company might increase its rebates for its psoriasis treatment Taltz, which would in theory get payers to move it to a preferred coverage tier to reduce enrollee cost sharing, and give a boost to their copay programmes. Abbvie, on the other hand, said it might have to spend more money on copay assistance to help patients get to the threshold where comprehensive coverage will kick in, but not cut the price of Humira.

“We don’t want to lose those patients over a month or two,” Abbvie's chief executive, Rick Gonzalez, said in a recent call with analysts. “So, within our co-pay programs today, we have the flexibility to go higher.”

Mr Gonzalez estimated that the number of patients in accumulator programmes was small – he estimates 4% based on the fact that 20% of Humira patients are on high-deductible plans and 20% of those have accumulators.

Other counterstrategies are also being employed, Bernstein analyst Ronny Gal wrote recently. Amgen and Abbvie are said to have shifted many patients to prepaid debit cards, which are indistisguishable from cash – although this is an expensive option for the sponsor and does not guarantee that the money will be spent on the designated drugs. In addition, pharmacists and payers in many cases know which patients are receiving copay assistance and might not be fooled by a debit card.

Mr Gal wrote that he expects pharma companies to work to eliminate accumulators in the next contracting cycle, perhaps by offering bigger rebates.

Deeper rebates, of course, could evaporate as an option should US President Donald Trump follow through on his intention to put greater legal restrictions on off-invoice discounting – the rationale being that rebates give pharma companies an incentive to accelerate list prices to ensure that they make profits.

Kickstarter for copays

Professor Mark Fendrick, director of the University of Michigan’s Centre for Value-Based Insurance Design, points out that in many cases accumulators punish patients for whom an expensive drug is appropriately indicated.

A better approach, Professor Fendrick says, is copay relief when a generic or preferred brand drug fails to keep patients’ conditions under control and they must progress to an expensive alternative.

“The day I decide a drug is clinically indicated for my patient – whether third line, fifth line, or sixth line – on that day, it’s first line,” he says. “We know it’s not hard: once you’ve approved the prior authorisation you can also make the copay adjustment.”

While Professor Fendrick says he sees the need for payers to crack down on subsidies for some branded drugs – citing Lipitor coupons as an example – he adds that copay assistance programmes play an important role that payers are not valuing. “I support manufacturers assistance programmes because they’re better than my patients having a bake sale or starting a kickstarter campaign,” he says.

Still, if there’s one thing that has been a constant in employer-provided drug coverage, it is that policies that shift costs to enrollees tend only to expand – witness the growth of four-tiered plans that segregate the most expensive speciality drugs into a category with very high patient cost-sharing (Vantage Point – Four-tier drug plans thrust affordability into spotlight, February 19, 2014).

In the US biopharma ecosystem opaque purchasing practices provide incentives for all parties to seek an edge over their negotiating adversaries or, failing that, force patients to make hard economic choices – accumulators are just another example of this latter characteristic.

Pricing based on value or outcomes could help ease the threat to patients, but these arrangements are uncommon – although this could change if the government gets serious about promoting them (Seven drug pricing proposals that will happen and a couple that won’t, May 14, 2018). For now, the goal of making drug costs clear and understandable remains aspirational.

To contact the writer of this story email Jonathan Gardner in Virginia at or follow @ByJonGardner on Twitter

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