The pharmacy landscape has shifted dramatically over the last 3 years, from the expansion of specialty and orpha-drug pipelines to new gene therapies, biosimilar drugs, and the phasing out of copay accumulator programs in certain markets. These and other trends will continue to impact payers in 2024.
The Prohibition of Copay Accumulator Adjustment Programs (CAAP)
Several states have now passed legislation that prohibits the use of copay accumulator adjustment programs (CAAP), or accumulator adjustment programs. These programs seek to reverse the impact of manufacturer cost sharing assistance for prescription drugs (primarily specialty drugs) by not counting the manufacturer assistance amount towards a patient’s deductible and out-of-pocket (OOP) maximum obligations. Copay accumulator programs, in effect, extend the amount of time it takes for a patient to reach their deductible and OOP limit, thereby reducing the plan sponsor’s coverage until such cost-sharing is met. The annual cost impact to the payer with such programs (self-funded plans, insurers) can vary depending on the plan size and mix of medications eligible for copay assistance. While U.S. courts have not yet passed broad rulings to ban or revise regulations on these programs, many states have.
As of July 28, 2023, 19 states (Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Illinois, Kentucky, Louisiana, Maine, New Mexico, New York, North Carolina, Oklahoma, Tennessee, Texas, Virginia, Washington, and West Virginia), Washington D.C., and Puerto Rico have all enacted legislation prohibiting copay accumulator programs. Similar copay accumulator laws are currently pending in other areas, such as Florida, Massachusetts, Michigan, Mississippi, Ohio, Oregon, Pennsylvania, Utah, and Wisconsin.
By January 1, 2024, more than 19% of the total US commercial market — over 26 million people — must be enrolled in plans that count any form of copay assistance toward patient cost-sharing limits. These regulations generally apply to fully-insured plans as well as self-funded plans that are not subject to ERISA.
Pharmacy benefit managers (PBMs) and plan sponsors have managed copay accumulator programs in a few different ways, depending on the complexity of their business model:
- Sunset for everyone: all clients, in all states
- Sunset only for those currently impacted by the legislation: fully-insured clients and self-funded non-ERISA clients, either in applicable states or for all states
- Self-funded clients who are subject to ERISA: leave programs in place until they are instructed to remove it (by client or by law)
Proposed Next Steps and Additional Considerations For Copay Accumulator Laws:
- Clients with a CAAP in place should engage with their PBM and/or their legal counsel to determine if their plan is impacted by recent copay accumulator laws, if they have not already.
- If a group is impacted, determine their approach for managing implementation of the legislation. At a minimum, clients should ask their PBM for an impact analysis including estimated increase in plan cost and associated member impact. This will be a positive impact for members, and clients can work with their PBM on communication plans, if any are determined to be needed.
- If a group is not impacted, there are many emerging methods pharma manufacturers have developed to push back on accumulator programs where they are still permitted. It’s worth learning more about these approaches to understand how they will play into your pharmacy benefit strategy.
- PBMs may be inclined to use this legislation as an opportunity to promote additional alternative funding programs or copay maximizers. Since drugs that are included in these programs are considered “non-essential” and therefore outside of the defined benefit plan, they do not apply to accumulators and OOP maximum obligations. Therefore, it is assumed that these copay accumulator laws do not apply to maximizer programs. Plan sponsors can ask about the potential benefits and savings of copay maximizer programs, if not already in place.
- Overview of CMS Policy Regarding Copay Accumulators. Johnson & Johnson Health Care Systems Inc. October 2020. Accessed June 30th, 2021. [Link]
- Legiscan Database Accessed November 11th, 2023.
- Arizona HB 166 [Link]
- Arkansas HB 569 [Link]
- Colorado SB 195 [Link]
- Connecticut SB 003 [Link]
- Georgia HB946 [Link]
- Illinois HB0465 [Link]
- Kentucky SB45 [Link]
- Louisiana SB94 [Link]
- Oklahoma HB2678 [Link]
- Tennessee HB0619 [Link]
- Virginia HB2515 [Link]
- Washington D.C. B25-0141 [Link]
- West Virginia HB2770 [Link]
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* This article was originally posted in July 2021. It was updated on 11/13/2023.