In the cat-and-mouse co-pay card game, payers have made their next move. Pharmacy benefit managers have been promoting “co-pay accumulator” programs to plan sponsors as a way to reduce specialty drug spending. Left alone, these programs will result in confused patients who are less likely to adhere to their medications, and high costs for pharmaceutical manufacturers. Pharma companies need to respond.
Many patients today have a significant deductible included in their health plans. About 50% of people covered with employer-based insurance had deductibles of at least $1,000 in 2017, according to The Kaiser Family Foundation. When a patient with a deductible receives a prescription, particularly for a specialty therapy, she may be responsible for a very large payment until the deductible is reached. If, for example, a patient with a $3,000 deductible is diagnosed with rheumatoid arthritis and is prescribed a therapy that costs $4,000 per month, that patient may have to pay thousands of dollars for her first prescription.
To improve access to their therapies in such circumstances, drug manufacturers have designed co-pay card programs that, in many cases, cover a typical patient’s deductible. These programs play a vital role in enabling patients to take their prescribed medications without experiencing the sticker shock of a large out-of-pocket expense.
Co-pay accumulator programs look to upend this approach. When applied, these programs aim to prevent any manufacturer assistance from being directed toward a patient’s deductible. The co-pay card can still be used, but the patient’s deductible remains in place. And when the maximum co-pay card benefit has been reached (most specialty drugs cap the total benefit annually), the patient remains responsible for paying the deductible and won’t be able to use the co-pay card for subsequent monthly payments either. In essence, these co-pay accumulators are saying: “It’s not enough that the deductible gets paid. The patient must directly experience the pain of paying it.”
Payers argue that requiring patients to pay their deductibles directly will make them more cautious about healthcare spending, but for those who are prescribed specialty therapies, low-cost generic alternatives generally don’t exist. For those patients, “cautious spending” is tantamount to not taking their prescribed medications.
Pharma Needs to Respond
If left unchecked, patients with co-pay accumulator programs will be in for a nasty surprise mid-year when their co-pay card benefit runs out and they’re hit with a large and sudden co-pay for their drugs. This will cause therapy adherence to suffer and undoubtedly will be upsetting for many of them. Meanwhile, for a patient who discontinues therapy at this point, the drug manufacturer will have earned no net sales because the manufacturer would have paid all costs up to that point. In fact, net sales may well have been negative given the co-pay card spend plus contracted payer access rebates.
We believe that manufacturers need to do five things—urgently—to address this looming risk:
- Push back on this plan design element. Co-pay accumulators may seem like an easy opportunity for plan sponsors to realize savings, but much of the savings will come from lower adherence to therapies that patients need to take. Drugmakers should denounce this ploy as the patient-unfriendly tactic that it is and encourage plan sponsors to seek other means of savings—ideally, means that don’t entail using a confusing program that stealthily shifts costs from the healthy to the sick.
- Monitor co-pay card utilization carefully. Manufacturers need to have a robust analytical and reporting program in place to understand how co-pay cards are being used to identify particular populations (for example, specific healthcare providers or geographies) where co-pay card redemption behavior and spending patterns appear to be changing substantially.
- Adjust the co-pay card program design. Co-pay offsets paid to the pharmacy at point of sale are ripe targets for co-pay accumulators. Alternative structures such as direct-to-patient rebates can achieve the same result for a patient without enabling the payer to push the discount away from the deductible.
- Ensure a seamless patient experience. Discount programs appear on their face to be much more patient-friendly than rebates since discounts can be applied immediately. They also can be applied at point of sale without the patient knowing about them. By contrast, there could be a waiting period for a rebate and only patients who seek them out will qualify. Manufacturers need to design their patient support, distribution and co-pay offset models in ways that ensure that all eligible patients are aware of available discounts or rebates, and can get access to them quickly.
- Support providers with these new access challenges. If manufacturers adjust co-pay program structures, some provider behaviors, like sending patients directly to certain pharmacies, may no longer work for their patients. Drugmakers will, more than ever, need to develop and deliver clear communications to providers about the best ways to ensure affordable patient access to therapies.
Manufacturers that take these steps effectively not only will meet the challenge laid at their doorsteps by the co-pay accumulator move, but also will develop a competitive advantage over those companies that take a more ad hoc approach.