It’s been a while since I’ve blogged… my website is under construction, so I’ve tried to stay off until the build is finished, but this topic is important and worth putting out there. It’s also possible my site crashes while you’re reading…

This is a long blog where I will talk all of us through copay accumulators, maximizers, copay assistance, and how all these things are coming together to create a giant mess. My overall opinion on this will come through at the end of the blog, but in getting there, I’m hoping to show why this is something we all need to care about.

Also, full disclosure… I have a copay accumulator on my healthcare benefit, so I’m tackling this from the perspective of truly hating how they work, but I’ve held that opinion well before I had an accumulator slapped on my benefit. I have been blogging about accumulator programs for years now.

The basic premise of health insurance is that we buy coverage fully well anticipating it will pay for expensive treatments or medical care for the few who need it at any one time, and yet, lots of us are about to walk into a major flaw. That said, it is important to have a healthy and functioning payer market. Payers, collectively, should help depress healthcare costs for patients primarily, but also society, too.

Copay accumulators and maximizers are types of insurance designs that counteract copay assistance, and they each work a little differently. Since accumulators and maximizers are part of the punch and counter punches between the pharmaceutical industry and the insurance industry, I’m going to pull their definitions and lots of background from a neutral party on this… a pharmacy blog called Drug Channels (you’ll notice a bunch of citations from there as this post goes on). The blog is excellent, albeit somewhat dense if you don’t live and breathe this stuff.

From Drug Channels:

Copay Accumulators are part of the drug benefit embedded in a commercial health insurance plan wherein “a manufacturer’s payments do not count toward the patient’s deductible and out-of-pocket maximum obligations. The manufacturer funds prescriptions until the maximum value of the copayment program is reached. After that point, the patient’s out-of-pocket costs begin counting toward their annual deductible and out-of-pocket maximum.”

Copay Maximizers, like accumulators, are also part of the drug benefit embedded in a commercial health insurance plan wherein “A manufacturer’s payments do not count toward the patient’s deductible and out-of-pocket maximum obligations. The maximum value of the manufacturer’s copayment program is applied evenly throughout the benefit year. The patient’s out-of-pocket costs are determined by the copay program and never reach their annual deductible and out-of-pocket maximum.”

The key levers here are the deductible, the maximum out of pocket cost and the maximum total copay assistance that a manufacturer (drug company) is willing to provide. Other levels like essential vs nonessential tiers of medicines are a little bit more nuanced and can both be negotiated away (with prior authorizations or other tactics) or stand as brick walls. These are all important terms to know embedded in your benefit schemes.

An important call out is that the Affordable Care Act allows for a maximum upper limit of out of pocket costs an individual beneficiary is responsible for each year. For 2023, that limit is $9,100. That doesn’t mean that your limit is $9,100, that just means it’s the upper limit. You can, of course, call your insurance provider and manager to understand specifically what your plan calls for and how subscribers can get to their upper limit. If, after reading this blog, you want to call your copay assistance provider, it’s important you bring several inputs to the table and your maximum out of pocket cost is one of them.

Of course, $9,100 isn’t a realistic cost for people, but it can serve as a backstop in some cases. Essential medicine lists can complicate this a little bit. It’s important to know how this affects your plan.

Copay accumulators and maximizers are all the buzz lately because the biopharmaceutical industry is starting to respond to their increasing frequency across the American healthcare system. For patients who don’t live and breathe insurance policy and design (it’s super boring), the nuanced nature of accumulator programs makes them ripe for confusion. By the way… I’d argue that’s an intentional function of accumulator designs. The key lever the pharmaceutical industry has to hit back against these designs is by starving them of revenue with reduced copay assistance.

And that’s where this is all coming to the surface. Vertex is changing their copay assistance program and will be offering less copay assistance in aggregate than in years past.

The announced change, which will be effective in 2023, is rightfully causing anxiety across the community because out of pocket costs could be increasing for some people.

In fact, Vertex, the CF Foundation, and CF patient advocacy groups are warning that the change could lead to increased out of pocket costs for your medicines if you do not take the time to understand how accumulators and maximizers might be impacting your health insurance benefits and how you’re choosing your insurance plan.

Importantly, if you are on commercial insurance and take an approved CFTR modulator, you need to contact your Vertex GPS Representative immediately to understand if you could be affected by the change. Do not wait to make this call.

These warnings don’t apply to people on Medicaid, Medicare and TRICARE.

So why is Vertex (and why are drug companies broadly) having to change their copay assistance schemes?

Drug makers are effectively needing to draw a line in the sand over accumulator and maximizer designs because, as you’ll see below, the insurance industry has figured out how to turn their copay charges into wealth generators. From the patient and drug maker side of the equation, it can feel a little bit like our copay assistance is vanishing into thin air because that’s exactly what has been happening.

To be clear, copays were never meant to generate meaningful revenue for drug benefit schemes, but more on that in a moment.

First, what is copay assistance? It’s exactly what it sounds like and comes in the form of manufacturer coupons that reduce the out-of-pocket cost of filling a prescription. Out of pocket costs are typically synonymous for copays or coinsurance. Both are cost sharing functions of insurance design.

Insurance drug benefit schemes will place different medicines on various cost sharing tiers. The cost sharing tiers are what dictate your out-of-pocket (OOP) cost when you fill a prescription at the pharmacy counter. Cost sharing for prescription drugs is a little bit of an outdated model that payers have hung on to, and it has largely been a way to control and prevent overutilization of medicines. The argument for cost sharing suggests that when payers keep utilization to the appropriate level, premiums won’t have to increase more rapidly than they already do.

When beneficiaries need to cost share as they fill their prescriptions, it can feel as though they have some skin in the game via a copay for an Rx. Today’s medicines are so precise and complex, however that it’s not exactly clear to me why copays on some prescription drugs are still around given the hoops people need to jump through to get a script (think prior authorizations and genetic testing, for example). I wrote more about that in a past blog.

Historically, commercial insurance beneficiaries could use copay assistance to pay down their OOP max, which would lead to very low out of pocket drug costs for many Americans. You can think of copay assistance as a sort of rebate that gets passed onto the patient because it can offset insurance cost sharing expenses. Importantly, there’s also evidence that substantially reducing out of pocket (copays) costs for medicines doesn’t lead to an increase in insurance premiums, so for a long time it felt like using copay assistance was one strategy that really paid off not only for individuals, but society, too.

Copay accumulators effectively render copay assistance to be less effective, and therefore increase out of pocket costs for patients. Maximizers are typically less impactful on OOP costs for patients, but they’re harsh on drug makers because they drain copay assistance funds.

When these schemes are placed on benefit packages, copay assistance might still reduce the per prescription cost of filling an Rx for a period of the year. But the problem is that only the cash paid by patients on copays goes toward their out-of-pocket max, so patients still need to pay down copays until they hit their maximum.

The real kicker is that the copay assistance from the manufacturer is still collected by the insurance benefit, but it doesn’t provide the same shield against high-cost sharing designs.

The result is that the benefit design actually collects two copayments and increases its revenue, while it forces insurance subscribers (patients) to pay down copays across more prescriptions fills (and thus feel a greater total cost) over the plan year until they hit their out-of-pocket max or the year ends. In past years, copay assistance would allow patients to their hit max out of pocket costs quite quickly without feeling the financial crunch.

The math on this is a little complex so I’m going to link out to the Drug Channels blog, which has an excellent calculation embedded into a 2018 article. The model with the calculation is in a PDF.

If you open the PDF, you’ll see three scenarios. The first is a conventional scenario where copay assistance counts towards a patient’s out of pocket maximum. The second includes a copay accumulator and third is a maximizer scenario.

Each scenario shows what happens to cash flows and costs per stakeholder if, and only if, this hypothetical medicine was the only healthcare cost a person incurred (so it’s not totally realistic, and only to be seen as a model). Because individual medicines don’t exist in a vacuum, CF pharmacists are actually recommending patients fill other prescription medicines in such a way that allows patients to start chipping away at their deductibles and out of pocket maximums.

So why have drug benefit managers resorted to using accumulators and maximizers? Insurers view copay assistance as an incentive for patients to use brand medicine and not a generic competitor. Generic alternatives to brand medicines are typically cheaper for both patients and their payers, but when copay assistance is given to patients, the market for generics can become anticompetitive.

In an overly simplified and made-up case (and using similar math to the linked PDF above) where there are only two equivalent medicines and a substantially different copayment due for each drug, the battle over copay assistance might look like this…

A patient is prescribed Trithromax (price $500/script), a brand name antibiotic for which there is a suitable generic alternative called trithromycin (price $125/script). Trithromax carries a $100 copayment, but the manufacturer offers a $75 coupon (copay assistance) per prescription, so the patient will only need to pay $25 after the coupon is applied. Trithromycin, as a generic drug, sits on a different tier and thus has a different copay. The copay is $25, but there is no copay assistance. The patient expects to fill the medicine 6 times, and so anticipates a total cost of $150 after all the copays are paid.

For the patient, the market is perfectly competitive, but for the payer it isn’t.  The payer, in a perfect world, could limit the impact of copay assistance on the brand drug (Trithromax) and then nudge a patient towards a generic alternative (in this case, trithromycin) with a naturally lower copay. It could even offer its own rebate via a preferred pharmacy.

In the real world, the payer might actually also be incentivized to keep drug costs high through a weird rebate system between drug makers and payers, which is why Mark Cuban started Cost Plus Drugs. That however, complicates this and adds a layer that is out of scope. I’ve written about that, too, if you’re curious.

Let’s add another layer to the above example: out of pocket maximums. Savvy patients could use the copay assistance from drug maker in filling Trithromax to reduce their total out-of-pocket burden. Let’s say, for the sake of simplicity, that the patient in our above example has an out-of-pocket maximum of $500 for the year. After the 5th month of filling Trithromax, the patient’s out of pocket obligations would be done, and then the 6th month would be entirely free to the patient. The math works out like this…

The drug maker offers $75 copay assistance per fill and the patient pays $25 per fill. Together they are paying $100 per month in copays attached to the benefit. After 5 months, they’ve paid $500 together (the patient $125 and the drug maker $375). In the 6th and final month, the drug has no copayment. After copay assistance is applied, the payer coughs up $2,625 for the drug over 6 months.

In the generic trithromycin example, the patient pays all 6 copays because he won’t meet the $500 out of pocket maximum and ends up paying $150 by himself. In this case, the payer only shells out $600 after cost sharing.

All in, the patient is incentivized to take the copay assistance and the more expensive drug. In doing so, he saves $25. The payer loses in this scenario because it buys the more expensive drug, which is why accumulators and maximizers have been put into place. The accumulator acts as a nudge because it maintains the pain of the out-of-pocket cost for the patient throughout the full script, while the plan benefits from the assistance as well. The maximizer basically drains the copay assistance fund to the maximum extent possible.

The important piece of this is that there are equivalent options available to patients in the market for trithromycin (a made-up medication). We, society, see that and know it’s broken when the more expensive option is chosen. Trithromax, the brand name and more expensive medicine, should be the irrational choice, but it isn’t in the absence of nudges. We as consumers, but also members of a market-based economy, want the patient to take the lower cost drug since it’s equal in effect to the higher price brand drug. In a perfect world, trithromycin pulls the cost down for Trithromax because the lower cost option is preferred for the plan and patient. To compete with the generic, the brand maker would need to react with cost adjustment.

Looking at the CF drug market, a competitive market isn’t always the case. Today, equivalent modulators are not yet available in the US. Soon there will be, and I’ve blogged before about what that will look like, but today, Vertex, in this case, rightfully commands a monopoly because the company needs to be rewarded, at a premium, for what it has achieved.

In the absence of generic alternatives, accumulators and maximizers are simply disincentives from filling prescriptions since they increase absolute cost for patients. We, collectively, need to ask why? Why are our insurance schemes disincentivizing access when the alternative is less absolute health. It’s a bad tradeoff for society.

If, the alternative were true and lower cost alternatives were, in fact, available, then I’d say go for it! Incentivize lower cost equivalent drugs by reducing total copay dues. Force the drug makes to compete on cost, and for the record, any time we work with a drug maker or health insurer on to understand the implications of health policy efforts, we make it very clear that’s how we feel from an organizational perspective. Rent-seeking with forever high prices as some drug makers have done in the drug market needs to come to an end.

But similarly, the accumulator and maximizer programs are rent-seeking policies in the same vein. They passively increase plan revenue through double charges, while saddling patients with increased cost as mentioned above.

So why does this all matter? Because costs could be increasing for some CF patients. It’s plain and simple.

It’s clear to me what Vertex and others are trying to do. They’ve realized their copay assistance has effectively started to disappear into a black hole in the face of the increasing frequency of copay accumulators and maximizers. Maximizers, especially, are draining copay assistance funds, so from that perspective, I understand their change because drug makers are limited in what they can do to push back against them in this tit for tat battle. The one key lever drug makers have in battling back against accumulators and maximizers (other than an outright ban of them) is to reduce copay assistance. And that is putting a lot of us on edge because we rely on copay assistance to keep out of pocket costs low.

Patients are caught in the crossfire, and that’s the absolute shame in all of this. That’s why we’ve asked Vertex to make a commitment to patients who could face medication disruption. This is an administrative burden that could also come with a real increased cost for patients who are already burdened with the administration of their own healthcare, and I don’t think that sits well with anyone.

So how does this end? There are a few potential end games that I see if patients end up getting saddled with higher costs in 2023 and beyond, so I’ll talk through them below.

  1. This is the new normal. Accumulators and maximizers continue to be so common that the drug making industry needs to continue to respond. I suspect that in the near term, this is probably the most likely scenario. It will require all of us to be smart about the insurance plans we choose during yearly enrollment periods.

  • Drug makers need to recalibrate. This might happen when drug makers see that they are losing more prescriptions than they forecasted and need to use more patient assistance (different than copy assistance, patient assistance is effectively free medicine) than they would have otherwise anticipated before reducing their copay assistance funds. Patient assistance typically kicks in when the cost of drugs is truly unaffordable after a major payer breakdown or because of some other complicating factor. If the cost of patient assistance exceeds some critical internal threshold (for example, some ratio that describes patient assistance to copay assistance), then a change might be needed. Drug makers incur an intangible cost (though an important one) when patients can’t access their drug regardless of whether the drug company or insurance design is to blame. They also incur the cost of lost revenue per prescription. Combined, those costs will necessarily be compared with the cost of copay assistance, customer acquisition and other measures relative to overall revenue. If the scale tips too far in one direction, then it will need to be rebalanced either by increasing copay assistance funds or some other aid program. Since this is the first year in the CF community where a drug maker is reducing copay assistance in response to insurance designs, it’s probably likely more families than we would like will get caught in this administrative nightmare. We’d, again, expect Vertex to maintain a commitment to the community to provide patient assistance until a remedy is found. I wouldn’t rely on this pathway because it’s the break glass in case of emergency scenario.

  • The insurance market needs to react to copay assistance changes. Drug makers, in changing their copay assistance, are nudging the market in a few ways. The first is that they are draining copay accumulator and maximizer designs of anticipated revenue. In aggregate, that will be a cost for insurance designs. The other force at play is that patients who rely on specialty medicines will be encouraged to shop for plans without accumulators and maximizers, and by extension so will employers who buy these plans. The latter is the true market reform, and it’s one where we are basically a blip on the radar given our small population size. If demand increases for insurance benefits without accumulators and maximizers, and the revenue from accumulator plans decreases, then the market will adjust to buyer preferences. In the near term, this is highly unlikely.

  • Policy makers ban copay accumulators and maximizers. States across the country are already starting to ban them and the federal government is looking at legislation to regulate their use. This is probably the second most likely path forward, but probably the most likely outcome in the long term if patients do face serious increases in out of pocket costs across many diseases.

All in, it’s wrong that patients need to pay for this. It’s true that any change to an insurance benefit or in response to one maintains a non-zero chance of disrupting standard of care, and patients shouldn’t have to stand for that.

So here is what we are doing:

  1. We’ve asked Vertex to commit to making sure patients will not face disruption in drug access after the copay assistance change goes into effect
  2. Double down on our efforts to ask for policies that ban copay accumulators and maximizers
  3. Double down on our efforts to ask for policies that eliminate out of pocket costs for medicines that do not have a suitable (generic) alternative
  4. Advocate for contractual genericization of medicines after a finite exclusivity period

Here’s what you can do:

  1. Contact your insurance manager to understand if you have an accumulator or maximizer on your plan
  2. Ask your employer’s HR the same
  3. Contact Vertex GPS if you are eligible
  4. During open enrollment, select insurance that will keep your out of pocket costs to a minimum relative to the cost you pay to purchase your plan and/or encourage your employer to purchase health insurance benefits that do not have an accumulator or maximizer attached to them
  5. Advocate for a federal ban of copay accumulators and maximizers