Groups representing HIV and diabetes patients are trying to scrap a Medicare rule that they say leaves patients stuck in high drug costs, by preventing them from offering billions of dollars in aid against their insurance deductibles.
The Big Picture: A federal lawsuit filed by the groups on Tuesday addresses the larger question of whether drug companies can cover Medicare costs for expensive drugs, or whether covering patients’ costs in this way amounts to a bribe.
Zoom: The lawsuit in the US District Court for the District of Columbia revolves around “coupons copay“Branded by drug companies to offer patients a better deal and ultimately increase sales of their drugs — at least, until their insurance deductions are met.
- Insurance companies are starting to use it–It’s called a co-pay accrual to prevent patients from applying those deductions to their own.
- But patient groups — including the HIV+ Hepatitis Policy Institute, the Diabetes Leadership Council (DLC), and the Diabetes Advocacy Coalition (DPAC) — argue that federal regulations define cost sharing as “any expenditure required by or On behalf of an affiliate with regard to essential health benefits.”
- “It doesn’t matter whether the help comes from a friend, a charity, or a drug manufacturer,” they wrote.
A CMS spokesperson said The agency does not comment on pending litigation.
what are they saying: Because of increased deductibles and cost-sharing requirements, patients often rely on co-pay assistance to help them pay for their prescriptions, said Carl Schmid, executive director of the HIV+ Hepatitis Policy Institute.
- “In a call with reporters, Schmid said that they are taking the sharing assistance provided by pharmaceutical companies, which last year totaled $12 billion… earmarked for patients but without counting it within the patient’s deductible or out-of-pocket obligations.
the other side: Studies showed drug coupons raise costs Across the board, by encouragement of patients To search for drugs of specific companies. Doctors are willing to prescribe it, knowing that patients will not be burdened with cost. But taxpayers can pick up the bulk of the tab.
This is part of J. Bai, a professor of accounting and health policy at Johns Hopkins University, told Axios that an elaborate dance between drug companies and insurance companies extends beyond Medicare to private insurance.
- Insurers use co-pays and co-insurance to steer patients away from more expensive drugs. Pai said manufacturers are offering plans to help co-pay.
- She said insurers can no longer easily direct patients to cheaper alternatives, so they are turning to co-pay accumulators.
- “We’re talking about drug manufacturers … seeking to circumvent cost-sharing mechanisms that have some potential to constrain drug prices and direct use of more cost-effective care,” Limor Daphne, a Harvard health economist, told Axios.
- “This does not mean that cost-sharing does not have significant downsides,” she said. “What he means is that drug companies shouldn’t be the ones setting it up.”
This can finally “Incentivize drug manufacturers to inflate list prices and PBMs to distort drug formulations in favor of higher list prices and higher discount treatments,” the authors wrote.
- A separate battle has broken out over rebates that drug companies pay to Medicare pharmacy benefit managers in exchange for preferred prescription mode. These rebates are then passed on to insurance companies, resulting in lower premiums for registrants.
- The Inflation Reduction Act delayed Trump-era implementation that would have eliminated some manufacturer rebates paid for prescription drug coverage plans until 2032.
Bottom line: “This war will continue. Both sides will continue to create new schemes,” Bai said.