Copay assistance programs: Managed care pros and cons

Do drug manufacturer copay assistance programs only serve to mask drug prices and inevitably lead to higher drug expenditures in the future? Or do they serve an important role in giving patients access to therapy they wouldn’t otherwise be able to afford? According to recent research and current market dynamics, both may be true.

“Copay assistance programs are only becoming more common as companies first response to public concern about rising drug costs,” says Joseph Solomon Ross, MD, MHS, associate professor of medicine (general medicine) and public health (health policy) at Yale University.

In his 2013 study published in the NEJM, Ross and coauthor Aaron S. Kesselheim, MD, JD, MPH, from Harvard Medical School, found that the majority of drug coupons being made available at that time were for drugs for which lower-cost and potentially equally effective alternatives existed.

Ross

“Copay assistance programs do not offer a long-term solution for patients,” Ross says. “First, copay assistance can only be used when a patient has insurance coverage and when their insurance plan offers coverage for the drug. But as prices rise, more and more medications are likely to be excluded from formularies. Second, copay assistance off-set patients’ higher out-of-pocket costs at the time of picking up the prescription, but the insurance company also pays more for the patient to receive that drug, which over time will result in higher premium costs for all patients.”

Finally, according to Ross, copay assistance is often time limited, so while patients might be able to use it for their first prescription, or even their third, eventually they will be required to pay the higher out-of-pocket costs for these drugs.

“The system would operate more efficiently if physicians made sure to only prescribe the lowest cost, highest value drugs for their patients. Such a program would make the most sense when used for essential therapies and for certain patients, particularly those with life-threatening conditions for which there are not reasonable generic substitutes and for patients without health insurance coverage, who would otherwise be unable to pay for the drug’s cost,” Ross says.

Next: Consumer-driven benefit designs

Consumer-driven benefits

With the emergence of consumer-driven pharmacy benefit designs however, which encompass components such as coinsurance and high deductibles, today’s insured members are finding themselves footing a much larger portion of the tab for the price of prescription medications. And, with highly prevalent chronic conditions such as arthritis, multiple sclerosis, and various cancers, expensive biologic therapies costing thousands of dollars per month are largely now the mainstay of treatment. In these instances, copay assistance programs have often become the only way for many of these individuals to afford the out-of-pocket costs tied to these therapies.

Howard

“[Copay assistance programs] are standard practice in the pharmaceutical industry for new drugs,” says David H. Howard, department of health policy and management, Emory University, Atlanta. “Many programs for high-cost specialty drugs offer very generous assistance to privately-insured patients. Many specialty drugs have prices that exceed patients’ out-of-pocket maximums, so I don’t know that copay assistance programs really affect the price in those cases. But for drugs with lower prices and patients in plans without out-of-pocket maximums, patients may be exposed to the full price of the drug. Consequently, fewer may use it. Copay assistance programs diminish the tradeoff companies face between setting a higher price and selling more product.”

These programs reduce the ability of insurers and PBMs to use cost sharing to steer patients to preferred drugs, according to Howard.

David Weingard, CEO of Fit4D, a patient-centered digital technology diabetes coaching platform, agrees. “Programs removing the cost focus from patients when deciding on therapy can lead them and the prescriber to choose more expensive and newer therapies, he says. “Managed care design formularies with higher copays and cost sharing for patients to control use of these more expensive therapies, but the copay programs counteract this design. It’s a complicated topic, as programs do want to help patients but it is sometimes at odds with cost control strategies.” 

Economic justification

In a recent perspective piece by Howard published in the NEJM, he discussed the economic reasons for the existence of these programs. “They allow drug companies to charge higher prices, offer PR benefits, and increase demand for the drug,” Howard says.

“Because copay assistance programs operate outside of the claims system, executives have no way of knowing whether their patients are receiving assistance,” he says. “Some executives have tried to penalize companies that offer generous assistance by moving their drugs to higher copay tiers. They will have to lean more heavily on non-financial tools, like step therapy.” 

At the end of the day, the most important outcome is that a patient is taking their medication as prescribed, according to Weingard. “Barriers to adherence can be very complex, ranging from financial issues, side effects, nutrition/lifestyle and psychosocial issues. The certified diabetes educators who work at our company are helping to uncover what these barriers are for the people with diabetes we support every day. Often when the barriers are financial, copay cards can be very helpful in improving adherence.”

Next: Making the right choice

Weingard

Ultimately, Weingard believes that the prescriber and patient control the decision of what therapy is the right choice.

“It’s a complicated decision that factors in clinical outcomes, side-effect profiles, convenience to patient, likelihood of patient being able to manage regimen and cost,” he says. “Copay programs can reduce the cost piece of this decision. Patients may prefer this when they want the newer technology, more convenience or other things factor, which influences their decision and they may really like the copay offer."

Education is needed on the impact of overall costs of therapies and insurance premiums or managed care executives can use other steps such as prior authorization or step therapy protocols to control the use of high cost drugs, according to Weingard. 

"Managed care can also start demanding more rebates from pharma in value-based pricing models, in order to control cost for therapies that aren’t realizing their promised outcome," he says. “These offer the copay discount, but also focus on improving adherence and overcoming the other non-financial obstacles to patients getting started on medications and taking them as prescribed. We have seen successful programs like this for chronic conditions such as diabetes and rheumatoid arthritis."

In an effort to balance the potential value of copay assistance programs for those who most in need, while minimizing the ability of these programs to undermine cost-efficiency efforts, health plans and PBMs are now devising new strategies themselves. More and more insurers are broadening exclusionary formularies to decline coverage of higher-cost drug products which circumvented benefit design strategies through the use of copay assistance. Additionally, PBM-owned specialty pharmacies such as Optum’s BriovaRx are now offering their clients the ability to employ protocols which decline the processing of copay coupons for a member if such coupon is being used in conjunction with a ‘non-preferred’ drug on that individual’s drug formulary. Additionally, insurers are also undertaking efforts to ensure that the value of copay assistance programs, since not directly covered by the member themselves, are not being applied toward that individual’s out-of-pocket deductible plan. With time, it is speculated that insurers may establish benefit designs which set copay thresholds for key preferred brand name drugs at levels equivalent to the value of the copay assistance programs offered by the manufacturer, and in turn pushing members to pursue these coupons as a way to minimize the cost for both the payer and the member, while still preserving value of the drug formulary.

Ideally, most would favor a scenario where the value of these copay assistance programs was simply applied at the front-end by drug manufacturers in reducing the upfront cost of their products. With this scenario not likely anytime soon, this topic will continue to be one of significant debate, pitting manufacturers against insurers, with the patient unfortunately stuck in the middle. To achieve optimal value for all moving forward will not be a simple undertaking and will require all key stakeholders, including manufacturers, insurers, employers and government entities to come together in devising more innovative alternative solutions.

David Calabrese is chief pharmacy officer, at OptumRx, and a Managed Healthcare Executive editorial advisor.