Copay Discount Cards and Coinsurance Programs

Well, this episode is suddenly incredibly relevant again just with all the stuff going on with co-pay maximizers. If you’re gonna understand maximizers, though, you really have to start here.

In a nutshell, this whole thing is a battle royale between co-pay cards and patient assistance programs offered by pharma companies versus co-pay accumulators and co-pay maximizers deployed by health plans and PBMs (pharmacy benefit managers).

I just want to start by getting everyone grounded on a few really key points.

#1: Drug abandonment is a thing. Patient goes into the pharmacy to pick up their Rx and the out of pocket is too expensive, so they leave without their drug. This can happen on the first fill, like, “Oh, wow, I guess I don’t really need that new drug my doctor just told me I should pick up.” Or it can happen downstream, like in January when, all of a sudden, a deductible kicks in. But in all cases, we have a patient getting sticker shock on the out of pocket for a med and then going without the drug … or pill splitting or rationing or doing other things to save money.

#2: How PBMs shake rebates out of pharma manufacturers is to use what I just said (that whole abandonment possibility) as a leverage point. Pharma goes into a PBM that controls access for drugs for, I don’t know, 100 million lives. The PBM says, “Hey, you, Pharma! If you want to be on our formulary, you gotta kick out this much in rebates.”

Pharma says, “No, that is too much rebate. I cannot pay it.”

PBM says, “Well, then … OK, you’re not on formulary or you are poorly positioned on formulary. And let me translate what that means. Now the out of pocket for your drug will be so expensive that patients are gonna walk out of the pharmacy without your drug because I, the PBM, have control over patient out of pocket and I will make it very expensive.”

From a pharma’s standpoint, all those patients that aren’t picking up the drug … that means a loss of market share. And that market share can translate into a lot of lost revenue for the pharma company.

And thus begins the whole war of the co-pays/out of pockets. So now, let’s fast-forward through the past, say, 10-plus years. It’ll be like one of those movie montages with the action sped up so fast you don’t need words to see what’s going on … except this is an audio podcast, so I guess you do need words.

Alright, so this is what happens next: Pharma starts raising its prices combined with there’s more super expensive specialty pharmacy drugs. Reaction by the PBMs to this was to try to get more aggressive with Pharma demanding increasingly high rebates and other concessions, keeping in mind the prize and leverage point that the PBMs offered Pharma to secure those PBM rebates was lower co-pays or out of pockets for patients.

Again, it’s a well-known fact that the higher the patient out of pocket, the lower the market share of the drug because the higher the patient cost, the more patients abandon at the pharmacy counter. It’s the old supply and demand curve at work.

At a certain point here in all of this, the pharma companies start to get really pissed about their dwindling net prices as rebates start going up and up and their market share kind of doesn’t because the PBMs are keeping the money and maybe not passing it along to plan sponsors or patients. It’s a zero-sum game fight over the money, and Pharma feels like the PBMs are getting more than their share.

And they’re pretty smart, these pharma manufacturers. So, Pharma comes up with a Houdini move to escape PBMs holding Pharma hostage for rebates by using their control over how much patients pay or don’t pay at the pharmacy counter.

Fasten your seatbelts and let the games begin.

Pharma decided to hand out co-pay discount cards. Then Pharma doesn’t have to pay PBM rebates to get lower patient out-of-pocket costs. They can finesse lower patient out-of-pocket costs all by themselves. Take that, PBMs!

Except now, the PBMs see this—and they raise. Enter co-pay accumulators and also co-pay maximizers.

For this part of the extravaganza of game theory at its finest, I’m gonna let Dea Belazi, PharmD, MPH, my guest in this episode, explain further.

However, one more thing to point out before we begin. In the olden days, this whole war of who has leverage over who transpired in the context of small molecule drugs in competitive markets a lot of times. So, like Lipitor versus Crestor and the brands all cost, like, $100 a month and, maybe, there was a generic equivalent. If the health plan made it too expensive for a patient to get one of those drugs, they usually made another one in the same class attractive financially. So, the patient had (theoretically, at least) options; and the stakes were also a lot lower. The dollar volumes that we’re talking about here were a lot lower.

Now this same war is being fought on the specialty side of the house, where drugs cost thousands or tens of thousands a month and the patient may have but one option. So, if it’s made to be financially toxic for a patient to get that one drug, the patient has to choose between their family’s health and dipping into their 401k in order to afford their out-of-pocket costs. Or going bankrupt. Or dying. And when I say “or dying,” that is not hyperbole. There are studies that clearly show the mortality rates for patients who have trouble affording their meds are worse.

In these cases, Pharma can be, sort of authentically, a hero who steps in and helps patients who are functionally uninsured because they can’t afford the co-pays and deductibles that their plan sponsors have put in place to actually use the insurance that they are paying handsome premiums to have. Pharma can step in and help via these co-pay discount cards or coinsurance programs or through patient assistance programs helping those with lower incomes.

So, there’s no question in the short term that when a patient desperately needs a drug and their insurance is insufficient, a pharma manufacturer can be a knight in shining armor financially.

But only if this were so simple, like this is some kind of spaghetti western with the good guys and the bad guys.

Now let’s think about this co-pay/out-of-pocket assistance offered by Pharma with a longer timeframe or a more systemic timeframe in mind.

How is it that Pharma can have prices that are as high as we all know they are? Right?! It’s because enough patients don’t abandon the med at the pharmacy counter or, these days, in the infusion clinic. So, the lower Pharma can drive the patient out of pocket for a really expensive drug, the more they have a certain amount of impunity to raise the drug prices.

This is a lot of the argument against price caps on out of pockets just in general, by the way. They matter for patients. They save lives. But they also have the consequence of kind of getting rid of what is often seen as a big control point checking pharma prices from zinging even higher than they already are.

Bottom line, we have a catch-22 on our hands—and the patient is stuck in the middle. If you’re a patient and you need your miracle drug (and a lot of patients call these drugs their miracle drugs), Pharma is your hero … at least right now. However, Pharma is also now able to raise their prices even more next year; and now you really need their out-of-pocket support because the price of the drug is so high your employer/taxpayers can’t afford the rising drug spend and even more cost gets shifted onto patients. It becomes like Stockholm syndrome.

But again, no white hats and black hats here. This whole thing is one of those incomprehensible art house films with lots of plot twists and in every other scene, you start to feel for the character you just hated 10 minutes ago … because while Pharma is getting busy raising prices, you have PBMs and nothing-for-nothing plan sponsors also up to their own machinations. Like, hey, here’s one that’s quite a marvel: PBM double-dipping. If the PBM can get Pharma to pay the patient deductible and then also get the patient to pay the patient deductible … Hmmm … By the way, that was a backdoor introduction to accumulators.

And then later on, maximizers showed up on the scene. I just want to say that with maximizers, not all are created equal. I can certainly see their value for patients when they are deployed by companies and plan sponsors as part of their benefit designs with an explicit goal of helping members and the plan itself (nothing for nothing) afford expensive drugs it’s clear that the patients need.

But … I have to say, and I’m not well versed enough yet in how this maximizer business has evolved to comment on whether some of what is going on is still a net positive for some members and patients.

Some of these PBMs have opened up entirely separate maximizer companies, which, for sure, they are upcharging employer plan sponsors to use. And the whole point of these separate entities is to get as much cash out of Pharma as possible while they, I don’t know, may or may not pass that cash on as savings to patients and members. I need to do a show on this coming up.

There’s a new bill in the House, by the way. It’s called the HELP Copays Act, which I don’t think is just aimed at accumulators. If you didn’t understand what I just said, you will after you listen to this episode.

With that, here’s Dea Belazi. Dea is president and CEO over at AscellaHealth. He is a pharmacist by training who has worked for Pharma, and then he worked at a health plan, spending a lot of time in the PBM space. In other words, he’s seen this tangled web from pretty much every angle. We kick right into the conversation talking about accumulators.

You can learn more at ascellahealth.com.

Dea Belazi, PharmD, MPH, has led the development and management of AscellaHealth’s global specialty pharmacy benefit and healthcare services for nearly a decade. As a visionary and architect of change, leading the AscellaHealth shift from pharmacy benefit management to specialty pharmacy solutions, he has played a key role in the company, achieving a staggering four-year growth of more than 1556%.

Previously, he served as a senior executive and played a key role in the growth and expansion of PerformRx, a PBM owned by Keystone First Health Plan. Additionally, Dea held a leadership position at FutureScripts, an Independence Blue Cross company that was sold to Catamaran.

A respected industry professional and thought leader, Dea is often invited as a reviewer for multiple medical journals and holds a seat on the board of directors for numerous healthcare-related companies. Based on his impressive career and growing reputation, he was chosen to serve on FierceHealthcare’s Editorial Advisory Council.

Dea was most recently recognized as an Ernst & Young Entrepreneur of the Year 2022 Greater Philadelphia Award Finalist; he is also a 2022 Philadelphia Titan and a 2021 Philadelphia Business Journal Most Admired CEO honoree.

Dea holds a PharmD from the University of Rhode Island. He completed his dissertation at Brown University, earned a Master of Public Health from Johns Hopkins University, and served as a post-doc health outcomes research Fellow at Thomas Jefferson University.

11:06 “The concept of co-pay accumulators wasn’t just a … PBM thought, but it also came from their customers, whether it was health plans or employer groups.”

15:50 “[This is] literally a math problem based on, ‘Do I spend it now? Do I spend it later?’”

17:20 What reason do employers and payers have for doing this?

21:13 “This is another mechanism for payers to push down additional cost to both the patient and now the pharma company.”

22:24 EP241 with Vinay Patel.

22:59 “I don’t think accumulators are really forcing Pharma to be more competitive.”

25:06 How co-pay maximizers are different from co-pay accumulators.

28:09 Who doesn’t like co-pay accumulators and maximizers?

30:01 How patient advocacy groups are a different model.

32:10 What is the biggest challenge facing employers right now?

You can learn more at ascellahealth.com.

Dea Belazi of @AscellaHealth discusses #copayaccumulators and #copaymaximizers on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthtech #copay

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