Patient Groups Sue Medicare Over Trump-Era Copay Assistance Rule (1)

Three patient advocacy groups are suing the Biden administration over a Trump-era rule that they argue has allowed insurers and pharmacy benefit managers to increase out-of-pocket prescription drug costs for consumers.

The complaint, obtained by Bloomberg Law, alleges the rule conflicts with the definition of “cost-sharing” in the Affordable Care Act and federal regulations. The rule (RIN: 0938-AT98) was issued in 2020 by the Centers for Medicare & Medicaid Services and says health insurers don’t have to count copay assistance from drugmakers toward a patient’s annual limitation on out-of-pocket costs.

The HIV+Hepatitis Policy Institute, the Diabetes Leadership Council, and the Diabetes Patient Advocacy Coalition allege the policy has allowed insurance companies and pharmacy benefit managers—the entities that manage prescription drug benefits on behalf of insurers—to collect funds from both patients and drugmakers while not using any of that money to alleviate the financial burden on patients.

“This practice is not only illegal but increases the cost of prescription drugs for millions of patients nationwide,” Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, said in a statement.

The groups filed the complaint Tuesday in the US District Court for the District of Columbia.

“We trust the court will side with us—and invalidate the ability to implement these punitive practices that impact people with HIV, hepatitis, and so many other health conditions that are treated with prescription drugs,” Schmid added.

Many insurers now seek to stop patients from counting manufacturer coupons as part of their cost-sharing obligations, the groups alleged in their complaint. The 2020 rule “explicitly allows” insurers and PBMs to engage in this practice, known as copay accumulator adjustment programs, “across the board,” they said.

The CMS previously only allowed these programs “with respect to branded prescriptions where a generic is available.”

“Copay accumulator adjustment programs can thus be expected to result in increased out-of-pocket costs to needy patients, decreased adherence to now unaffordable prescription drug regimens, and greater systemic costs to the healthcare system and to the Nation’s health,” the groups argued.

Schmid and others have repeatedly condemned copay accumulator programs, and have called for the Federal Trade Commission to review them as part of its ongoing study into six of the nation’s largest PBMs. The agency is examining whether certain practices by PBMs have restricted the affordability and access of medications.

The Pharmaceutical Care Management Association, the leading PBM trade group, has argued that drugmakers offer copay assistance programs to encourage uptake of their products among patients. It adds that the use of copay coupons “reduces the utilization of more affordable medication options,” which means “overall prescription drug costs will continue to increase dramatically.”

Cause of Action: Rule conflicts with federal statute, existing regulations; arbitrary and capricious.

Relief: Declaration of rule as unlawful and void, enjoin government from enforcing.

Attorneys: McDermott Will & Emery LLP represent the groups.

Response: The CMS said it doesn’t comment on matters of litigation.

The case is HIV & Hepatitis Policy Inst. v. Dep’t of Health & Human Servs., D.D.C., No. 1:22-cv-02604, complaint filed 8/30/22.