Judge Strikes Down Trump-Era Medicare Copay Assistance Rule (1)

The Medicare agency must withdraw a Trump-era rule on copay assistance programs under a federal judge’s order following claims from drug industry-backed patient groups that the policy has allowed health plans to increase out-of-pocket prescription drug costs for consumers.

The rule (RIN 0938-AT98) from the Centers for Medicare & Medicaid Services appears to conflict with the definition of “cost-sharing” in the Affordable Care Act and federal regulations, Judge John D. Bates wrote in an order filed Friday in the US District Court for the District of Columbia. The 2020 rule said pharmacy benefit managers—the entities that manage prescription drug benefits on behalf of insurers— don’t have to count drugmaker copay assistance toward patients’ out-of-pocket costs.

The rule “must be set aside based on its contradictory reading of the same statutory and regulatory language and the fact that the agencies have yet to offer a definitive interpretation of this language that would support the rule,” Bates wrote.

The ruling is a win for the HIV+Hepatitis Policy Institute, the Diabetes Leadership Council, and the Diabetes Patient Advocacy Coalition, which filed a lawsuit against the Medicare rule in August 2022. The groups alleged the rule allowed health plans and PBMs to collect funds from both patients and drugmakers while not using any of that money to alleviate the financial burden on patients.

“We are thrilled that the Court has taken the side of patients who have been struggling to afford their prescription drugs due to the greedy actions of insurers and their PBMs,” Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, said in a statement Monday.

“We call on the Biden administration and states to immediately enforce this decision and not take any further steps to undermine the copay assistance that allows patients to access their essential medications,” Schmid said.

Pfizer Inc. and Johnson & Johnson are among the institute’s corporate sponsors. Pharmaceutical companies like Abbott Laboratories, Eli Lilly & Co., and Merck & Co. also give funding to the Diabetes Leadership Council and its affiliated Diabetes Patient Advocacy Coalition.

While manufacturers can offer assistance to patients in commercial plans, these programs are prohibited in government-funded health insurance programs under the Anti-Kickback Statute.

The HHS had argued in response to the patient groups’ lawsuit last year that the CMS found manufacturer coupons “can add significant long-term costs to the health care system that may outweigh the short-term benefits of allowing the coupons, and counter-balance issuers’ efforts to point enrollees to more cost-effective drugs.”

The Department of Justice, which represents the CMS and Department of Health and Human Services in this case, declined to comment on the ruling. A CMS spokesperson declined to comment, noting the agency doesn’t comment on pending litigation.

The case is HIV & Hepatitis Policy Inst. v. Dep’t of Health & Human Servs., D.D.C., No. 1:22-cv-02604, 9/29/23