Coupon-Program Pivot: Meeting New Legal, Operational Hurdles

Pharmaceutical Executive

John S. Linehan, Member of the Firm in the Health Care & Life Sciences practice, in the firm’s Baltimore and Washington, DC, offices, authored an article in Pharmaceutical Executive, titled “Coupon-Program Pivot: Meeting New Legal, Operational Hurdles.”

Following is an excerpt:

In 2020, the pharmaceutical industry witnessed a flurry of regulatory and legislative activities addressing drug pricing, distribution, and reimbursement. But while the industry and media have been captivated by high-profile reform initiatives, critical developments regarding drug manufacturer copay coupons have quietly transpired in the background. The legal treatment of coupons and copay accumulators—mechanisms used by pharmacy benefit managers (PBMs) and payers to counter coupons’ impact on plan costs—has evolved in ways that are, on balance, not favorable for manufacturers. These developments deserve closer scrutiny, given the importance of coupons as tools to facilitate access to branded drugs, the ubiquity of coupon use, and the billions of dollars at stake. Many manufacturers will need to modify their coupon programs to preserve their value while accommodating new challenges.

The rise of accumulators

For well over a decade, branded drug manufacturers have offered copay coupons that may be used by commercial plan beneficiaries to cover their cost-sharing obligations at the pharmacy point-of-sale. However, in recent years, health plans and PBMs have developed copay accumulators and related benefit mechanisms3 to mitigate the cost-impact of coupons by barring them from counting against a beneficiary’s deductible or annual out-of-pocket maximum. After the coupon’s value is expended, the beneficiary must then cover the entire amount of any remaining deductible before plan benefits are triggered. By employing accumulators, plans are able to reduce their financial liability by deriving cost-savings from coupon use and from beneficiary cost-sharing payments before furnishing drug coverage.

Given their financial benefits to plans, the employment of accumulators and related plan mechanisms has exploded in the past several years. Accumulators have also generated controversy, as plans and PBMs have used them to shift costs to beneficiaries, and sometimes in an abrupt manner. On the other hand, plans have defended accumulator use as a means to enforce plan mechanisms that are designed to manage costs and promote economical prescribing choices.