We recently published a mythbuster tackling the myth that larger drug copays lower total costs of care. Those familiar with the pharmacy benefits space know, however, that copays aren't the only cost sharing strategies that PBMs, health plans, and employers use to save money on drug costs.
In this blog post, we highlight two additional strategies that didn't make it into the mythbuster: copay adjustment programs and high deductible health plans.
These strategies may ultimately be counterproductive and raise costs for plan sponsors because when patients face high deductibles and copays, they are more likely to struggle to acquire and adhere to their medications. Both strategies also have ripple effects that disproportionately impact vulnerable communities.
Copay adjustment programs
In 2020, 83% of commercially insured lives were covered by a health plan with a copay accumulator program. In these programs, PBMs adjust the drug benefit to capture pharmaceutical manufacturer patient assistance funds so that they no longer apply to patients' deductibles. In the accumulator model, the manufacturer copay card funds a patient's copay until the card is empty, after which the patient must pay the entire deductible.
Patients enrolled in these programs can face a steep "copay cliff" after the copay card runs out, when they are suddenly responsible for the full copay for expensive medications. An IQVIA analysis found that patients in accumulator programs with costly "copay surprises" are 25-36% more likely to discontinue therapy.
After hearing concerns about the potential patient impact of accumulator programs, PBMs launched maximizer programs that adjust the patient's copay so that it matches the manufacturers' maximum patient assistance offering, spread evenly over the year.
Thus, while patients no longer face a "copay cliff" for their medication, patients are still responsible for their full deductible for other medical care, while PBMs capture both manufacturer and patient dollars. 65% of drug benefit design decision makers cited copay adjustment programs as a good way to save money for plan sponsors in a 2022 survey.
Implications for health equity
Copay assistance programs can represent a lifeline for patients who require costly medications. A recent study found that 65% of patients rely on copay assistance programs to afford their prescriptions. Of the 45% of patients who reported being unable to afford their medications because their copay assistance ran out, 33% were people of color.
Black and Latino patients are more likely in general to not take medications due to cost. This can drive poorer health outcomes and increase total costs of care. Accordingly, copay adjustment programs—and copay accumulators, specifically—may deepen existing inequities and drive more patients to abandon treatment as they face steep copay cliffs.
Action steps for health plans and PBMs
PBMs and health plans need to consider alternative strategies to save costs and ensure patients' access to expensive medications. More states are exploring legislation that mandates copay accumulator and maximizer programs allow patient assistance dollars to apply toward a patient's deductible and out of pocket maximum. This should be a wakeup call for PBMs and health plans that they cannot continue with business as usual.
PBMs and health plans should also leverage their data and evaluate their unique patient populations to determine if implementing copay accumulators or maximizer programs may exacerbate existing health inequities.
High deductible health plans
In 2021, over a quarter (28%) of all U.S. employees were enrolled in HDHPs. 16% of individuals in employer-sponsored HDHPs had to meet their annual deductible before they could access prescription drug coverage (compared to 11% of those enrolled in preferred provider organization plans).
HDHPs are designed to reduce overall health care utilization by exposing patients to the full costs of their care. However, studies have shown that increasing patients' exposure to out-of-pocket costs can have cascading consequences for patients and plans—especially where prescription drugs are concerned.
Health equity implications
High deductible health plans pose serious financial and health risk for low-income, non-white patients. Low-income, non-white individuals enrolled in HDHPs are more likely than individuals with low- or no-deductible plans to report having claims denied by insurance and delaying necessary medical care.
HDHPs may also exacerbate the patient impact of other cost-sharing strategies, such as pharmacy formularies that include many drug tiers. Most health plans have approximately three tiers for drugs covered by the plan. However, almost half of individuals with employer based HDHPs were enrolled in plans with four or more drug tiers. Plans with more tiers can expose patients to higher costs before they meet their deductible.
These higher costs disproportionately impact patients with chronic conditions, who often rely on multiple long-term prescriptions as part of their care plan. Black patients in particular experience higher incidence and worse health outcomes for many chronic conditions. While plan members may make requests for tiering exception to lower cost-sharing, patients report that these requests are often denied. This creates an environment where HDHPs are a serious financial threat disproportionately impacting low-income and minority patients.
Action steps for health plans and PBMs
Plans should consider implementing insurance plan designs that offset the cost of maintenance treatment for common chronic conditions such as diabetes. Plans should also consider strategies that leverage health tech solutions designed to manage disease and reduce the likelihood of surgery.
For example, a digital diabetes program that offers glucometers and test strips as deductible-free preventive care can 1) reduce financial barriers for patients and 2) link patients with their providers encouraging proactive care.
PBMs often work with plan sponsors and employers to customize their benefits, including drug tiers. PBMs could consider developing a product that incorporates a social determinants of health lens, providing an analysis for employers to make sure that they are selecting a plan that best supports their enrollees.
Achieving health equity means making it more than a mission imperative
Persistent health disparities increase health care costs overall and are detrimental to quality of life for many Americans. A comprehensive health equity strategy at your organization can move the industry toward delivering equitable care for all.
PBMs, plans, and plan sponsors should prioritize patients by creating drug benefit designs that reduce financial barriers for the most vulnerable populations. Drug benefit designs that improve access for patients of color can improve outcomes overall.