It is Time for Policymakers to Protect Patients from Predatory Practices of Insurers and PBMs

Updated on August 30, 2023

Although per capita patient out-of-pocket (OOP) spending on prescription medications has dropped, averages are deceiving. In the U.S., a modest percentage of patients are burdened with unsustainable OOP biopharmaceutical spending. These are the patients who depend on brand-name medicines that have no generic or biosimilar equivalents. The primary contributor to the OOP burden is the changing of pharmaceutical benefit design. Such evolution from fixed-cost co-payments to percentage-based coinsurance and the expansion of high-deductible plans has dramatically increased the OOP share of drug costs paid by those patients. 

In addition, pharmacy benefit management companies (PBMs) and insurers have devised a payment model in which patients do not directly benefit from multi-billion-dollar concessions, rebates, and fees collected by PBMs and insurers from biopharmaceutical companies. In contrast to physician or dentist visits, where a patient’s coinsurance or deductible is based on lower prices negotiated by the insurer, patients’ shares of medication costs are based on the inflated list price. Subsequently, biopharmaceuticals are the only segment of the health system in which patients do not realize the benefit of lower prices negotiated on their behalf.

Over the past several years, biopharmaceutical companies have offered assistance to eligible patients to help offset OOP costs. The monetary value of these manufacturers’ patient assistance programs (PAPs) places the pharmaceutical companies among some of the largest U.S. charities. To devalue PAPs, PBMs and insurers have instituted accumulator and maximizer programs. These initiatives prohibit the patient assistance funds provided through pharmaceutical companies from counting toward the insured individual’s deductible or maximum OOP spending. Consequently, accumulator and maximizer programs force patients to double-pay. The insurer and PBM collect the patient assistance funds provided by the biopharmaceutical industry meant for the patient, while patients must continue making OOP payments until they meet their maximum requirements. Simply put, PBMs and insurers increase profitability on the backs of patients.

To ensure patients are not being taken advantage of, state policymakers have introduced legislation protecting PAPs, and over a dozen have passed such legislation. These laws mandate that all payments, including patient assistance funds provided by the biopharmaceutical industry, count towards a patient’s deductible and maximum out-of-pocket requirements. Insurers and PBMs have raised opposition to such legislation by claiming that such prohibition to accumulators and maximizers will increase insurance premiums.

To evaluate the claim that laws protecting patients against PBM and insurer predatory practices impact healthcare premiums, the Global Healthy Living Foundation initiated an assessment to evaluate the claim made by insurers and PBMs. The GHLF analysis concluded that the insurance premiums did not change after the passage of state laws requiring that patient assistance funds count toward policyholders’ deductibles or maximum out-of-pocket payments. GHLF researchers found no statistically significant correlation between the passage of the laws and rates of change in insurance premiums.

A federal bill, which complements state action, HR 5801, The HELP Co-pays Act, was proposed to protect all patients on November 1, 2021, and has been sitting in committee with no further action since. If passed, this law will require insurance policies to count “third-party payments, financial assistance, discounts, product vouchers, and other reductions in out-of-pocket expenses” toward “deductibles, coinsurance, co-payments, and OOP limits.” Most recently, despite backing by patient and provider advocacy groups, the Center for Medicare and Medicaid Services (CMS) failed to include language in the Notice of Benefit and Payment Parameters for 2024 that would mandate that insurers count pharmaceutical company patient assistance towards a patient’s deductible. 

Policymakers often talk about protecting patients against the predatory practices of insurers and PBMs. It is about time for state and federal legislators to support such legislations to ensure that ONLY patients benefit from such patient assistance programs and to stop PBM and insurers from profiteering on the backs of patients.

Louis Tharp
Executive Director at Global Healthy Living Foundation

Louis Tharp is the Executive Director of Global Healthy Living Foundation and an Employer. After a 20-year career as an international communications executive, journalist, author, and technology entrepreneur, Louis Tharp began his social welfare, nonprofit career in 1999 when he cofounded CreakyJoints®, the international digital community for millions of arthritis patients and caregivers worldwide who seek education, support, activism, and patient-centered research. In 2007, CreakyJoints became part of the Global Healthy Living Foundation (GHLF), which he also cofounded and where he now serves as Executive Director. 

In 2012, he accepted an appointment in the Obama administration as a member of the Army Education Advisory Committee after serving on staff at the U.S. Military Academy as triathlon swim coach.  

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Robert Popovian
Robert Popovian, PharmD, MS, Chief Science Policy Officer, GHLF; Senior Health Policy Fellow, PPI and Visiting Health Policy Fellow, Pioneer Institute - photo attached

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