Let’s cut to the chase here for our conversation about co-pay cards offered by pharma companies versus co-pay accumulators and co-pay maximizers deployed by health plans. This whole war of the co-pays started back in the day when PBMs (pharmacy benefit managers) began to shake down Pharma for higher discounts. The prize that PBMs offered Pharma was lower co-pays for patients. It’s a well-known fact that the higher the patient out of pocket, the lower the market share of the drug—the old supply-and-demand curve at work.
So, the PBMs and health plans kind of had an ace up their sleeve because they control how much the patient pays out of pocket. And so, they use that ace to pull in higher discounts from Pharma. “You’ll make it up in volume,” they told Pharma. “We’ll make sure you get lots of patients by putting your drug on a lower formulary tier and giving patients who take your drug the lowest possible co-pays.”
At a certain point, pharma companies started to get mad about their dwindling net prices. And they’re pretty smart. So, Pharma came up with a workaround to PBMs holding them hostage for lower net prices. Pharma decided to hand out co-pay discount cards. Then, they don’t have to pay the PBM. They can finesse lower patient co-pays all by themselves. Except now, the PBM sees this and they raise.
Enter co-pay accumulators and co-pay maximizers. For this part of the extravaganza of game theory at its finest, I’ll let Dea Belazi, PharmD, MPH, explain. Dea is the president and CEO over at AscellaHealth. He’s a pharmacist by training who has worked for Pharma, then at a health plan, then spent lots of time in the PBM space. Now he’s working to create a different kind of pharmacy benefit at AscellaHealth. He has seen this tangled web from pretty much every angle.
One thing to point out here before we begin: In the olden days, this whole war of who has leverage over who transpired in the context of small molecule drugs in competitive markets. So, like, Lipitor versus Crestor versus simvastatin—and they all cost, like, $100 a month. If the health plan made it untenable to get one of those drugs, they usually made another one in the same class financially attractive. So, the patient had options, and the stakes were a lot lower.
Now this same war is being fought on the specialty side of the house, where drugs cost thousands or tens of thousands of dollars a month and the patient may have but one option. So, if it’s made financially toxic for a patient to get that one drug, then the patient has to choose between their family’s health and dipping into their 401(k). In these cases, Pharma can be, sort of authentically (and the “sort of” is an important qualifier), a hero who steps in and helps patients who are basically functionally uninsured because they can’t afford the co-pays and deductibles to actually use the insurance they’re paying handsome premiums to have. Pharma can step in and help via co-pay discount cards or through patient assistance programs to help those with lower incomes.
But let me point out an obvious but rarely-mentioned-in-the-same-sentence connection. If the patient cost share is really high, there are at a minimum two parties responsible for that: the insurance company, who set the patient cost share and may have created functionally uninsured members in the process, and the pharma company, who may have set the price of the drug untenably high, maybe way over what the value of the product was. Neither is an innocent bystander, and the patient, sadly, is caught in the middle of this war.
You can learn more at ascellahealth.com.
Dea Belazi, PharmD, MPH, has more than 20 years of experience in the health care industry, mostly developing and managing pharmacy benefit management companies. He is currently the president and CEO of AscellaHealth, a national specialty pharmacy benefit manager (SPBM™) serving commercial, Medicare, and Medicaid segments.
He was part of the development of PerformRx, a PBM owned by Keystone First Health Plan, as well as another, FutureScripts, an Independence Blue Cross company that was sold to Catamaran a few years ago. Dea holds a PharmD from the University of Rhode Island and completed his dissertational work at Brown University. He later completed a Master of Public Health from Johns Hopkins University and a post-doc health outcomes research fellowship at Thomas Jefferson University. He is a reviewer for multiple medical journals and sits on multiple boards.
05:03 “The concept of co-pay accumulators wasn’t just a … PBM thought, but it also came from their customers, whether it was health plans or employer groups.”
10:00 “[This is] literally a math problem based on, ‘Do I spend it now? Do I spend it later?’”
11:31 What reason do employers and payers have for doing this?
15:26 “This is another mechanism for payers to push down additional cost to both the patient and now the pharma company.”
19:57 EP241 with Vinay Patel.
20:33 “I don’t think accumulators are really forcing Pharma to be more competitive.”
22:49 How co-pay maximizers are different from co-pay accumulators.
25:57 Who doesn’t like co-pay accumulators and maximizers?
28:03 How patient advocacy groups are a different model.
30:14 What is the biggest challenge facing employers right now?