Lousy Healthcare for Thee but Not for Me

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In recent years, sometimes spurred by employers, pharmacy benefit managers (PBMs) have instituted programs to keep out-of-pocket drug costs high for patients. These programs are especially harmful since they are primarily instituted to keep patient costs high for drugs that treat life-threatening diseases.

Under these so-called accumulator and maximizer programs, PBMs pocket the financial assistance that drug companies offer patients to offset their out-of-pocket costs since they forbid any support to count towards a patient’s deductible or required out-of-pocket maximum. Currently, nearly 50 percent of commercial insurance plans utilize one of the programs.

A paper by Pioneer Institute quantifies how such programs enhance PBM profiteering by keeping out-of-pocket costs high for medicines that treat cancer, multiple sclerosis, and psoriatic arthritis.

The Biden administration has been advocating policies to keep prescription drug costs low for patients but has not weighed in on behalf of patients regarding these PBM programs that force patients to pay thousands of dollars for their drugs when financial assistance programs are available that could defray those costs.

While seventeen states have banned these programs, bans on the state level are less effective as they cannot regulate the large ERISA (Employee Retirement Income Security Act of 1974) and multi-state plans that provide coverage for millions of patients. Hence the need to pass federal legislation, which a bipartisan group of congressional members has introduced.

Federal government administrators are fully aware of the harmful effects of the accumulator and maximizer PBM programs on patients. Recently, the Office of Personnel Management (OPM) solicited bids for health plans interested in providing health insurance for federal employees.  Some health plans have been lobbying OPM for several years to include these PBM programs in their drug benefit design.

Fortunately, OPM seems quite aware of these programs’ adverse impact on federal employees, and they essentially told the FEHP (Federal Employee Health Plan) bidders, “Don’t even think about implementing one of these programs for our employees.”

OPM wrote that they “will not entertain any proposals that manipulate prescription drug benefit drug design” because “programs that eliminate or bypass the copay/coinsurance maximums negotiated as protections in the benefit design are not in the best interest of the enrollee or the Federal government.”

OPM’s strong admonition of these corrupt programs should be lauded as an example that other employers ought to follow. However, OPM’s strong rebuke also raises a question: Why is the administration so eager to protect federal employees from high out-of-pocket costs but is perfectly happy for PBMs to enroll millions of other patients in these programs? Are lower drug costs for federal employees more important than lower drug costs for patients in the private sector?

In fact, under both the Trump and Biden administrations, the Centers for Medicare and Medicaid Services (CMS) has ignored calls from patient advocacy groups to require that Affordable Care Act (ACA) plans count patient assistance provided by the manufacturers toward beneficiaries’ deductibles and maximum out-of-pocket liabilities for medicines.

We know from our research that these programs are enormous profit centers for the PBMs since they capture assistance meant for the patients as profit for the PBMs. We also know that they increase patient healthcare out-of-pocket spending since they require patients to pay for the entirety of the deductible through their own pocketbook.

The most unfortunate outcome of such programs is an increase in non-compliance with life-saving medicines and other healthcare services crucial to the well-being of patients. Our own Pioneer study calculated that these PBM programs could raise healthcare costs by up to $2.5 billion because patients with high out-of-pocket expenses tend to abandon their prescriptions at the pharmacy counter, thus exacerbating their health condition.

If policymakers are serious about helping patients with their healthcare needs, they will listen to the patient’s voices asking for relief through the passage of federal and state legislation banning the accumulator and maximizer programs that are hurting patients’ wallets and their overall health.

William S. Smith, PhD, is Senior Fellow and Director of the Life Sciences Initiative at Pioneer Institute in Boston.

Robert Popovian, Pharm.D., MS is Senior Visiting Health Policy Fellow of the Life Sciences at Pioneer Institute in Boston.