Behind the Push and Pull of Copay Accumulator Programs

PE: Can you explain the evolution of copay adjustment, or accumulator, programs in healthcare? Why were they introduced by payers and pharmacy benefit managers (PBMs) to begin with?

Dowd: With everything going on with accumulators and maximizers through the years, sometimes everybody forgets about why they even started or why they exist. The first reason is that the payers have a job to do, meaning they have taken on the risk of these lives for the pharmaceutical benefit. The employers, which are their clients, are coming to the PBMs and to the payers and saying, 'you have to control this drug cost. I'm an employer, I have high cost just to provide healthcare to my employees. What are you doing about that?' Through the years, there's been formularies, exclusions, and prior authorizations, but really where the usage of the accumulator technique—where the deductible is affected by taking off the manufacturer's contribution—is newer. But it really stems from the same reasoning, and that is the payers are looking for ways to control costs and employers are looking for ways to control costs to provide healthcare to patients.

PE: How did the controversy around these copay arrangements ultimately grow? What were the drivers?

Dowd: The other thing that's really fueled it is the total economic fabric of what's happening with pharmaceutical products and specialty drugs. Right now, it's amazing when you look at the numbers. Let's call it 90/20. 90% of the pharmaceuticals that are dispensed in the United States are generics. So there's some great lifesaving and quality-of-life-changing drugs out there that are now generic, that are now pennies on the dollar of what they were. That's great for those pharmaceutical payer budgets. However, that 90 part only represents 20% of the drug spend. So although 90% are dispensing generics, that only adds up to about 20% of the drug budget or the drug spend that the payers are dealing with.

This 20% reality is that the specialty drugs that are coming out are continuing to fuel the upside-down cost model—for everything from tackling very difficult diseases to address, going all the way up to cell and gene therapy and oncology. New products coming up for oncology are lifesaving, and we're in amazing times there. But the products that are coming out are running these crazy [cost] averages.

Reuters put out some numbers that indicate, when you put together drugs that were approved by the FDA in 2022, the average cost of a new, innovative pharmaceutical product coming out was $200,000. Now, they ran the gamut from $80,000 to over $1 million, but the numbers, any time they're looked at, are kind of staggering. Depending on the patients that are in a [particular] health plan, with an employer, it could be driving the costs way up.

The accumulator and maximizer usage is still with us today, because it finds another way to put that out-of-pocket burden onto the patient. But a lot of it is based on these economics and based on just some of the realities of our current system.

For more on the copay landscape, read Dowd’s recent guest article for Pharm Exec. And check out how the Inflation Reduction Act (IRA) may impact patient out-of-pocket costs and the future of drug pricing in our analysis here.