Copay Accumulators and CMS Best Price Rule

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Brief Summary: This lawsuit challenges the Centers for Medicare and Medicaid Services’ (CMS) updated Best Price rule, which requires copay assistance to be included in a drug manufacturers Best Price calculation when a health plan utilizes a copay accumulator program.

Overview: The Medicaid Rebate Statute requires drug manufacturers to provide prescription drugs to state Medicaid plans at a price that is as favorable as the price provided to commercial health plans. Under the rule, the amount that the drug manufacturer can charge state Medicaid programs is based on the manufacturers Best Price. 42 CFR §44.505 defines the Best Price as the lowest price paid for a drug by any wholesaler, provider, retailer, HMO, government entity, nonprofit, or other health care purchaser. Under the statute this price includes all applicable discounts, rebates or other transactions that adjust prices either directly or indirectly to the Best Price eligible entities.

In December 2020, the Center for Medicaid and Medicare Services announced that it was revising the Best Price rule to include manufacturer copay assistance if the copay assistance benefitted the health plan rather than solely benefitting the patient. Essentially, this new rule required manufacturers to count copay assistance towards determining the Best Price of a drug when a health plan was using a copay accumulator program.

Court Updates: On May 21, 2021, Pharmaceutical Research and Manufacturers of America (PhRMA) filed a lawsuit against the Department of Health and Human Services (HHS) alleging that CMS’s rule requiring manufacturers to consider copay assistance as part of the manufacturer’s Best Price violates the Medicaid Rebate statute and the Administrative Procedures Act.

PhRMA alleges that requiring copay assistance to count towards the Best Price violates the Medicaid Rebate statute because the statute solely requires the Best Price to be based on the cost that manufacturers provide to wholesalers, retailers, providers, health maintenance organizations, nonprofit entities, and governmental entities. PhRMA argues this is an enumerated list that does not include discounts given to patients, thus, including the costs that manufacturers provide to patients via copay assistance is outside the scope of the statute. PhRMA also argues that in 2006 CMS stated that discounts are only to be counted if the manufacturer intended for the discount to adjust the price at the retail level. Thus, PhRMA argues because copay assistance is intended to benefit the patient at the pharmacy counter, not the health plan or pharmacy benefit manager, copay assistance should not be counted towards the manufacturer’s Best Price.

PhRMA’s complaint can be found here.

Current Status: On May 17, 2022, the United States District Court for the District of Columbia granted PhRMA’s motion for summary judgment and vacated and set aside the 2020 accumulator rule. In vacating the 2020 copay accumulator rule, the Court reasoned that the Medicaid Best Price statute defined best price as “the lowest price available from the manufacturer . . . to any best price eligible purchaser”, such as wholesalers, retailers, providers, health maintenance organizations, non-profits, and government entities. Thus, the Court reasoned that because copay assistance is given to patients and not one of the enumerated best-price-eligible purchasers HHS did not have the authority to require the cost of copay assistance to count towards the Medicaid Best Price. The full decision can be read here.

Impact: As of May 17, 2022, the accumulator rule cannot go into effect. The rule can only go into effect if HHS appeals the decision to the District of Columbia Court of Appeals, and if the Court of Appeals reverses the May 17, 2022, District Court’s decision. This is an important win for patients. For patients, this means that the rule will not create an additional barrier in accessing copay assistance and jeopardize patient access to their necessary treatments.

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