Brief Summary: This lawsuit challenges the U.S. Department of Health and Human Services (HHS) 2021 Notice of Benefit Payment and Parameters (NBPP) that permitted health plans to adopt copay accumulator programs by allowing plans to apply their own definition of cost-sharing.
Overview: When privately insured patients cannot afford their medications, they may rely on financial assistance from pharmaceutical manufacturers and other third parties to meet their health plans’ cost-sharing requirements and fill their prescriptions. The value of this assistance should count towards a patient’s deductible and annual out-of-pocket limit. However, health plans that adopt a copay accumulator program accept this third-party assistance but do not count it towards satisfying the patient’s deductible or annual out of pocket limit.
On August 30, 2022, the HIV + Hepatitis Policy Institute, Diabetes Patient Advocacy Coalition, and the Diabetes Leadership Council filed a lawsuit against HHS in the United States District Court for the District of Columbia. The complaint argues that HHS’s 2021 NBPP improperly permitted health plans to adopt their own definition of “cost-sharing,” thereby permitting plans to implement copay accumulator programs.
The complaint argues that the 2021 NBPP is unlawful because it (1) is contrary to the statutory text of the Affordable Care Act; (2) conflicts with the regulations of HHS and Centers for Medicare and Medicaid Services; (3) is arbitrary and capricious because HHS failed to “articulate a satisfactory explanation for its action including a rational connection between facts found and the choice made”; and (4) cannot use the IRS’s non-binding 2004 notice to justify its decision. Therefore, the complaint asks the Court to invalidate the 2021 NBPP. The filed complaint can be found here.
In July 2023, HHS filed its response. In its response, HHS argues that its conduct was entirely permissible. HHS argues the 2021 NBPP is not contrary to the ACA because the ACA cost-sharing requirements only mandate plans count the amount a patient is “required” to pay for a prescription drug be counted towards their annual limits on cost-sharing. Thus, as the drug copay is reduced based on what the drug manufacturer copay assistance, this amount is not “required” of the individual. Further, HHS argues it was not required to determine if there was a conflict between the 2021 NBPP and the 2004 IRS guidance. Read the Government’s brief here.
Aimed Alliance and 28 other advocacy organizations also filed an amicus brief in this case explaining to the Court the impact of copay accumulators on patients, caregivers, and providers; and addressing the national health policy implications of the 2021 NBPP interpretation. Read the amicus brief here.
On September 29, 2023, the United States District Court for the District of Columbia held that the 2021 NBPP, which permitted the use of copay accumulators, would be set aside because it was arbitrary and capricious. In reaching this decision, the Court accepted the amicus brief filed by Aimed Alliance and fellow health policy and patient advocacy organizations explaining the impact of copay accumulators on patients.
The Court reasoned that the 2021 NBPP was arbitrary and capricious because HHS permitted two distinct interpretations of the same statutory text, and while HHS may interpret a text with some ambiguity, it may not interpret the same piece of text to have contradictory meanings.
When determining if the statutory definition of cost-sharing includes manufacturer copay assistance, the Court used the traditional canons of statutory interpretation, which include interpreting the text in light of its “plain meaning at the time of enactment.” The Court reasoned that the statutory text does not include any definition of cost-sharing as it relates to manufacturer copay assistance. However, the Court recognized it lacked the authority to pick a definition and thereby determine whether manufacturer copay assistance was intended to count towards “cost-sharing.” As such, the Court remanded the matter to HHS to decide whether manufacturer copay assistance is part of the statutory definition of “cost-sharing.” Read the full decision here.
On November 27, 2023, HHS filed a motion to clarify the scope of the District Court’s order. Subsequently, on November 28, 2023, HHS filed a notice of appeal to the D.C. Circuit Court of Appeals. In the motion, HHS expressed its intension to draft a new rule addressing whether financial assistance from drug manufacturers to patients qualifies as “cost sharing” under the ACA. However, during this period, HHS clarified that it had no plans to take enforcement action against issuers or plans.
Current Status: As of January 16, 2024, HHS has withdrawn its appeal of the District Court decision to set aside the 2021 NBPP. Advocates interpret this move as a positive signal, hoping it signifies the government’s commitment to enforcing the 2020 policy that prohibited the use of accumulators for brand drugs without generic equivalents.
Impact: All 2024 health plans are prohibited from using a copay accumulators unless it is for a brand name medication that has a medically appropriate generical alternative available. This is the current law under the 2020 NBPP.
Last Updated on January 26, 2024 by Aimed Alliance
