Pharmacy Benefit Managers (PBMs) — health insurance middle-men wedged between plan managers, drug manufacturers, patients and pharmacies — are pushing a new payment scheme called accumulator adjustment programs (AAPs) that could increase out‐of‐pocket costs for patients and substantially raise annual health-care costs for American consumers.
In October, we wrote “in this absence of true market competition, PBMs can practically choose how much to profit on the backs of consumers.” AAPs are just another example of how PBMs profit from business practices that harm consumers. Worse, the programs will hurt the most vulnerable patients most.
Here’s how it works.
To ensure these medicines are affordable, drug manufacturers provide coupons patients apply at the pharmacy counter to significantly lower their out-of-pocket costs. Traditionally, insurers and PBMs counted the value of manufacturer coupons towards a patient’s deductible.
Unfortunately, PBMs are pushing insurers and large employers to adopt accumulator adjustment programs that prevent the full out‐of‐pocket cost of certain medications from counting towards a patient’s annual deductible. Under these programs, only the amount a patient pays at the pharmacy counter — after a manufacturer coupon has lowered the patient’s cost sharing — will count towards their deductible.
So, for example, if a patient faces $2,000 of cost sharing in the deductible for a certain medicine but pays only $100 after the manufacturer coupon, PBMs would only count $100 of cost sharing towards the patient’s annual deductible instead of the original drug price of $2,000.
In the past, a combination of patient payments and manufacturer coupons would lead to patients meeting their annual deductible early in the year. However, the new payment structure created by accumulator adjustment programs could hinder a patient’s ability to meet their annual deductible with copay assistance, causing patients to pay significantly more out-of-pocket each year.
In fact, patients could face thousands of dollars in increased costs. A 2018 Kaiser Family Foundation report found that the average deductible for individuals in a silver plan — the second most modest plan — is a startling $4,034.This increase in costs will have significant consequences for consumers and the overall economy.
For instance, if patients can no longer afford the medicines they need, they are more likely to stop purchasing them. Without proper treatment, patients will stay sicker, longer, potentially threatening their ability to work. Furthermore, a reduction in adherence to drug regimens for patients with chronic conditions could raise costs across the entire health-care system and may result in additional costs to American taxpayers.
This is unacceptable. Health-care reform based on free market principles — including access to information and accountability to consumers — are necessary to help ensure that health insurers and PMBs can’t take advantage of vulnerable patients, slyly lining their pockets by increasing out-of-pocket costs for consumers.
Every American should ask their insurer or their company’s human resources department whether they have adopted or plan to adopt an accumulator adjustment program. If so, they should fight back.
Matthew Kandrach is President of Consumer Action for a Strong Economy (CASE), a free-market oriented consumer advocacy organization.