September 20, 2024
Alternate Funding Programs, such as copay assistance programs (CAPs), are offered by manufacturers on some brand name medications to lower patients’ out-of-pocket costs. While the focus is on removing barriers, if not managed, these programs can circumvent the formulary and the plan design’s ability to steer members toward lower cost and effective therapies. In response, Pharmacy Benefit Managers (PBM) have developed programs that plan sponsors can opt into. PBMs either manage their own programs or outsource all or a portion of their programs.
One such program is manufacturer copay assistance programs. CAPs are non-need-based programs for those on commercial or private insurance. They offer utilizers funding to access expensive prescription drugs by covering all or part of the cost of the medications. These programs are available for PPO and HDHP plan types. PBMs may offer CAP-focused programs on specialty and/or non-specialty medications and may require certain pharmacies, often owned by the PBM, for member enrollment. PBMs charge a fee to administer these programs usually in the form of a percent of shared savings. Based on the PBM’s program design there is the potential for mis-aligned incentives that plan sponsors need to assess.
PBMs typically manage CAP in two ways: accumulator programs and/or variable copay programs.
Accumulator Programs
Accumulator programs ensure that the dollars paid by the manufacturer CAP do not accumulate to a member’s deductible or out-of-pocket maximums. Without an accumulator program, there is the potential for a higher cost brand name product to be used with a manufacturer copay assistance card, leading to a higher cost for plan sponsors. Not only do plan sponsors end up paying more for that branded product in situations where a generic alternative is available, they may face increasing costs from deductibles and out of pocket being met in a way that doesn’t align with the plan’s intended design.
Variable Copay Programs
Variable copay programs (also referred to as maximizer programs) are a type of CAP where the PBM uses the manufacturer copay assistance dollars to benefit both the plan and the member. The PBM will adjust the prescription processing in their system to utilize as much of the manufacturer copay assistance dollars as they can to lower the plan cost.
Are CAPs right for my plan?
Are these programs best for your plan and your members? That’s where Innovative Rx Strategies comes in. Careful review must be given to how the program is managed, fees are assessed and copays apply to plan parameters. If not implemented correctly or with a clear understanding of the specific PBM’s program design, these programs may end up costing the plan money.
Ensuring that PBM programs align with the plan sponsor’s goals and philosophies are just one of the many ways that Innovative Rx Strategies supports our clients. If you would like to take a deeper dive into the world of PBMS and how misaligned incentives can impact plan sponsors bottom line, check out our upcoming PBM 101 webinar by following the link below.
