District Court Vacates Drug Manufacturer Assistance Rule

Generally, “manufacturer assistance” is any financial support for patients to pay for specific prescription drugs. Subsidies like these are common, but they also give rise to the question of how they should count toward plan cost-sharing limits.

For instance, a patient may have a $20 manufacturer coupon for a drug for which the patient is usually responsible for a $50 copayment under their plan. If the patient then presents the coupon at a pharmacy, they can purchase that drug for just $30 since the pharmacy will bill the drug manufacturer for the $20 difference.

Assume the patient in the above example was covered by a self-only plan with a cost-sharing limit of $9,100, which would be the maximum allowable under the ACA for 2023. Should that patient be credited $50 toward that limit with that drug purchase since that was their copayment, or just $30 since that was the amount they actually paid?

In its Notice of Benefit and Payment Parameters for 2020, the agencies determined that health plans were not required to count drug manufacturer coupons toward the annual limit on cost-sharing when a medically appropriate generic equivalent was otherwise available. The agencies removed the generic equivalent condition in 2021, however, to address concerns that the 2020 rule conflicted with IRS HDHP rules, under which only amounts actually paid by the individual may be taken into account when determining whether the HDHP deductible is satisfied.

Using the above example, the 2020 rules would not have required the patient’s plan to credit the entire $50 (the $30 the patient paid plus the manufacturer’s $20 coupon) toward the patient’s cost-share so long as an appropriate generic equivalent was otherwise available to the patient. In contrast, under the 2021 rule, the plan could credit the patient with either $30 or $50 at its discretion, regardless of whether a generic equivalent was otherwise available.

The court determined that this broad discretion rendered the 2021 rule arbitrary and capricious. Accordingly, the court vacated the rule and directed the agencies to provide an interpretation of the statutory definition of cost-sharing rather than delegating that task to the parties the agencies were supposed to be regulating.

The ruling has renewed the conflict between the ACA’s cost-sharing rules and the IRS HDHP rules that the agencies’ 2021 rule had sought to resolve. The agencies must now follow the court’s directive to provide a single interpretation of the ACA’s cost-sharing provisions as applied to drug manufacturer assistance to patients. Employers that sponsor prescription drug plans should be aware of this ruling and monitor for further developments.

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