June 14, 2021

Volume XI, Number 165

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June 14, 2021

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HHS Gives New Guidance on Drug Manufacturer Coupons and Out-of-Pocket Maximums

Background

In April 2019, the Department of Health and Human Services (HHS) released guidance indicating that a health plan must include the value of financial assistance received from a drug manufacturer (often referred to as a “coupon” or “copay card”) when calculating a member’s annual out-of-pocket maximum if the coupon was used to purchase a specialty drug that had no generic equivalent available. In response to industry concerns over this rule and its impact on programs developed and utilized by pharmacy benefit managers (PBMs) to exclude such coupons from members’ cost-sharing amounts (e.g., out-of-pocket maximums, copays, and deductibles), HHS, the Internal Revenue Service, and the Department of Labor issued joint guidance in August 2019 (discussed here), providing that the new rule developed by HHS would not be enforced for the 2020 calendar year. The joint guidance also stated that HHS would revisit this subject and issue new guidance that would apply for 2021 and beyond.

Legal Development

 In a proposed rule recently issued by HHS (available here), which would apply beginning in 2021, HHS appears to have backed away from its prior position. Specifically, HHS has now proposed that group health plans be permitted, but not required, to count the value of drug manufacturer coupons toward members’ annual cost-sharing limits. If the proposed rule is finalized, health plans and PBMs would be able to continue to utilize any current practices of excluding drug manufacturer coupons from members’ annual cost-sharing amounts (sometimes referred to as “copay accumulator programs” or “copay optimization programs”) in 2021 and beyond.

Note, however, that some states (e.g., Virginia and West Virginia) have passed insurance laws that require that the value of drug manufacturer coupons be credited to a member’s annual cost-sharing amounts in certain circumstances. While these state laws would not apply to self-funded group health plans, sponsors of fully insured group health plans and insurance carriers should be cognizant of any such restrictions imposed by state law.

Takeaway Message

For the remainder of 2020, health plans may continue to exclude the value of drug manufacturer coupons from a member’s annual cost-sharing amounts. While nothing is finalized yet for 2021 and beyond, we expect that the recent rule proposed by HHS will be adopted in final form without many changes (and that, as a result, health plans would be permitted to continue to exclude drug manufacturer coupons from annual cost-sharing amounts in all cases). Please stay tuned for future developments.

© 2021 Foley & Lardner LLPNational Law Review, Volume X, Number 62
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About this Author

Jessica Simons, Foley Lardner Law Firm, Milwaukee, Labor and Employment Law Attorney
Associate

Jessica M. Simons is an associate and business lawyer with Foley & Lardner LLP. Her practice focuses on advising clients on all aspects of employee benefits, including retirement and welfare plans. She is a member of the firm's Employee Benefits & Executive Compensation Practice.

Prior to joining Foley, Jessica was a labor and employment associate at a prominent Milwaukee-based law firm, where she also served as a summer associate, and was an employee benefits research assistant at Marquette University Law School. While in law school,...

414-297-5199
Nick J. Welle, Foley, Employment Benefits Lawyer, qualified retirement plans attorney
Senior Counsel

Nick Welle is an associate and business lawyer with Foley & Lardner LLP. His practice is focused on health and welfare plans. He also assists clients with qualified retirement plans, including defined benefit and defined contribution plans.

Mr. Welle advises employers, insurers, and brokers concerning the federal laws governing health and welfare plans, including the Affordable Care Act (ACA), Employee Retirement Income Security Act (ERISA), Internal Revenue Code (Code), Health Information Portability and Accountability Act (HIPAA), Mental...

414-319-7185
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