On average, Americans allocate over $1,000 annually per person for prescription medications, significantly exceeding spending in other comparable countries. A 2023 KFF survey indicates that 30% of adults on prescription drugs have not adhered to their prescribed medication due to financial constraints. Additionally, a 2023 KFF consumer survey revealed that nearly one-quarter (23%) of insured adults have faced issues with their health insurance not covering a prescribed medication or imposing very high copays, a figure that rises to over one-third (35%) among those in fair or poor physical health. Individuals requiring specialty or brand-name medications for chronic conditions such as diabetes, cancer, arthritis, and HIV are particularly at risk for high costs, especially amidst increasing deductibles over the years. Moreover, insurance plans are more inclined to utilize coinsurance (a percentage of the medication cost after meeting the deductible) rather than copayments (a fixed dollar amount) for expensive specialty drugs, which can lead to higher out-of-pocket expenses for enrollees.

As biologics and specialty drugs have become more accessible, many individuals relying on these costly medications receive financial aid from drug manufacturers to mitigate out-of-pocket expenses. For those with private insurance, this support can be quite beneficial when applied toward deductibles and out-of-pocket expenses; however, an increasing number of plans have instituted “copay adjustment programs” that exclude these contributions from counting toward enrollees’ out-of-pocket limits. This issue brief summarizes copay adjustment programs, presenting arguments for and against their implementation, their commonality, and ongoing federal and state initiatives to tackle these issues.

Key Takeaways

• A number of drug manufacturers distribute copay coupons for their high-cost medications (often specialty drugs) to promote their usage and reduce consumers’ out-of-pocket expenses. In response to concerns over these coupons affecting their benefit structures and escalating costs, some health plans have modified the way these coupons apply to enrollees’ out-of-pocket responsibilities, potentially placing patients in a challenging position.
• Copay accumulators allow the value of the manufacturer’s copay coupon to apply with each prescription fill; however, this value does not contribute toward the enrollee’s deductible or out-of-pocket maximum. Once the coupon is depleted, the enrollee becomes liable for meeting their deductible before any copayment and/or coinsurance applies, which can be considerable for such medications.
• The 2024 KFF Employer Health Benefits Survey indicated that nearly one in five (17%) large employer-sponsored health plans have implemented a copay accumulator program in their primary plan, with this figure rising to one-third (34%) among firms with 5,000 or more workers. Further analysis revealed that two-thirds (66%) of individual Marketplace plans sold in states lacking prohibitions against copay accumulator programs have embraced these mechanisms in 2024.
• With copay maximizers, insurers aim to capitalize on the savings from manufacturer coupons. Plans may re-categorize specific high-cost specialty medications to exempt them from the Affordable Care Act’s limits on patient cost-sharing. Consequently, copay coupons do not contribute toward the enrollee’s deductible or out-of-pocket maximum, and cost-sharing requirements are calibrated to align with the maximum coupon value, spread evenly throughout the year. Enrollees who opt into this program typically do not face immediate out-of-pocket costs, but those who opt out may incur significant obligations that do not contribute to their out-of-pocket limits.
• While comprehensive data on the prevalence of copay maximizers remains scarce, one study shows their usage has surged in recent years, with approximately half of commercially insured individuals exposed to such programs.
• Although federal regulations have not yet thoroughly addressed the implementation of copay adjustment programs, relevant legislation has been proposed, and 21 states plus Washington, DC have taken steps to mitigate this issue within state-regulated health plans.

An Overview of Manufacturer Copay Coupons

Numerous prescription drug manufacturers have launched copay assistance initiatives in the form of copay cards and coupons designed to alleviate immediate out-of-pocket expenses (deductibles, copays, and coinsurance) for brand-name, often specialty, prescription medications for insured individuals. Some branded drugs with available coupons also have generic alternatives. The structure of these copay coupons differs by manufacturer and medication. Some coupons cover a specific number of prescription refills or are valid for the entire duration a patient is prescribed the medication. Others impose a maximum annual value or a monthly cap or a combination of both. Some manufacturer copay programs may require a minor monthly contribution (such as $10) from patients towards the drug cost. Additionally, copay coupons can be allocated to patient deductibles and coinsurance payments.

Eligibility for these programs may depend on whether the patient’s health insurance includes a copay adjustment program (as discussed in the following section). Copay assistance programs are distinct from patient assistance programs (PAPs), which typically provide financial support to those who are uninsured or underinsured but meet certain income criteria. They are also different from drug discount cards available to any consumer that can offer discounts on medications from pharmacies.

Copay assistance is accessible for the vast majority of brand-name drugs, and this percentage has increased over time. In 2023, it was estimated that copay assistance was utilized for 19% of prescriptions for privately insured patients (notably higher in some therapy areas), totaling approximately $23 billion in value. Nearly one-third of brand commercial prescriptions in the top 10 therapy categories made use of manufacturer copay assistance that year.

The federal anti-kickback statute prohibits the offering of copay coupons for beneficiaries of federal healthcare programs, including Medicare and Medicaid, as these coupons may incentivize beneficiaries to select more costly drugs over cheaper equivalents, potentially leading to increased federal expenditure. Manufacturers often implement safeguards to comply with this regulation, including printed notices on coupons and verifications during the claims process. However, a 2014 study by the Office of the Inspector General of the Department of Health and Human Services indicated that these safeguards may not stop all copay coupons from being used for Medicare Part D drugs, largely due to the lack of transparency in the pharmacy claims process related to coupon usage.

In contrast, federal regulations applicable to private insurance, such as the Affordable Care Act (ACA), do not specifically address copay coupons. However, the ACA does establish annual limits on out-of-pocket cost-sharing for essential health benefits (EHBs), including prescription drugs, for consumers with private health insurance (see callout box). Two states (MA (until 2026) and CA)) have banned the usage of copay coupons in their private insurance markets if a generic equivalent exists, subject to certain exceptions.

How Do Manufacturer Copay Coupons Operate?

To illustrate how manufacturer copay coupons function in real-world scenarios, consider this hypothetical example featuring a patient with cystic fibrosis who requires a brand-name specialty medication priced at $2,000/month, with and without the utilization of a copay coupon (Refer to Table 1). Assume the patient has the following:

• $2,000 deductible that remains unmet,
• 25% coinsurance (equivalent to $500),
• $5,000 out-of-pocket (OOP) maximum, and
• A $6,000/year manufacturer copay coupon applied.

Without a copay coupon: The patient covers the complete medication cost in January, fulfilling her deductible. The insurance plan begins to cover the medication in February, at which point the patient pays her coinsurance. By July, she hits her OOP maximum ($5,000), and from then on, the plan fully covers her cystic fibrosis medication (as well as all other in-network covered services and medications) for the rest of the plan year.

With a copay coupon: The copay coupon is deducted from her deductible and coinsurance each month. In this case, her $5,000 OOP maximum is reached in July, meaning that although the coupon was valued at $6,000, the manufacturer contributes $1,000 less. Her health plan will subsequently cover the medication in full for the remainder of the year, meaning the patient incurs $0 costs for this medication throughout the plan year. The health plan receives no advantage from the copay coupon.

In both scenarios, the patient achieves her deductible and OOP maximum within the same month. The total out-of-pocket expenses remain identical in both cases; however, without a coupon, those expenses are shifted from the patient to the drug manufacturer.