On May 17, 2022, the U.S. district court for the District of Columbia granted the Pharmaceutical Research and Manufacturers of America (PhRMA)’s motion for summary judgement and thereby vacated the patient assistance penalty provision in the accumulator adjustment rule of 2020 (WHG summary of the rule here).
The issue in contention was the finalized provision in which the Centers for Medicare & Medicaid Services (CMS) established that manufacturers would be required, beginning January 1, 2023, to ensure the full value of manufacturer-provided financial assistance is passed on to the consumer or patient for any financial assistance to an insured patient to not count toward the “best price.” As the court noted, health insurers sometimes “pocket for themselves at least some of the assistance” through accumulator adjustor programs, which prevent manufacturer assistance from counting toward an insured patient’s annual deductible.
The court is vacating the rule on grounds that the final rule violates the underlying statute that governs Medicaid drug rebates. Specifically, statute defines best price as the “lowest price available from the manufacturer…to any [best-price eligible purchaser],” which includes wholesalers, retailers, providers, health maintenance organizations, nonprofit entities, or governmental entities within the U.S. Importantly, a best-price eligible purchaser does not include patients, as the court notes.
From this, the court determines that a manufacturer’s financial assistance to a patient, in the context of an accumulator adjustment program, cannot count as the lowest price available from the manufacturer to any best price-eligible purchaser (i.e., because a patient is not such a purchaser). Because, under the final rule, manufacturer-provided financial assistance could count towards best price if a manufacturer does not ensure the full value of the assistance is passed on to the consumer, the rule is in violation of how best price is defined in statute (again, because a patient is not a best price-eligible purchaser). In other words, the court determines the rule would consider financial assistance from manufacturers to patients as a “price” in the context of an accumulator program.
The court also notes that the final rule presents substantial feasibility challenges upon drug manufacturers, who would have to conduct “transaction-by-transaction investigations into the operations of accumulator adjustment programs even though manufacturers have no control over (and sometimes no information concerning) those programs.” The court continues that “such a requirement makes it infeasible for manufacturers to report the best price to the agency in a timely fashion as the statute requires.”
CMS may move to challenge this court’s ruling, though the agency’s immediate next steps are presently unknown. PhRMA applauded the decision and stated it will continue working with policymakers to lower patient out-of-pocket costs.