The U.S. Department of Health and Human Services (HHS) recently finalized its rule regarding amounts paid by drug manufacturers towards annual limits on cost sharing (84 Fed. Reg. 17454, 17545 (Apr. 25, 2019)). Read alongside commentary in the Federal Register, the final rule may pose a threat to specialty drug copay accumulation programs. We encourage employers and plan sponsors to engage with their internal/external legal counsel to review how this regulation may impact their plans.

On its face, the rule is straightforward in allowing insurers to exclude the value of drug manufacturer coupons from a plan participant’s annual cost sharing limit. Less obvious is the rule’s negative implication that the exclusion of manufacturer coupons is prohibited in certain situations. Specifically, the final rule attempts to clarify that copay accumulation programs are prohibited if a generic equivalent is not available or is not medically appropriate.

Though not explicit in the rule itself, the commentary preceding the rule reveals HHS’s intent to prohibit programs that exclude copay assistance from a member’s deductible and out-of-pocket maximum unless a generic equivalent is “available” and “medically appropriate.” The commentary explains that by adding these two qualifying terms, it clarifies that when a generic equivalent is unavailable or medically inappropriate, plans must include the value of manufacturer coupons toward an individual’s cost sharing limits.

While the text of the final rule is binding, commentary accompanying the rule in the Federal Register is advisory. This distinction creates a grey area in interpreting the final rule. Because most specialty drugs do not have a generic equivalent that is available and appropriate, specialty drug copay accumulation programs may be inconsistent with the final regulation.

Though HHS’s intent is clear in the commentary, the application of this law is uncertain. Employers and plan sponsors affected by this regulation should discuss this rule’s application with their internal/external counsel prior to making a decision regarding these programs.


Madison Evans, J.D., CEBS

Madison Evans, J.D., CEBS

Associate Counsel

In her role as associate counsel, Madison is responsible for performing corporate legal functions and contracting, legal research related to new and ongoing group purchasing programs and supporting fee-based consulting projects.