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CMS Addresses Drug Manufacturer Coupons in Proposed 2020 Payment Notice

On January 24, 2019, CMS published its annual Notice of Benefit and Payment Parameters for 2020 ("Proposed 2020 Payment Notice") proposing parameters applicable to qualified health plans (QHPs) on the Exchanges for plan years beginning January 1, 2020.  Among several other proposals, CMS is proposing that issuers be permitted to exclude drug manufacturer coupons for prescription brand drugs that have a generic equivalent from counting toward patients’ annual limit on cost-sharing.  

Currently, the amount that patients save using drug manufacturer coupons goes toward their annual cost-sharing maximum.  However, in the Proposed 2020 Payment Notice, CMS states that drug manufacturer coupons can cause prescribing physicians and beneficiaries to choose expensive brand-name drugs over less expensive generics.  In addition, CMS expresses concern that, by reducing patients’ copayment obligations, drug manufacturer coupons relieve manufacturers of market constraints on drug prices, distorting the market.

CMS is seeking comments on this proposal, specifically on:

  • whether states should be able to decide how coupons are treated;
  • whether it would be difficult for issuers to carve out manufacturer coupons from their cost-sharing calculations;
  • whether it would be difficult for issuers to account for exceptions (e.g. when a generic equivalent is not available);
  • issuers’ ability to differentiate between drug manufacturer coupons and other drug coupons;
  • how drug discount programs should be treated under this proposal;
  • whether issuers’ information technology systems could be easily updated for this purpose; and
  • whether this policy should be limited to QHPs only.

Comments must be received no later than 5pm on February 19, 2019.

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Rachel Yount is a Mintz attorney who focuses her practice on health care industry transactions. Her clients include hospitals, health systems and plans, physician organizations, and pharmacy benefit managers.