Alternative Funding Programs Present Stakeholder Challenges

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Increased use of alternative funding programs has introduced new access challenges for patients, plans, and manufacturers for specialty therapies.

As copay adjustment programs have received increasing stakeholder scrutiny in recent years, a new type of program to limit plan sponsors’ financial exposure to specialty drugs has emerged: alternative funding programs (AFPs). These programs operate in agreement on behalf of plan sponsors and pharmacy benefit managers to “carve out” certain specialty products from a beneficiary’s prescription drug benefit. AFPs then coordinate the enrollment of patients taking these products into the specialty product manufacturer’s foundation or patient assistance program (PAP). While manufacturers’ PAPs and foundations are not interchangeable, both types of programs are designed to provide free product support for patients with financial need—typically patients who are uninsured and sometimes underinsured (e.g., patients with insurance who have significant financial affordability burdens).

AFPs may create challenges and delays for patients starting or staying on therapy due to the PAP’s enrollment processes and timelines. Like copay adjustment programs, AFPs may also prevent patients from moving through their insurance out-of-pocket (OOP) requirements (e.g., deductible, OOP maximum) in the way they would have if the product had been included in their insurer’s prescription drug benefit.

Several manufacturers have acted to mitigate the risk of being targeted by AFPs by updating the eligibility criteria or terms and conditions for their free product offerings (e.g., prohibiting any patients with insurance from receiving free product support). While such program changes may prevent AFPs from moving patients into manufacturer foundations or PAPs, the program and eligibility changes may limit or change access for patients who previously had access to this support. In May 2023, the first lawsuit from a manufacturer against an AFP vendor was filed, claiming the vendor was operating a “fraudulent and deceptive scheme to enrich itself” at the expense of the manufacturer and its patients.

Policy Impacts on Patient Support Programs

Beyond the market dynamics of AFPs, the design and implementation of patient affordability programs (particularly PAPs and foundations) are of particular importance given recent policy developments. Beginning in 2024, the Inflation Reduction Act will implement a new maximum OOP cap for beneficiaries enrolled in Medicare Part D  (estimated at around $3,200 in 2024 and established at $2,000 in 2025). These changes will require manufacturers and foundations to assess charitable giving strategies and program implementation in the future. Also, in the immediate term, up to 9.5 million individuals may be disenrolled from Medicaid coverage as states redetermine eligibility and enrollment following the conclusion of the public health emergency. These individuals may move into other insurance markets (e.g., exchange plans) or else lack insurance, which may introduce new needs and enrollment into manufacturer PAPs and foundations.

It is unclear whether Congress or state lawmakers will address AFP use, as federal oversight on these initiatives has been limited to date. However, bipartisan momentum to lower the cost of healthcare for patients exists. For example, several members of the House of Representatives recently published a letter calling on Congress to regulate AFPs. Further, Congress is considering levying greater oversight around pharmacy benefit managers (PBMs) business practices. One bill, the PBM Reform Act, has language that mandates PBMs disclose the total value of copay assistance given in a plan year.

Learn More

With expertise in patient support programs and experience from the manufacturer, patient services vendor, and advocacy perspectives, Avalere assists clients in understanding emerging issues related to patient support by modeling the impacts of policy changes and identifying solutions for maximizing patient access. To learn how Avalere can help your organization respond to or shape the evolving patient assistance landscape, connect with us.

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