Tennessee and Connecticut Become the Latest States to Target Accumulator Adjustment Programs

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In just the last few weeks, Tennessee and Connecticut joined the growing list of states to pass legislation banning the use of accumulator adjustment programs. As my colleague Erik explained earlier this month, manufacturers often provide cost sharing assistance programs to help patients afford certain high-cost specialty drugs. Insurers have in turn implemented “accumulator adjustment programs” that seek to reverse the impact of these programs by not counting the amounts provided by the manufacturer in calculating the patient’s annual out-of-pocket limit. In response, manufacturers and patient advocates have pursued state and federal legislative strategies to prohibit or significantly weaken this practice, arguing that these programs result in patients paying higher out-of-pocket costs for specialty medications.

Tennessee’s bill, signed into law by Governor Bill Lee on May 12, requires insurers calculating the enrollee’s cost-sharing contribution to include cost sharing amounts paid on behalf of the enrollee for all health care items or services, including prescription drugs. This requirement will not apply if the prescription drug has a generic equivalent, unless the patient has exhausted certain utilization management requirements, such as prior authorization or step therapy protocols. The law becomes effective on July 1, 2021.

Connecticut’s bill, signed into law by Governor Ned Lamont on June 2, provides that a payer or pharmacy benefit manager (PBM) must give credit for any discount provided or payment made by a third party for the amount of, or any portion of, the out-of-pocket expense for the covered benefit. The bill’s requirement applies to all covered benefits, and does not distinguish between drugs with or without generics or biosimilars. Connecticut’s bill applies to all health insurance policies issued, renewed, amended or continued on or after January 1, 2022.

Tennessee and Connecticut now make 10 states that have enacted legislation barring accumulator adjustment programs. They join Arkansas, Arizona, Kentucky, Georgia, Illinois, Oklahoma, Virginia and West Virginia, as well as Puerto Rico. Similar anti-accumulator bills are still pending in various states across the country. We will be keeping an eye on these bills and will provide updates on any developments as they come.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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