How do patient assistance programs work? The pros and cons of prescription coupons and more.

In the search to lower out-of-pocket costs for prescription drugs, consumers will encounter a number of different coupons, discounts and assistance programs available to them.

They don't all work the same way and can have fine print that impacts insurance deductibles and other costs.

So it's important to understand the differences between retail coupons, manufacturer coupons and patient assistance programs, as well as how copay accumulators and maximizers work.

Here's a rundown of all those terms:

How do prescription coupons and drug discount programs work?

You may have seen advertisements for Walgreens' Prescription Savings Club where most generic medications are $5 a month, or for websites like WellRx and GoodRx which promise up to 80% savings on your prescriptions.

These retail discount programs are ways for people who are paying cash for their prescriptions to save off the normal retail total.

You'll note they have fine print at the bottom that says, "Cannot be combined with any form of insurance."

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"GoodRx-type programs exist for individuals who want to pay cash for their medicines instead of using their insurance benefit or uninsured individuals," said Robert Popovian, chief science officer of the Global Healthy Living Foundation, which advocates for people with arthritis and other chronic illnesses.

In many cases, insured individuals might find these discounts are a better deal than the out-of-pocket cost they would incur using their insurance benefit, he said.

Because you're paying cash and not running your insurance card at the pharmacy, these prescription purchases won't count toward any deductible you have or out-of-pocket maximums.

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But retailers tout these coupons as a way to get many common medications for very cheap and without all the hassles of insurance.

For people on high-priced or specialty drugs, these coupons probably won't offer much savings. For example, a search on GoodRx for the blood thinner Eliquis, which retails for nearly $650 will show it is priced at more than $500.

For those patients, manufacturer copay coupons or patient assistance programs are available.

How do manufacturer co-pay coupons work?

Manufacturer coupons are used in conjunction with your health insurance. The drugmaker charges your health plan its normal portion of the drug cost, but the patient doesn't pay their normal co-pay share.

These coupons have limitations to be aware of including cost caps and time limits.

For example, a coupon may say you'll only pay $10 per month for your co-pay, but the total value is capped at $5,000. If your medication normally costs $7,500 a year, you'll be back to paying the normal, higher co-pay before the end of the year.

Other coupons might be good for six months and then run out. And some, but not all, are one-time use. Meaning you can use them for one year, but then you can't get another coupon the next year.

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Anti-kickback laws make it illegal for pharmaceutical companies to offer discounts for medications that will be paid for by the federal government. So those on Medicare and Tricare, for example, cannot use these types of coupons.

Beneficiaries of government insurance must decide if they want to use their drug plan or a discount coupon when purchasing a drug. One or the other may be cheaper but going outside the plan means any money spent doesn't count toward their out-of-pocket totals.

Popovian recommends Part D patients that require assistance with their out-of-pocket costs reach out to foundations such as Patient Advocate Foundation that have programs that support seniors.

How do drug manufacturer patient assistance programs work?

In addition to copay coupons, manufacturers of expensive, specialty drugs offer patient assistance programs that help uninsured or underinsured people get free or very low-cost prescriptions.

These programs are generally administered through independent charitable organizations or by foundations established by drug manufacturers.

People typically need to seek out these programs by searching on the drug manufacturer's website, searching for nonprofits that offer assistance to those with their condition, or going to a site like NeedyMeds, which maintains information on more than 40,000 assistance programs.

They then have to apply for the program, showing proof of income if there is a restriction on the assistance, or showing proof that they have no insurance or their insurance doesn't cover the drug they take.

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Popovian said these programs used to be harder to qualify for because they were basically only for the uninsured, but the requirements are much more liberal now.

Patient assistance programs can give money to those on Medicare if they operate outside of the Part D benefit, according to the Centers for Medicare & Medicaid Services.

For the patient that means the money they receive doesn't apply toward their "true-out-of-pocket cost," which is important for determining whether an individual has reached the threshold for catastrophic coverage.

If a Medicare beneficiary is taking a high-priced drug and the patient assistance program doesn't cover the full cost, they'll still need to hit the $7,050 out-of-pocket limit each year before Medicare starts full coverage of their drugs.

Drugmakers aren't the only ones that provide copay money or other assistance with drug costs. Nonprofits including the HealthWell Foundation, Good Days, and the Patient Access Network Foundation offer assistance.

What are copay accumulators and maximizers?

Throwing a new wrench in the patient assistance landscape, insurers began in 2017 to implement rules which say that any assistance money you receive no longer counts toward your deductible or out-of-pocket totals, said Kollet Koulianos, vice president of payer relations for the National Hemophilia Foundation.

These programs are called copay accumulators or copay maximizers.

In the past, even if the patient was only paying $10 each month for their prescription, the full amount of the drug cost was applied to their deductible, so if the assistance ran out after six months, they weren't hit with a huge out-of-pocket requirement for their next refill.

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With a copay accumulator someone with a $5,000 deductible who is using a copay coupon or patient assistance will still owe that full deductible if the assistance money runs out late in the year, Koulianos said.

A copay maximizer program is similar, but the total value of the coupon is spread out evenly throughout the year, eliminating or greatly reducing the out-of-pocket cost for the prescription to the patient. However, the patient still owes their deductible if they incur any other medical expenses throughout the year.

The Crohn's and Colitis Foundation published a graphic showing how patients end up paying more out of pocket for their meds when an accumulator program is in place. Since these are patients who have requested assistance with their costs, it can come as a shock to have to suddenly fork over hundreds or thousands of dollars, the foundation said.

In a 2020 blog post, pharmaceutical industry expert and CEO of Drug Channels Institute Adam Fein points out that accumulator and maximizer programs are run by separate companies set up by pharmacy benefit managers: PrudentRx is run by CVS Health’s Caremark and SaveonSP by Express Scripts.

These companies keep up to 25% of the money that a manufacturer has set aside for patient support, Fein said in his post.

In August, the HIV+Hepatitis Policy Institute, the Diabetes Leadership Council, and the Diabetes Patient Advocacy Coalition filed a lawsuit challenging the federal rule that allows copay accumulators.

Lawmakers in 14 states and Puerto Rico have outlawed accumulator programs, but those laws only apply to small group plans and marketplace plans because large group plans and self-funded employer plans are governed by the federal Employee Retirement Income Security Act of 1974 and not state laws.

A proposed federal ban on copay accumulators, called the Help Ensure Lower Patient Copays Act, was introduced in the House last year.

This article originally appeared on USA TODAY: Patient assistance programs: What to know about drug coupons and more