New Challenges Faced by Charitable Copay Assistance Foundations

The global economic landscape has been ever shifting, with numerous macroeconomic challenges arising from various sources. For Charitable Copay Assistance Foundations that provide financial support to patients facing high out-of-pocket costs, rely heavily on funding from drug manufacturers and private donations to run their operations, these shifts have led to a myriad of obstacles. In recent times, rising inflation, staffing challenges and the variability of funding availability have severely impacted these organizations.  

1. Rising Inflation

Inflation erodes the purchasing power of money. For individuals and corporations, this means that the cost of living and operating businesses rises. For non-profits, it translates to:

• Decreased value of donations: As the value of money diminishes, so does the real value of donations. What may have been a substantial contribution last year might now fall short of covering the same operational costs.
• Increased operational costs: Rising prices for goods and services mean that non-profits have to allocate more funds for basic necessities, such as utilities, supplies and facilities.
• Budget constraints: With more funds going towards essential expenses, there's less room for covering medical costs for vulnerable populations, innovation or expansion.
• Increased out-of-pocket costs for patients: This economy and inflationary environment has created financial pressures, so patients are exploring plans with lower monthly premiums which come with higher deductibles and maximum out-of-pocket costs. This year, the average deductible for a silver plan (the most popular level of health plan for mid-range coverage) is $5,388 more than double the average deductible of $2,556 in 2015).
• Decreased supply: The Inflation Reduction Act may cause manufacturers to decrease the amount of philanthropic donations to foundations because of the changes to drug prices and structure of research and development.  

2. Staffing Challenges  

Human resources are the backbone of many non-profit foundations, and they are not immune to the challenges the current job market presents.

• Talent retention and recruitment: With sectors competing fiercely for talent, non-profits often find themselves unable to offer competitive salaries, especially amidst inflation. This can lead to a talent drain, where employees leave for better-paying opportunities.
• Volunteer burnout: Many non-profits rely heavily on volunteers. With economic pressures, these volunteers might be compelled to prioritize paid opportunities over volunteering, leading to a shortage of helping hands.
• Training costs: With a high turnover rate, non-profits might find themselves continually inducting and training new members, which is both time-consuming and costly.
• Longer wait times for application approvals: With staffing cuts, the ability to approve patient assistance applications can be further delayed and create a backlog, resulting in less patients being helped.

3. Variance of Funding Availability

The availability of funds for Charitable Copay Assistance Foundations is becoming increasingly unpredictable, mainly due to:

• Economic uncertainty: Economic downturns and market forces affecting drug manufacturers can lead to reduced philanthropy, as both individuals and corporations tighten their belts. Endowments or investment-based incomes for non-profits can also take a hit during these times.
• Shift in priorities: During crises, donors might redirect their funds to immediate relief efforts, sidelining other equally important causes.
• Competing causes: The sheer number of non-profits and the diversity of causes means there's fierce competition for a limited pool of donor funds.

Impact of Copay Maximizers and Accumulators

Accumulators prevent 3^rd party dollars (foundation or drug manufacturer programs) from counting towards a patient’s deductible and maximum out-of-pocket limit which enables plans to double dip on deductibles as rebate arrangements. This shrinks the dollars available because patients are utilizing more assistance given the initial assistance isn’t counting towards their deductible. Many 501(c)(3) non-profit and patient advocacy groups, as well as provider organizations, have advocated against accumulators. The advocacy effort has been effective and state legislators are passing bills banning the use of accumulator programs. As of July 2023, 19 states have banned this strategy for state-regulated health plans.

The largest impact to copay assistance programs has been copay maximizer programs which is a feature within a health insurance plan where drug manufacturer payments do not count toward the patient’s deductible and out-of-pocket maximum. With a copay maximizer program, health insurance plans set the patient’s copay to reflect the annual patient assistance available from the drug manufacturer. The net result is money from patient assistance programs is effectively utilized by the health plans rather than by patients and reduces the overall supply available in the market for patients in need. In 2023, we have seen some drug manufacturers modify their copay program eligibility criteria and exclude patients whose commercial insurance plan includes a copay maximizer program which accounts for 76% of plans.

Patients often don’t know where to turn to be able to afford their medication. Charitable Copay Assistance Foundations can play an important role since they don’t have as many limitations on the patient assistance they can provide when patients are in a copay accumulator or maximizer program. However, it’s challenging for providers to access these foundations since there are thousands and searching for them is a very manual process.  

A key step for providers in accessing these foundations is to utilize technology that actively searches for these foundations, checks the status of funding availability and automatically matches patients to the best program for their needs.