The Trump Administration Must Close an Insurance & Middleman Loophole to Protect Patients from Rising Drug Costs
American patients continue to face the burden of rising costs for their prescription medications while health plans and middlemen reap the financial benefits of greedy schemes. But there’s a simple solution that will ensure patients can afford their medications.
The Department of Labor must work with the Departments of Treasury and Health and Human Services (HHS) to issue a long-promised regulation to expand cost-sharing protections to all Americans, ensuring patients can access and afford the medications they need.
Understanding the Problem
The Essential Health Benefits (EHBs) are a set of 10 categories of critical health services that insurance plans are required to cover under federal law. One of the EHB categories is prescription drugs. Unfortunately, some health insurers and pharmacy benefit managers (PBMs) have exploited a loophole in federal law to reclassify certain prescription drugs – often specialty drugs – as “non-essential.”
As a result of the “EHB loophole”, these “non-essential” prescription drugs are exempted from cost-sharing requirements and patient affordability protections. This means that assistance meant for patients for these drugs DOES NOT COUNT toward their out-of-pocket cost limitations, which helps to ensure they can access their prescriptions and care.
How This Loophole Harms American Patients
Greedy PBMs, insurers, and third-party vendors are using the EHB loophole to exploit American patients and drug manufacturers’ copay assistance programs meant for patients for their own financial gain. In 2023, insurers and PBMs siphoned $4.8 billion in copay assistance through the EHB loophole scheme and another harmful practice. When health plans and middlemen use the EHB loophole, patients are left facing rising out-of-pocket costs for their specialty, sometimes life-saving medications. Many of these medications do not have a generic alternative available to patients.
Protections that were supposed to improve access and affordability are falling short for those who need them most. American patients lose. Insurers and PBMs increase their profits.
A Solution That Puts American Patients First
The Trump Administration can end the EHB loophole.
Last year, the Centers for Medicare & Medicaid Services (CMS) finalized a rule that protects patients with individual or small group health plans from the EHB loophole.
But current regulation does not protect patients with large group or self-insured health plans – meaning that patients across the country are still at risk of these middleman practices.
The National Psoriasis Foundation (NPF) urges the Department of Labor, along with Treasury and HHS, to promptly issue regulation to close the EHB loophole for all Americans.
This rulemaking should clarify that essential prescription drugs are considered an Essential Health Benefit. This change will ensure that all patients, regardless of their insurance coverage, have access to affordable and life-saving treatments.
What Others Are Saying:
“We strongly support that HHS will further address the EHB loophole in a forthcoming rule with Labor and Treasury Departments that will ensure this rule applies to all non-grandfathered health insurance plans.” – All Copays Count Coalition
“We urge you to issue a promised rule to close the Essential Health Benefits (EHB) loophole. By doing so you will end a scheme that insurers, pharmacy benefit managers (PBMs), and unscrupulous third-party vendors use to exploit drug manufacturer copay assistance programs meant for patients for their own financial gain.” – HIV+Hepatitis Policy Institute and 79 Organizations
“What does this look like in practice? A patient may spend money on lifesaving medications that don’t count toward their out-of-pocket maximum. All year, a patient could pay out-of-pocket for prescriptions but never reach their maximum and see their insurance kick in. This saves a few bucks for insurers and PBMs but imposes massive financial burdens for patients who would otherwise be protected under the ACA. The EHB loophole forces patients to pay more out-of-pocket, a situation that circumvents the original intent of the law — which, as a reminder, is to keep drug costs affordable for consumers.” – Sally Greenberg, Executive Director, National Consumers League (NCL)
"The Trump Administration must act to protect Americans from this deceptive insurer and PBM practice that leads to skyrocketing out of pocket costs. If this loophole is closed, patients like me could see thousands of dollars returned to our pockets each year. Washington has an opportunity to help patients across the country, and it involves acting quickly to close the EHB loophole in federal law that allows this to happen." – Larry Bahr, psoriasis patient and volunteer for the National Psoriasis Foundation (NPF)