Yet despite their simplicity, offset programs can be costly to drugmakers, with spending likely to surpass $3 billion this year. It is thus surprising how few companies have conducted a rigorous analysis of the return on this investment, particularly in brand adherence, or on the larger impact on patients over time. As copay offset programs expand and more companies enter the space, it is critical to step back and pose a few tough questions in return. For instance, what is the real, long term value of these offset programs—i.e., when, where, and for how long should they be used?
While offset programs look to be a quick, reasonably cost-effective way to cement patient loyalty, lowering out of pocket costs to a manageable $20 or $25 per scrip, there are many pitfalls. These range from implementing a "one-size-fits-all" solution, including every patient as an eligible (much as occurs in a free sample program), to simply bundling offsets with other elements of a larger direct marketing campaign. Over time, this can actually diminish the value of the brand at peak stages of the product life cycle, while wasting scarce resources that could be better spent through more targeted initiatives aimed at specific patient sub-classes.If the bottom line in brand marketing is to increase patient and provider uptake of a medicine, then subsidized copay offsets are not always the optimal approach, as confirmed by the following caveats:
1. Not every patient is eligible (copay offsets are an illegal inducement for Medicare Part D beneficiaries)
2. Many who elect to use the cards won't get much value—perhaps under $5
3. Many who do use them and extract high value would have filled the scrip anyway
4. Those who grow accustomed to the lower cost will face a copay "sticker shock" when faced with withdrawal of the benefit.
The irony is that over the last 15 years, pharmaceutical manufacturers have become highly sophisticated in their approach to institutional discounts, offering up incentives in the form of rebates to managed care companies and PBMs. The rationale for maintaining access in a world of progressively higher copays on expensive Tier 2 and 3 classified products is self-evident, and there are metrics to measure that. The precedent exists to do the same by building more analytical controls around the task of easing the patient burden through the copay offset.
A few industry players are creating a set of "first principles" for copay offset programs, covering design, deployment, and monitoring issues. New data, widely purchased by the industry but not yet well understood by senior management, can inform the development of clear answers to these "how much, how long, and where" questions, and dramatically improve the investment return on this promotional strategy.
More importantly, these principles, combined with appropriate forethought and data analysis, can help minimize potential damage to a brand's value from indiscriminate spending. It is great to change the trend line, but first, brand managers must make sure that they do no harm to their brand franchise.