First, Do No Harm... - Pharmaceutical Executive


First, Do No Harm...

Pharmaceutical Executive

Keys to Successful Offsets

The key to minimizing harm and maximizing return on copay offset programs lies in three basic principles. These are grounded in the ability of manufacturers to tap new streams of data that allow them to allocate and measure their direct-to-patient investments, on a timely basis.

Principle One—Offset programs should be designed to reflect consumer price sensitivity and brand adherence requirements. The availability of dynamic claims or rejections and reversals data as well as anonymous patient longitudinal data (APLD) now makes it possible to understand patient price sensitivity at both the initial pharmacy transaction and for each subsequent refill. From these data it is possible to identify the inflection point at which patients increase their rate of abandonment of prescriptions, and what level of monthly out-of-pocket expense will have the most significant impact on patient adherence to continuing with the brand.

By capturing the entire stream of data for a patient (including scrips that must be reversed due to abandonment by the patient), pharmaceutical marketers can determine the optimal price to be offered. Many companies have targeted a $20 or $25 dollar maximum out-of-pocket payment for patients trying to emulate the typical Tier 2 copay. But who says this is the optimal level? Analysis of actual patient decisions when facing alternative copays can help identify this price point. To the surprise of many, the data show that the price sensitivity threshold (PST) is extremely different between therapeutic classes, and is often very different between two products in the same class.

Table 1
Take, for example, the statin class. An analysis of patient reversals shows that the out-of-pocket payment level (OOP) at which Lipitor patients significantly increase abandonment is around $50. On the other hand, for Vytorin, which has a generic simvastatin as a near- alternative available, price sensitivity kicks in at just $10. (See Table 1)

Table 2
Longitudinal tracking of patients who fill their first scrip makes it possible to understand the impact of patient out-of-pocket expenses on adherence. In the statin class, commercial Lipitor patients who most frequently fill at copays of $20 can be expected to purchase 280 days of therapy over the next 360 days. When their copay is over $50, the expected adherence drops to under 180 days. (See Table 2)

Would a strategy of reducing $50 copays to $30 pay for itself by increasing patient adherence, thus building sales of the scrip? What about reducing it to $20? What would the impact be on Lipitor adherence if class competitor Vytorin opted to offer a copay card that got the patient out-of-pocket payment down to just $5?

Questions like these are now answerable through data. Using this data it is now possible to design a copay offset program that will optimize prescription sales to new and continuing patients. It's also possible to determine the optimal potential length of the copay offset—be it three months, six months, or "evergreen." The point is to never give away more revenue than you need to. The goal is to determine what actions are sufficient to get and keep the patient.

Principle 2—Allocate resources to where they do the most good and the least harm. Copay offset programs cannot legally be used by Medicare Part D enrollees. But while physicians may know which managed care plan is paying for their services, they usually have no clue as to the source of prescription coverage.

So what happens when a Part D patient gets a copay offset card? The simple answer is: for drug manufacturers, nothing good. If the patient gets to the pharmacy counter and finds that he or she is ineligible for this offer, and then learns that the prescribed drug has a high copay, they will at best be disappointed. And if the prescribed drug hasn't been approved for Tier 2 copays, it can be much worse. In such cases, the patient may ask the pharmacist to call their doctor and return them to their old therapy. Or worse, they might follow the pharmacist's suggestion of a comparable generic or OTC product.


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