It may be possible for sales reps to direct the physician's office to provide copay offset kits only to commercial patients,
but the simplest and best way to "Do No Harm" is to calibrate the allocation of kits and cards away from those territories
that have a high percentage of patients on Medicare. For example, almost 50 percent of potential statin patients in Miami
are enrolled in a Part D plan. (See Table 3) In Pittsburgh, the number is only 30 percent. Across the typical 600 territory
US pharma sales structure, the range of prescriptions coming from Medicare might be between 10 percent and 80 percent of the
A second problem that can be avoided is giving out cards where they will have little value. After all, what good is an offset
card that reduces copay to $25 if a patient's copay is actually only $15? Or what if the card only saves the patient $4? Using
transactional data that includes copay, it's possible to identify the territories that have low probability of "value redemption,"
or a prescription that exceeds the minimum set by the program. For programs in the dyslipidemia market that get copays down
to $25, the probability that one of these cards will have any value can range from 15 percent to 50 percent in any given sales
The final harm to avoid is perhaps the most difficult to identify, and possibly the most counterintuitive. Brands can minimize
losses in profit margin by allocating copay offset cards to the sales territories where copay actually matters—that is, where
the copay offset will be used by patients who might, without assistance, abandon their prescription altogether. (See Table
4) The abandonment rates—and more precisely, the differences in abandonment rates between low and high patient out-of-pocket
expense levels—can be used to focus spending in geographic areas where patients are the most price-sensitive.
Ironically, those areas may be the places where copays are currently lowest, such as metro New York, where patients have been
conditioned to low branded copays subsidized by employers. In other markets, such as Houston and Seattle, patients have been
conditioned to pay $45 to fill a prescription, and won't abandon many drugs until their out-of-pocket exceeds $50 or more.
Sales managers may not like the idea of distinct allocation of cards to where they are actually needed, because getting a
patient's copay down to $10 in Queens might cost the exact same amount as getting a Houston patient's prescription down to
$25. In Queens, however, it could make the difference between keeping a patient and losing the prescription altogether. In
Houston, it's just giving away margin unnecessarily.
Principle 3—Measure returns and modify the offer on a regular basis. This last principle, though seemingly simple, is one that requires strict discipline. It's critical to measure the returns
on investment for copay offset programs with the same analytical rigor that is applied to managed care contracts. Manufacturers
should compare test and control groups of patients and physicians receiving copay cards in order to determine whether program
objectives (uptake, adherence, loyalty) are actually being achieved. In so doing, they might identify opportunities to modify
the offer or focus resources to do the greatest good and the least harm.
Separating Risk From Benefit
The valuable aspect of applying these principles is that it can make a significant difference in an offset program's financial
returns. Results vary by class, but as many as one-third of all territories currently getting an equal allocation of a national
copay offset program will still have a negative return on the investment. Another third will have nominal returns. Worst of
all, the remaining territories are probably not getting all the investment they need. Even minor modifications to the "one-size-fits-all"
approach can reduce the probability of harm (avoiding Part D beneficiaries), and have immediate impact on market share in
places like metro New York, where patients have become conditioned to low copays.
Care in the deployment of these programs is also mandated by the likely reactions of the purchaser community as their own
business models change. The biggest harm to pharmaceutical manufacturers may occur in the long term, as managed care plans
become conditioned to believe that, as they increase cost-sharing to patients, industry will react by increasing copay assistance
programs. Managed care plans may also begin to see offsets as a threat to their ability to extract rebate dollars from the
Tier 2 drugs. They could react by closing pharmacy networks or to mandate mail prescriptions, where they can decline to accept
Slowing the pace of spending on these programs might be the best course for the industry. Although a well-designed and rationally
deployed copay offset program can provide a positive result for an individual brand, indiscriminate use of these programs
by the industry, with no strategic differentiation, is a race to the bottom. The lasting consequence could diminish the value
proposition for all branded pharmaceuticals.
Mason Tenaglia and Christopher Meister are Directors of the Amundsen Group. They can be reached at MTenaglia@Amundsengroup.com