Reckless Abandonment

November 1, 2009

Pharmaceutical Executive

Pharmaceutical Executive, Pharmaceutical Executive-11-01-2009, Volume 0, Issue 0

Executives should embrace design to discover new markets and find new ways to server customers.

Picture this hypothetical, but common, situation: It's a typical Monday morning at the clinic, and Dr. Smith writes seven prescriptions for his patients. Of these, only four are being filled with the brands he prescribed and end up in patients' hands. Up to this moment, the marketers of these products did everything right, including significant investments in physician and patient education and managed care.

Kelly Myers

What Happened?

As the result of the high copay, the payer rejected one scrip and another was swapped for a competitive product at the patient's request. Furthermore, one scrip was actually refused by the patient at the point of purchase.

Patients across geographic and therapeutic areas are increasingly refusing their approved prescriptions due to higher copay costs and non-compliance, a phenomenon known as reversal or abandonment. Brand managers must have deeper analytic insights at the physician level in order to implement more effective strategies to tackle this increasing problem.

According to a recent Wolters Kluwer Pharma Solutions analysis of the US pharma market, prescription abandonment increased by 34 percent in 2008 compared to 2006 (from 5.15 percent to 6.8 percent.) Analysis of the top 10 therapeutic classes based on 2008 retail prescription sales reveals that patient reversals are happening regardless of drug tier, often at a rate that is as high as, if not higher than, health care plan rejection rates. When you combine these two forces, pharma companies are looking at millions in lost revenues daily across a wide spectrum of brands and therapeutic classes. (See chart 1).

Chart 1

Know the "Hot Spots"

Many marketers assume that higher copays equate to higher reversal rates. In fact, research shows that patient sensitivity to pricing varies by geography and therapeutic class, and some abandonment "hot spots" are in areas where copays are the lowest.

A case in point is the rescue inhaler market. A 2009 Wolters Kluwer Pharma Solutions study of the top 10 albuterol inhalers found that several brands lost more than 15 percent in revenues when factoring in the 6.9 percent of prescriptions denied by health plans and the 8.3 percent abandoned by patients.

Logic would dictate that the volume of abandoned prescriptions increased as the copay amounts increased across regions, especially among new prescriptions. In many cases that was true. However, applying advanced analytics at the regional level revealed important and surprising insights about patients' copay responses, and that average cost—which varies by geography—is only a piece of the equation. (See chart 2).

Chart 2

Paint the Bigger Picture

For example, a metro area in Chicago has the highest average copay for one brand, suggesting that it should have the highest reversal rates. However, when abandonment rates are overlaid with average copay costs in Chicago, New York, Philadelphia, Pittsburgh, and Seattle, the cities with the lowest copays (Philadelphia and Pittsburgh) accounted for the highest number of abandoned prescriptions. Chicago had the lowest reversal rate.

These counterintuitive findings demonstrate that Tier 2 placement doesn't guarantee success anymore, and that brand managers may be focusing copay assistance efforts in states with low abandonment rates, instead of areas where abandonment is the highest.

Chart 3

"Price sensitivity is clearly a factor as consumers decide to forego certain prescriptions altogether, including some for chronic conditions," said Mark Spiers, president & CEO, Wolters Kluwer Pharma Solutions. "However, price sensitivity varies by region, and there are cities where high abandonment is occurring despite lower copays, suggesting that there are socio-economic factors at play. This disturbing trend may have serious health implications and seems poised to continue as the economy remains under stress."

Reverse the Reversal

According to a December 2007 Wall Street Journal article, starting in 2010, the industry will face a tsunami of patent expirations affecting dozens of top-selling drugs, such as Lipitor, Plavix, and Advair. With an estimated $67 billion in revenues at stake—roughly half of the companies' combined 2007 US sales—brand managers of these products must maximize every dollar spent before the waves of patent expirations begin.

Here are three actionable strategies that brand managers can take to reverse the trend of prescription abandonment:

Gather data that quantifies the problem by region and product Examine pharmacy data using advanced analytic techniques. These techniques will identify data patterns pointing to a disproportionate share of patients with prescriptions that have been abandoned, reversed, rejected, or substituted at retail pharmacies. Ensure that behavior patterns are properly examined in conjunction with and independent of managed care considerations.

Make the data actionable Brand managers can blunt reversals by possessing abandonment insights and aggregating them to the physician level. Physician-centric insights should be in formats that are intervention-specific and easily applied. Customized tools will allow brand managers to dial-in on physicians with attributes best suited to specific interventions or goals, and to match those results to resource constraints, or to re-allocate resources as necessary.

Implement new, more focused strategies to effect desired change For example, more than 20,000 physicians in California treat asthma. Even by focusing on high prescribers, there remain roughly 9,000 who may appear to be targets for copay assistance programs. But, when abandonment is analyzed at the physician level, the number of targets narrows dramatically to approximately 2,500 physicians.

Brand managers are concerned about patients not receiving physician-recommended treatments when their products are abandoned. Reducing reversals means that the patient receives appropriate therapies and that the company's investment is being returned. Reversal issues are no reason to abandon ship.

If your boat starts to sink, find the exact spot where the leak is, and repair it. Armed with advanced analytics, marketers can take similarly decisive and effective action. Pinpoint the problem areas and reversal "hot spots," plug the leaks, and right the ship.

Kelly Myers is CEO of Qforma, Inc. He can be reached at kmyers@qforma.com

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