Co-Pay Program Optimization

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Following your competition’s moves with your copay program?

Written by Al Kenney on Monday, 20 November 2017 00:00. Posted in Co-Pay Program Optimization

followleader

Follow the leader has been a strategy used countless times over the centuries but the vast majority of times it has not worked out well for the follower. These days when we talk to brands, many say the same thing: "We just match or try and beat our competitor's copay offer". That strategy sounds harmless enough... but is it really?

There are many assumptions that you will be making when choosing to follow the competition. You are assuming that your competitor knows the best approach – but do they? And is this the best approach for your brand as well? Does copying your competitor's copay program structure best address the unique situation and patient base for your brand and will it meet your specific objectives? You need to be sure on all these details or else you will just be following your competitors down a rabbit hole!

The vast majority of the time the "Following the leader" strategy results in brands not meeting their goals. This is because the majority of time there is only one way to go with this strategy and that is down... down to a lower face value (and a higher cap). Then everyone sits around and wonders why no one is making any money. We often hear "We don't understand how our competitors could be making any money with that offer amount". Let's face it...this follow the leader strategy is driven by fear of the unknown. It's the easy way out just like when you were a kid and your mom asked you "if Jonny jumped off a bridge would you too?" Well I guess the answer can still be yes.

The optimal copay program structure is one that best addresses the patient's needs while also meeting the brand's goals and budget. A thorough predictive analysis should be done before the copay program structure is finalized to ensure that all goals are being met, including gross to net objectives and budget requirements. Just matching your competitor's program could be costing you millions of dollars and likely will not achieve your brand's goals! And, while you may think you need to match your competitor's offer, they are likely having the same conversation and may be interested in matching your offer! Many times brand teams are just waiting for the other party to move in a different direction and shortly after they will follow suit.

Be the leader and not the follower!

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Copay program utilization rates - What should your rate be?

Written by Al Kenney on Tuesday, 10 October 2017 00:00. Posted in Co-Pay Program Optimization

Utilization Rates

One of the questions we are frequently asked is about copay program utilization rates.  Many want to know what rate ranges they should be shooting for.  What are the brands that are “doing really” well getting? Thinking about what other brands in the marketplace are getting should not be something you should be concerned with. These rates depend on many factors, including your brand's objectives for the program, your margin requirements, your adherence and abandonment rates, and others.

Everything here depends on the brand’s situation.  Some brands have managed care issues with a large percentage of patients seeing NDC blocks and step edits at the pharmacy.  In these cases I’d be looking for an extremely high utilization rate on my copay program. The reverse situation would be true for a brand with great managed care coverage. Here I’d be selective with my offers and structure the program to try and help high OOP patients only.

Obviously, the offer itself and the channels used to distribute it, have a lot to do with utilization. A brand with lots of reps (for distribution) and maybe a Relay Health program with a $15 copay offer with a high cap could have a very high utilization rate, but at the same time this program would be taking a heavy toll on their margin, which may not be necessary given their situation. Sometimes it is a “be careful what you wish for because you might just get it” situation.  

In many companies we have the finance department as watchdogs over these programs which can be a real blessing as long as they too understand the levers that can help achieve the desired brand objectives.  Sometimes a high level of spending is necessary and other times its not.  If the brand focuses too much on ROI and profit (which is many times the case), without thinking about lost sales, the net result would not be positive.  You need to have the analytical tools, data, and understanding in place to achieve the right balance.

The real moral of the story here is that the optimal copay program utilization rate for your brand should come from within your own walls and within your own numbers, budgets, and objectives. One little change in a brand’s situation could completely change your strategy on what you should be doing and what you feel the correct utilization rate should be.

 

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Copay program strategies to handle High Deductible Health Plan (HDHP) influences

Written by Al Kenney on Sunday, 17 September 2017 00:00. Posted in Co-Pay Program Optimization

HDHP Influences

With the number of HDHPs increasing every year, brands are searching for ways to best cope with the issue of uncovered patients with high OOP costs. Having great managed care coverage sounds great but brands know it’s not nearly what it once was as many of their patients could end up with a bill for the full retail cost of the drug unless they can utilize the brand’s copay program.

Looking for the best way to manage this situation, many brands are considering one of three different strategies to help cope:

1) Annual cap – no "cap per use" but rather one flexible overarching cap that will cover the entire cost of the first few scripts to get the patients through their high deductible.

2) Increased Q1 cap – Increasing the cap for the first 3 months of the year to help cover the patient's deductible when it is reset each January.

3) First 3 uses inflated cap – A higher cap for the first 3 uses regardless of when the patient starts their therapy.

Depending on your brand and its situation, not every one of these strategies will work.  Knowing which of these strategies will be effective will depend on whether your brand is for an acute or chronic condition, what comorbidities may be present, and the overall drug price.  For example, if your drug is for an acute condition with maybe an average of 2 uses and with patients coming in and out of the franchise throughout the year, then an increased Q1 cap would not be effective for your brand.

With only about 56% of the HDHP claims coming in Q1 each year, taking the strategy of increasing your Q1 cap could backfire on many brands. Annual caps can work well but their values need to be carefully composed or else the brand may wind up paying much more than is needed to keep your trial and adherence numbers in check.

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What is a patient willing to pay for your brand?

Written by Al Kenney on Tuesday, 15 August 2017 00:00. Posted in Co-Pay Program Optimization

PatientPay

The summer is here and brand planning for 2018 will be in full swing very soon. A key issue brands will be discussing is what the patient is actually willing to pay for their medications once they weed through their insurance coverage, high deductible health plans, and copay program discounts.  In the end, each patient winds up with a final price due at the pharmacy counter and they are faced with that all-important decision of whether or not to actually fill that script.

I thought this might be an opportune time to discuss briefly the three most important considerations during the all-important purchase decision process:

  1. Severity of the condition: The more severe the condition is, the more willing the patient is to pay to overcome their issue… whatever it may be.
  2. Uniqueness of the brand: Brands with unique indications and claims have added value to patients and thus patients are willing to pay more for it  
  3. Substitutability of the brand: If there are no other suitable options available for the patient to ease their condition then they will pay more…But provide them with even a few alternatives and their perceived value of the brand will decrease. Some categories with possible OTC alternatives available could see an even further reduction in their value in the patient’s mind.

The Brand team needs to be realistic in their assessment of where their brand stands in each of these areas. Making the mistake of overestimating a brand’s value rating in any of these key areas could cost you in the form non-starts and high abandonment rates.

 

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Defining Patient Copay Program Optimization

Written by Al Kenney on Monday, 17 July 2017 00:00. Posted in Co-Pay Program Optimization

deliveringcopay

What is your definition of copay program optimization?

Many potential clients ask us how we define copay program optimization. We don’t actually define copay program optimization… our customers define it for us. The copay program should support the brand and program objectives and not the other way around. 

At Alpha 1C we utilize our unique data and technology to structure a program that meets or exceeds our client’s objectives (which also includes meeting their all-important budget requirements).

Since we don’t get distracted by selling and executing the copay programs themselves, we can focus on ensuring that the program drives on all cylinders to meet the brand’s real objectives. This involves optimizing key program elements:

  1. Program structure
  2. Offer wording
  3. Offer type
  4. Correct cap
  5. Patient eligibility
  6. Delivery vehicles
  7. Program business rules
  8. Program execution and delivery  

Errors, oversights, or non-alignment with your brand goals can easily cost you millions in overspend and/or lost trial and adherence. Depending on what we find during our deep dive, we may recommend taking the analysis down to a local or even a physician level. All of these steps are necessary in order to fully optimize your program.

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How to figure out the impact of HDHPs on patients

Written by Al Kenney on Monday, 19 June 2017 00:00. Posted in Co-Pay Program Optimization

HDHP Imact

All brands know that high deductible health plans are having a major impact on both the industry and on the costs of their individual copay programs.


I was recently told by a client that all brands are impacted the same way by these HDHP’s. While it may appear that way on the surface, every brand is impacted differently by HDHP’s.

Here are four things that will impact your brand when it comes to HDHP’s:

  1. Average age of your patient
  2. Chronic or Acute Condition
  3. Net cost of your drug
  4. Patient Comorbidities

While it looks like all brands are potentially looking at a similar landscape when it comes to the percent of their patients who are enrolled in HDHP’s, the four items above will certainly impact brands in different ways.

First, we have the average patient age. Brands targeting older patients will have more of their patient base on government insurance (Medicare and Medicaid) and therefore a lower percentage having to deal with the HDHP’s.

Brands treating acute conditions don’t have the luxury of providing higher subsidies via their copay program for the first few scripts until their patients meet their deductible. These are “1 or 2 uses and you’re done” drugs so the HDHP issue is certainly more of an issue for these acute medications.

After that it’s really just a numbers game. Drugs that have higher costs due to either high prices or poor managed care coverage will be impacted more by HDHP’s. Also, patients with comorbidities who take several medications will likely meet their deductible threshold faster. As these high deductible plans become more and more common, all of these things should be considered when planning your copay program and performing your copay program optimization analysis.

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Answering some common questions on patient copay programs

Written by Al Kenney on Monday, 15 May 2017 00:00. Posted in Co-Pay Program Optimization

CopayQuestions

There are two things that most brand managers can say about copay…. a) they probably have a program and b) years later they still have many unanswered questions about what these programs are doing for their brands.

Here I will try and tackle the most frequently asked questions about copay programs:

Are these programs worth your spend? The short answer here is yes…on average, these programs are certainly worth your spend since they lower the financial barriers to filling scripts and they help many patients. I addition, if structured correctly, these programs can increase patient trial and adherence which is good for the brand long term. The key is getting this growth while still meeting your financial objectives for this year and beyond.

Do copay programs generate increased adherence? Yes, copay programs will most likely generate increased adherence by lowering patients’ financial barriers and lessening the impact of cost. Of course there are many reasons why patients are not adherent and cost may not be the driving factor. Even If all patients were given their drugs for free, we’d still be talking about how to increase adherence! With limited funding for a copay program, you will have to make tough choices about how to structure your program to meet your objectives: For example, do you set up the program to give something to everyone or to give more to the patients who need it most? And what should you do about your insured not covered patients until they meet their annual deductible? Etc.     

What is a good ROI number for programs like these? What you may find surprising is that some of the best ROI’s we have seen are not necessarily the best programs for the brand. Brands that focus purely on ROI are often not happy at year’s end since program ROI doesn’t consider the impact on the total business (Total scripts, total revenue, impact on adherence and trial etc.) The key is to use ROI as one of the KPI’s you might look at in addition to objectives for trial, adherence, sales, and gross to net. You need a well-rounded set of objectives to shape a well-rounded program.  

What’s the best patient offer for my brand? This one is a loaded question and my standard answer is that the best offer is the one that best meets all of the brand’s annual objectives. That is why planning out your annual objectives in detail should always be your starting point. Once your objectives are set, our models can optimize the program to meet and exceed the objectives. Changing your objectives slightly may mean changing your offer as well. Just because an offer is lucrative doesn’t mean it will meet your most important objectives. For example you might meet your sales goal but fall short on your profit goal. But if you don’t have a stated profit goal you most likely will never reach it!   

These programs generate so many questions and the best way to answer them is to have not only good data but also good tools to draw out the insights. Please feel free to reach out to me with your copay program questions!

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Easing the burden for your high deductible patients

Written by Al Kenney on Monday, 17 April 2017 00:00. Posted in Co-Pay Program Optimization

HDHP

Easing the burden for your insured not covered “high deductible” patients is a problem for every drug today. You know almost 40% of Americans are on high deductible health plans and those plan’s drug copay deductibles are making it difficult for your patients to pay for their medications without assistance from you.

Any subsidy you provide will indeed help each patient get over their plan’s deductible “hump” as it counts towards their deductible. This is because the plan will only see the amount owed and will deduct that OOP from their deductible. You are essentially a secondary payer and any discount you offer will look like it came from the patient and reduce their OOP requirements for the year. Later in the year, as their deductible is met, they will have coverage on your drug and see lower OOP costs.

The hope is the patient gets to their deductible threshold as quickly as they can. Remember they might be taking other drugs whose offers will also be cutting into the patient’s deductibles which these days can average more than $2,000 per year per patient even within the same household (family deductibles are quickly becoming a thing of the past!)    

From a brand perspective it’s important to understand these patients who will show up as “insured not covered” (INC) patients when trying to process your offer. Many brands think of these patients as “cash paying patients” when they are not. While it’s true they will need to pay cash for your drug due to their deductible, this is only a temporary situation which should be rectified later in the year. So unlike true cash patients who will most likely disappear once your offer is expired, INC patients will still be there.

That’s important for your lifetime value calculations. For medications for chronic conditions, these patients will settle in and you should be able to recover much of the subsidy you laid out earlier in the year. Obviously this is not the case for acute drugs which is why they are more severely impacted by HDHP’s. You need to decide how to treat these INC patients when working on your program’s business rules.

 

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Why launching with the same copay offer as everyone else may not be the best

Written by Al Kenney on Monday, 20 March 2017 00:00. Posted in Co-Pay Program Optimization

bedifferent

So you have a launch coming up and most everyone in your category has the same copay offer… will you take what seems like the “safe route” and follow everyone else’s lead? Doing the same as everyone else doesn’t guarantee you’ll have the same impact as everyone else. Worse yet, it may ensure your brand is passed over as being just another in a crowded category.

So what should you do? Is it good enough to just be where everyone else is? The answer is no… you should be doing a detailed analysis into a custom offer that works best with your goals, objectives, and budget to find the offer that is right for your brand. This will give you the right mix of trial, ROI, and profitability.

Remember that HCP’s don’t know the difference between offers as they can’t recall them. They only react when their patients complain that the drug is too expensive. These days with high deductible health plans, high cost is going to be an issue for every drug in most every category, not just yours. The key for you will be to do an in depth analysis where you can find the pricing inflection point. That is the price where you will begin to lose patients because the cost is too high.

There are many factors involved here and some depend on the uniqueness of both the category and the brand. Once your detailed analysis is completed, you may be able to structure your offer in a way that allows you to cover more of your patients with a more reasonable copay verses covering fewer patients with a lower copay amount. So instead of doing the same as everyone else and possibly getting lost in the shuffle, understand the numbers and customize your offer to give you the best performance for your brand and your patients.  

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Why Brands should not be tracking patient script abandonment

Written by Al Kenney on Monday, 20 February 2017 00:00. Posted in Co-Pay Program Optimization

abandonment

Many brands are tracking script abandonment monthly and trying very hard to get their numbers reduced thinking that is the way they can gain incremental business. While that seems like a sound strategy, it isn’t because of two very big factors: E-prescribing, and High Deductible Health Plans (HDHP’s).  Due to these two factors, your baseline number is increasing every year.  

As I explained in an earlier article, as the industry moves more to the digital age and more and more scripts are delivered via the e-prescribing channel, you will see your abandonment rates increase. This is because even though you might think that delivering your coupon electronically is more efficient it isn’t because the offer is actually delivered in a seldom used notes field which the pharmacist needs to identify and process (it’s not automatically loading the offer for the patient). So while it’s virtually impossible for a pharmacist to miss the physical card the patient provides with their script, it’s easy to miss the e-prescribing version which increases “perceived” abandonment.    

The HDHP’s are playing games with your managed care coverage. In the old days (not too long ago) it was easy to say you had tier 2 coverage across the country. You can’t say that anymore because of HDHP’s. These plans are proliferating the USA and driving down your perceived coverage numbers in a big way! So maybe 40% of those patients who you thought have a $50 copay actually don’t and this is driving up abandonment rates because patients are looking at higher out of pocket costs every year.

So, if somehow your boss has your bonus tied in any way to the abandonment measure you are in for a real uphill battle. You need to quickly find some other KPI by which you can be judged!

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Why a $0 copay offer should not be your starting point

Written by Al Kenney on Monday, 23 January 2017 00:00. Posted in Co-Pay Program Optimization

money

Why a zero $0 copay offer should not be your starting point for your Pharma Product.

The year 2017 should be a big year for the pharma industry with many products expected to be approved across a wide range of categories in all areas (retail, specialty, and buy and bill). Once completing the FDA’s extensive hurdles to get to phase #3 and then onto final approval, these brands will be quite involved with managed care contracting strategies and most likely a patient copay subsidy program as well.

The mindset of most pharma executives and brand managers will be to start off with the best copay program possible. Most will translate that to mean the copay program with the lowest patient out of pocket. Looking at the current marketplace for copay programs they will see many brands still at a $0 copay offer and they may strive for the funding to get there.

While finding the right structure for your offer is imperative for your launch, a $0 copay offer is almost never the correct starting or ending point. In looking at thousands of programs across the industry we see that the $0 offer is almost always outperformed by the $5, $10, or even $15 offer. Many have speculated why brands get less when spending more… a lot more to get your offer down to $0. My thought is that a $0 offer sets a bad precedent in the patient’s mindset. Free is free and actually cheapens the brand’s value. Also when you want to change that offer to anything else suddenly the patient sees it’s no longer free!

The $0 OOP for a patient sounds like a real win for brands who can afford it. It seems fine in the beginning, however when your launch is over and you try and bring your offer up to lets say pay as little as $10, patients seem to react very negatively. Those same patients if started at $5 or more react less when their OOP is increased slightly later on. After all they are used to paying something, now with the new offer it’s just a little more.

You would think that the lower you go the more trial and adherence you will see…studies show that is not the case. Starting your offer at zero does absolutely nothing to increase patient trial or adherence… a sad but true fact you should consider for your next product launch. For most brands it’s just pouring money down the drain resulting in a poor ROI!

 

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Are objectives driving your copay program or is it the other way around?

Written by Al Kenney on Monday, 02 January 2017 00:00. Posted in Co-Pay Program Optimization

Objectives

All new copay planning work should start with a fresh analysis of all the major KPI’s the most important thing to track is how it your program did verses the objectives you set. Alpha 1C models have a very unique feature we take clients through which is the ability to recommend the right offer based on the brand’s weighted objectives.

What I find interesting is that sometimes we have clients who have no problem setting firm objectives, but when when they see the recommendation for offer structure is based on those objectives (maybe something less lucrative than what they wanted to do), they may say “maybe I got my objectives wrong? Let’s try again”

From a modeling perspective that isn’t an issue as the model will accommodate an objectives change and potentially produce a different result. What I find funny is it’s pretty easy to get your objectives correct as you pretty much know what they are and it would be very hard to get them wrong. What is “out of kilter” is their expectation of what they want their offer to be instead of what would meet their real objectives and what they can afford.

When I saw this cartoon I thought it was a brilliant and funny interpretation of what happens so often in business and certainly within the copay program arena. You have to let your brand objectives drive your copay decisions not the other way around.

 

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Should you be using the mobile channel to deliver your co-pay offers?

Written by Al Kenney on Tuesday, 22 November 2016 00:00. Posted in Co-Pay Program Optimization

MobileChannel

A question we are often asked is; should mobile be a delivery channel for your copay offers? As a starting point I’ll point to the following facts I found on the use of mobile:

-        91% of adults keep their smartphones within arm’s reach(Source: Morgan Stanley)

-        82% of U.S. adults own a cellphone (Source: Pew Reports 2010)

-        90% of text messages get read within 3 minutes of delivery(Source: ImpigeMobileStrategy.com, 2011)

-        25% of Americans use only mobile devices to access the Internet. (Source: GoMoNews.com)

-        Mobile performs 4-5x better than online ads for key metrics such as brand favorability, awareness and purchase intent. (Source: Neilson Study, 2012)

-        Cisco predicted an 18x increase in mobile usage from 2011 to 2016 as reported by FierceWireless.com.

-        22% percent of U.S. mobile users prefer offers via text to mobile Web (21 percent), Apps 11 percent and voice mail (8 percent). (Source: DMA.org, 2011)

Based on those numbers it would seem that the mobile channel would be a must for programs, but in looking at the actual results last year the industry saw only about 2% of all copay claims being delivered through the mobile channel (the smallest delivery channel). Why the disparity in the results? Honestly, that is a question I can’t answer except to say that at this point you should consider a mobile channel delivery purely as a convenience for some of your potential patients but not a necessity as they will find your offer through your other channels.

My advice would be if you chose to invest in this channel choose a vendor that charges by the claim because with those few claims coming through that channel it would be very hard to get any type of return on your investment.  

 

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What percent of your overall business should come through subsidized copay programs?

Written by Al Kenney on Tuesday, 25 October 2016 00:00. Posted in Co-Pay Program Optimization

SubsidizedPrograms

In working with clients over the past few years, one of the questions I am frequently asked is what percentage of a brand’s business should come through their copay program. This question which on the surface seems like a relatively easy one to answer with a fixed percentage is actually quite complex and the reason brands dig deep on their analysis of their programs with us.

I will start the answer by saying that the answer is a triangulation between at least three major components:

  1. The brand’s current objectives – It ollowing to look at the next two variablese at least a strating baseline the brand, not a situation where you are running arouis very important the brand have objectives they monitor throughout the year for things like sales, trail, adherence, ROI and profit. These will help set the framework for right percentage of claims. Next we need to look at the following two variables
  2. The brand’s financials - WAC and Margin are going to play a major role here as knowing what you can afford will help you triangulate the correct utilization percentages for each brand. Keeping this in mind you can determine at least a starting “baseline” for a percentage you can afford. One rule of thumb we like to live by is to always make sure the program you put in market is producing a profit on a per claim basis. . This is because if the program actually does better than expected you want it to be a good thing for the brand, not a situation where you are running around trying to shut everything down and counting your losses.
  3. The brand’s lifecycle – where the brand is in its lifecycle will help determine the correct range here. A brand in its launch or growth stage should have a greater percentage of their TRx’s coming from copay program usage verses a brand that is either mature or beginning to

With that said it is no surprise that there is not a one size fits all answer to this question. There is a “right” percentage for every brand but you must dig into your market position, your objectives, and the brand financials through detailed analysis to determine the percentage that is right for your brand.  

 

 

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The top three places to find inefficient copay program spending

Written by Al Kenney on Tuesday, 27 September 2016 00:00. Posted in Co-Pay Program Optimization

InefficientSpending

There are many areas that contribute to inefficient spending within your copay program. After evaluating many different offer configurations, I’m prepared to name the top three areas where most programs waste money:

#3- Your cash offer: Brands seem to be struggling with how to best assist those patients who need the financial help the most, and this often leads to the discussion regarding including an offer for cash patients. It’s a fact that a cash patient’s adherence is less than half of the adherence rate for a patient with commercial insurance. It’s simply a matter of OOP cost (IE: the higher the out of pocket cost, the lower the adherence will be). So when considering including a cash offer, you must first think of what you can comfortably afford based on your current margin, and then how that net price will impact the trial and adherence of a cash patient. A cash offer has to be continual (multiple months) since once your offer disappears…your cash patient disappears as well. Stick first to what you can afford and then to what you think it will take to entice a cash payer to your brand.

#2- Your offer face value: Your offer face value (e.g.: The $5 in your “PALA $5” offer) is a very important aspect, but it is not the only consideration when structuring your offer. It’s really the combination of your face value and your cap that determines what the patient will actually pay which is a key factor in determining whether they decide to fill or not to fill. Every $1 increase in your face value has an impact on all of your claims. This means that by moving up $5 (from say $5 to $10) you have freed up a tremendous amount of money from the bottom (patients who may not need it) to the top end (patients who definitely need it). I call making the move the “Robin Hood Effect” taking from the rich and giving to the poor. Done correctly it can save you money and help you gain the incremental sales you are looking for. This is definitely something to consider next time you are thinking about making a change to your offer.

#1- Your Cap: The greatest area of wasted spend for brands (by far) is the cap you employ. All too often it’s too high as brand teams chase patients like insured, not covered (INC) patients. Trying to “save them” is very expensive since you are buying down all patients to the face value of your card which results in a lot of wasted spend. You have to find a subsidy level that is acceptable but still makes your highest OOP patients pay something.

Another thing everyone needs to remember is that fraud still can (and does) happen. Having a high cap will increase the likelihood that pharmacies process your cards incorrectly to provide the best benefit for their long time patients. Keep your cap in check and you reduce the problem to a very manageable minority.

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How to calculate the real value of your co-pay program

Written by Al Kenney on Monday, 22 August 2016 00:00. Posted in Co-Pay Program Optimization

realvalue

Years ago, pharma marketers and senior management teams were asking themselves if copay programs were worth having in a brand's repertoire. For most brands, the answer today is certainly a big YES! But with that said, what is the best way to calculate the real value of your co-pay program given all the KPI's that may be available?

From an Alpha 1C perspective, our primary KPI for evaluating a program is Incremental ROI. This measure provides an indication of whether the copay program has generated sufficient incremental volume to cover the cost of the copay program itself. The formula for incremental ROI is simple. Just take your incremental claims, multiply them by your WAC price then multiply that by your margin to arrive at your incremental net profit number. Then add up your total copay program costs (monthly management fees, transaction and adjudication fees, printing costs, plus the money that funds the patient discount you offer). Then take the incremental net profit and divide that by the copay program costs.

So if the result of your equation is $1.25 that would mean that for every $1 you invested in your program, you got a $1.25 return. This is great because your goal should always be a $1.00 break even or better. If this calculation is something you can't do easily through your existing vendors because they can't estimate how many incremental claims you have generated, then maybe it's time we talked...

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How does a price increase impact your copay offer?

Written by Al Kenney on Monday, 01 August 2016 00:00. Posted in Co-Pay Program Optimization

risingprices

I have been asked many times how a brand's upcoming price increase will impact their copay program. Obviously they are asking because they don't know...and for good reason! This is not a simple answer to get to. Every brand is different and so is the maze of their managed care contracts.

Many contracts have clauses written in to address price increases. This makes it somewhat easier to understand the ramifications of a price increase, but many contracts don't have these clauses. In these cases, each PBM will decide the implications on a case by case basis. Chances are that the pricing action will not change your tier status but if the PBM passes on some or all of the additional costs to patients via increasing their copays, then there could easily be an impact on the cost of your copay program.

The magnitude of the cost impact will depend on the way your copay program business rules and cap are structured. I have seen both ends of the spectrum. If you know that you will be taking a price increase sometime soon, you should assume a higher patient OOP cost and plan for it in your programs business rules. It could save you a bundle.

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How do you know when you are spending too much?

Written by Al Kenney on Monday, 11 July 2016 00:00. Posted in Co-Pay Program Optimization

spendtoomuch

How do you know when you are spending too much of your budget on copay?

Do you sometimes feel like Steve Martin from the movie "The Jerk" when he said "I stopped giving blood when I cut myself and nothing came out"? Patient copay programs can be a never ending "money pit" for brands.

That's OK if the program is generating the incremental volume to make up for the spending, but what if it's not? Copay vendors don't give you an incremental volume report - they can only tell you the total number of claims your program has produced. So how do you know what percentage of those claims are going to those patients who would have filled anyway (base script volume)?

How many patients started therapy on your brand as a result of the patient copay program you offered them? Can you answer this question? If not, don't worry- you are in the majority! Most brands have no idea what their program is actually doing for the brand. They just know they need to have a program in market and that it "is working" because they see claims coming in. The problem is that program claims don't equal incremental trial or adherence. They make you feel good, but it is important to establish benchmarks for success so you can track and improve the performance of your program over time.

Many brands measure success by looking at redemption or utilization rates. Redemption rates are calculated by taking the # of card claims divided by the number of offers distributed. However, redemption rates can easily be over or understated if the quantity of coupons distributed is not accurately tracked. In contrast, utilization rates are calculated by taking the number of claims divided by the TRx's for the brand. Utilization is the better of the two measures to be looking at because it is a more accurate measure and it shows what % of TRx's were actually moved with a coupon. Let's say your average utilization rate is 15%...sound good? Is it? What should it be? Looking at what other brands are doing with similar offers is one way to benchmark yourself but it is important to preset your goals for utilization based on your brand's unique profile. This is the only way you'll know if your program performance is in line with what you should expect.

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The Roadmap

Written by Al Kenney on Monday, 27 June 2016 00:00. Posted in Co-Pay Program Optimization

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The Roadmap to Capturing Incremental Scripts through Effective Patient Copay Programs

Adjudicated patient copay programs have been around since 2005. What appears to be a simple program to devise and implement on the surface, has continued to be anything but that.

At last count, annual spending on Pharma copay programs was estimated at over $6 billion dollars. Yet, with all of that spending there are still very few brands that have gotten it right. Getting it "wrong" costs the brands hundreds of millions in wasted spend. I am defining "wasted spend" as money that was used to subsidize the OOP costs for a patient who would have purchased anyway based on their acceptable OOP cost (may include a manufacturer discount). Buying the price down below this price inflection point is the major driver here. Brands should be looking at optimizing their copay programs as an untapped opportunity or low hanging fruit. This is done by getting the offer right and reducing OOP costs for the patients who have high abandonment due to high OOP costs. This does not mean bringing down an already acceptable cost to something even lower.

You need to think of your managed care contracting efforts as the pillars on which your overall promotional strategy can be built. The first thing you must do is understand the position you are in when it comes to patient out of pocket costs. Many brands start with an average patient OOP estimate, but often times, those estimates are incorrect and do not consider the impact of high deductible health care plans or the impact of the patients who are insured but not covered. Many brands make the mistake of basing their copay program offer off their average patient OOP cost and this leads to a suboptimal program design. For more on this topic and the importance of generating incremental volume, download my latest whitepaper entitled "The Roadmap to Capturing Incremental Scripts through Effective Patient Copay Programs".

Alpha1C Roadmap to Capturing Copay Volumne White PaperFor more on this topic and the importance of generating incremental volume, click the image to download my latest whitepaper entitled, The Roadmap to Capturing Copay Program Incremental Volume: How to Capture Incremental Scripts through Effective Copay Programs.

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Brand lifecycle - a key driver

Written by Al Kenney on Monday, 30 May 2016 00:00. Posted in Co-Pay Program Optimization

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Brand lifecycle:  The often forgotten, but major consideration when structuring your patient copay program.

There are many factors influencing your copay program but a key driver impacting your program objectives is where the brand is in its lifecycle. Your objectives for the brand will certainly be different depending on which lifecycle stage your brand is in:

Launch – At launch, you want to drive as much trial as possible so this is when most brands put forth their most lucrative offer. The key here is to give enough of an incentive to get the fill but not to give more than is necessary. If your brand has a unique point of difference you may not have to go as deep as some of your competitors.  

Growth stage – When the brand is firmly in the growth stage, copay offers still need to provide a good incentive, but you can start to dial the offer back a bit once you feel your brand has good traction and acceptance with your HCP’s.  

Maturity – Once your brand is mature and/or a leader in the category, you might want to dial your offer back even more to try and capture a bit more profitability before going into the decline stage (pre-LOE). You will also be more focused on driving increased adherence and ROI more than ever before.

Decline – There will be a decline stage as the brand approaches its loss of exclusivity date. Here your strategy will be to maintain or increase patient adherence rates prior to the loss of exclusivity.

During each of these brand stages having the right offer in place is the best way for you to achieve your brand goals. Optimizing the offer amounts, caps, # uses etc. for the brand’s life stage is critical to achieving the brand’s goals. Alpha 1C’s modeling tools let you set and change your brand’s goals on the fly and will recommend the offer that best meets those goals in a simple easy manner. This way you are sure that the offer you have in market at all stages of your brand’s lifecycle actually delvers what you are looking for.    

 

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Is this really your patient adherence curve?

Written by Al Kenney on Monday, 09 May 2016 00:00. Posted in Co-Pay Program Optimization

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We have many clients who misinterpret reports and data from their copay program vendors. One of the most misinterpreted reports we see is this one showing copay card usage which is sent to clients by their copay vendors each month.

When asked about their adherence curve, many times clients send us this graph. They may also complain that their adherence curve doesn’t look as good as it should and they conclude that there must be something wrong with their copay program. We explain to them that the copay card usage information shown in this graph is not their adherence curve…at least not yet.

This report tracks how many times patients have been utilizing their copay offer on a program to date basis. It is important to remember that patients are entering the program each month while the program is still in effect. Each new patient using the copay card will be recorded in “Use 1” regardless of when they entered during the program’s effective dates. That patient will be recorded in the “Use 2” grouping if and when they use the card a second time. The counts of claims are actually laid on top of each other regardless of when the use actually occurred and that causes the confusion. For example: you have thirty three new patients come into the program this month counted as script #1, another twenty two who have filled twice (started last month) and then groups of patients that have filled three, four, five and six times.

Put them all together in one report and what do you get? You get a bunch of mush that is hard to interpret! A high first use number and low second use number may indicate that new patients have dropped therapy. Or, alternatively, those new patients may not yet have reached the point of needing a second or third fill (they may still be on their first script). Looking at this graph as a representation of the average patient’s adherence over time will cause you much anxiety!

Once the program is closed down and all of the patients have cycled through (6 months after the program is over), then the final version of this chart will give you a much better indication of what your adherence rates really look like. Until then, this report has very little value as a proxy for a brand’s adherence curve.