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

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

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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...