A quality copay program analysis considers the influence of high deductible health plans on patient out of pocket costs. It’s not like the old days when you could just go to your managed care group and they would say 92% of all commercial patients were covered to an average out of pocket of $50.
Back then it was much easier to understand what the average patient was actually paying. Even though your managed care group may give you the same information today, the OOP costs they have contracted for are not happening consistently! High Deductible Health Plans are the new norm. With 45% of US households enrolled in these plans and patient deductibles increasing every year, it’s very difficult to understand what prices patients will be charged at the pharmacy counter once they get there.
All your hard work getting the doctor to prescribe and getting the patient to present the script to the pharmacy will go to waste if your copay program isn’t ready for what comes next… the price!
Insured Not Covered (INC-HDHP) patients may have commercial insurance and coverage on your brand but are in a high deductible health plan and have not yet met their deductible. Until they meet their deductible, they will most likely have a high OOP cost through mid-year (chronic drugs). High deductible health plans make it difficult for your patients to pay for their medications during their deductible period without assistance from you.
Any financial subsidy you provide will indeed help each patient get over their plan’s deductible “hump” as your subsidy counts towards paying down the patient’s 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 will see lower OOP costs. Your program will help patients get through their deductible threshold as quickly as they can. The only exception to this is for specialty drugs that have an accumulator program in place. In these special cases, the discount you are paying does not count towards the patient’s deductible.
When it comes to designing your copay program you will need to consider the impact of having up to 45+% of patients faced with paying full retail for your brand without your copay subsidy. Every program should have a program for their INC-HDHP patients because while it’s true that they will need to pay full price 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-HDHP patients will still be there.
It’s important to start your analysis with realistic patient OOP numbers prior to your copay offer so you can structure your program to better cover these patients and get them through their high deductible period. Spending a little more time upfront will pay big dividends in developing a program that will better handle the situation and enable you to properly forecast the impact on your gross to net.
For medications for chronic conditions, these patients will settle in and once their deductible is met, your copay program subsidy should decline. 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.
Calculating the Impact HDHPs will have on your Patients
I was recently told by a client that all brands are impacted the same way by HDHP’s, but, in fact, every brand is impacted differently.
Here are four things that will impact your brand when it comes to HDHP’s:
- Average age of your patient
- Chronic or Acute Condition
- Net cost of your drug including copay program
- Patient Comorbidities
While it looks like all brands are potentially looking at a similar landscape when it comes to the percent of their patients 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. A brand with a younger patient age may be more impacted by HDHP’s as the younger patients may have lower income and may be more prone to select the HDHP option as they feel they won’t get sick.
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 WAC prices and/or poor managed care coverage will be impacted more by HDHP’s.
Patients with comorbidities who take several medications will likely meet their deductible threshold faster as they have more brand programs contributing to their deductible through copay programs. All these things should be considered when planning your copay program and performing your copay program optimization analysis.
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 excellent 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. Although this is the most expensive option, this is the tried-and-true way to best manage the HDHP situation.
2) Increased Q1 cap – Utilizing a “per use” cap and having a higher cap for the first 3 months of the year to help cover the patient’s deductible when it is reset each January. The issue with this cap option is if your patient starts outside of Q1 they do not get the benefit of the higher cap level.
3) First 3 uses inflated cap – A higher cap for the first 3 uses regardless of when the patient starts their therapy. This is the most effective “per use” cap to implement.
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.