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How to Calculate Your Patient Copay Program’s Real Value

Years ago, pharma marketers and senior management teams were asking themselves if copay programs were worth having in a brand’s repertoire. Over the years it has become clear that copay programs have provided a tremendous benefit for patients and therefore brands also benefit from lower abandonment and higher adherence rates. For most brands the result is very positive!

With that said, what is the best way to calculate the real value of your copay program given all the KPI’s that may be available?

From Alpha 1C’s perspective, our primary KPI’s for evaluating a program are incremental volume and incremental ROI. These measures provide an indication of whether the copay program has generated sufficient incremental volume to cover the cost of the copay program itself. Knowing how much incremental volume your program is actually generating is very important.

Once you know that, 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 before copay costs. 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 subtract the copay program costs and divide that by the copay program costs.

So, if the result of your equation is .25 that would mean that for every $1 you invested in your program, you got a 25% return. This is great because for most growth brands (non-launch) your goal should be at least break even or better. If this is something you can’t easily calculate because you can’t estimate how many incremental claims you have generated, then give us a call.

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