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The Five Most Misleading KPI’s Used in Copay Evaluation

There are many commonly used KPI’s for planning or evaluating copay programs. Here is my list of a few of the commonly used KPI’s and examples of why each one can be very misleading if looked at individually:

1. Cost per Claim – The cost you paid on average for each claim derived from your copay program. Many feel their underlying objective is to reduce this number to produce a better financial outcome for the brand. This KPI is very misleading. As an example, let’s take a Pay No More Than (PNMT) $30 patient offer. You decide to move to a PNMT $25 program, fully expecting that because your offer is better that your cost per claim will go up…results are now in showing that your cost per claim went down. Why is that? It probably happened because you have now opened the offer to patients who were not eligible for it before (Those patients paying between $26 to $30). Each of those patients will now receive a $5 discount. Those $5 paid claims may bring down your overall average cost per claim.

 2. Program Sales – The industry’s most prevalent way of calculating Sales from copay programs is to multiply the # of claims by the WAC price. With that in mind, I’ll ask a question…What offer will produce the highest program sales for the brand? The answer is of course “Pay $0”. This will get you the greatest patient takeaway based on raw claims. It’s also the best way to ensure you will discount a large portion of your TRx’s and kill your budget.

Implement a “Pay $0” program and suddenly you will have a high percentage of your commercial business utilizing your copay program.  It doesn’t guarantee your business will grow overall and if it does grow, by how much. If I have 100 total scripts before and then I implement a copay program and now I have 100 total scripts using the copay program, I just rewarded all my existing patients and didn’t grow my sales.

The true measure you need to be tracking is “incremental sales” as it is the only one that tells you what you are truly getting from your copay program spending.

3. ROI – If you currently have a copay program and someone asked you “What’s the best offer to increase your ROI?” What would you say?  The correct answer depends on the cost of the program and the level of sales and incremental sales generated by the program.  An inexpensive program that generates a certain level of incremental sales may produce a better ROI than a more expensive program that generates a significant level of incremental sales.  Perhaps the program that costs more would be a better approach given the brand’s objectives in this example, but not if the decision is being made based solely on ROI.  ROI is simply a mathematical calculation, and although it is certainly a factor to consider, it can be misleading if only considered in isolation. 

4. Number of Claims – Claims generated from a copay program is a very deceiving metric as it’s only one side of the equation (the side you pay for) but it gives you no insight into the complete impact of your program. Is getting the greatest number of claims out of your copay program what you want? Does that mean that getting fewer claims is not as good? If you move from a PNMT $20 program to a PNMT $25, your actual claims may decrease slightly but for a different reason than you might think. You may think it is because the incentive is no longer as lucrative and patients will have to pay more so they will redeem less. It’s much more likely that you now have more patients who are no longer eligible for the program because their copays are at or below the new offer face value amount. Some may ascertain having fewer claims means your brand is losing sales. Absolutely not! Claims data does not show you what happened to the patients who were ineligible for your offer. You’re not seeing the whole picture of what is happening by only utilizing claims data. Fewer claims might be a very good sign!

5. Abandonment rate – In a previous post, I went into more detail on this (please see that post). Abandonment rates most brands look at are most often interpreted as price related. This is not true. Abandonment rates are a combination of many factors only one of which is price. Looking at a standard abandonment graph you will most likely see something like 10% of patients still abandon at a $0 price point. Obviously if patients can get the product for free there must be another reason they did not fill it. Because there are so many factors that can impact abandonment rates (adverse conditions, e-prescribing programs, access to pharmacies and more) it should not be a measure you should be looking at individually.  

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