We see many brands launching these days with copay offers which require a very small or even no out of pocket amount to be paid by their patients. There are really two questions here; 1) What is the right initial offer? and 2) What is the correct timing to tweak the offer?

You see many $0 or $5 offers at launch because brand marketers want to start with a splash and do not want to create a barrier to patient trial. That is fine to get things going, particularly since most brands will have poor managed care coverage for the first year to 18 months.  But how long should these very lucrative offers stay in place? Here are a few key points in the brand lifecycle where a potential change to the copay offer should be evaluated:

Timing #1: Once the brand’s managed care coverage has achieved your goals and has stabilized

The first time you should be doing an optimization analysis is once the brand has achieved the desired managed care coverage.  At this point it would be important to reevaluate the competitive arena and to model what a slightly less lucrative offer would deliver. 

Timing #2: When your brand hits its “mature stage”

By the time your brand hits its mature stage, managed care coverage and loyalty rates are the highest, and abandonment rates are the lowest. This is a good time to bring back some more profitability into the copay program. At this point, the most important thing to look at in your analysis is gross to net impact and bottom-line profit, not the estimated number of claims.

Timing #3: Eighteen (18) months from the brand going LOE

This timing allows you to plan your offer for the last year of exclusivity. The idea is to plan 18 months out, so you have your offer in place 12 months prior to LOE. At this time, more than any other, the focus should be on optimizing net profit. As Steve Martin said in the movie, The Jerk. “So… it’s a profit deal!” 

Timing #4: Six (6) months from LOE

Some companies think that LOE is the end of the road for a brand, but this simply isn’t true. Yes, the brand’s volume may drop below 10% of what it was, but that can be very profitable volume which could last another 10 years. Plan the final copay offer of your brand’s life six months prior so it is in place at LOE.

Since your initial launch offer will be the most lucrative, each of these “check points” is set to examine the business with the hope of bringing more profitability to your brand. As brands mature and have a more loyal following, abandonment rates decrease. You need to consider this and break from the fear that you will lose patients by making a change.

At each evaluation point, the most important things to look at in your analysis are gross to net impact and bottom-line profit, not the estimated number of claims.  Many times, decreasing the number of claims in your program is a very good thing, especially if many of those patients continue to buy without an offer. 

In addition to the four points in a brand’s lifecycle noted above, copay offers should also be re-evaluated if there is any major change in the competitive environment to ensure that the most productive offer continues to be in place for the brand.  

So, excluding your initial launch, there are at least four times (and maybe more depending on the competitive environment) during your brand’s lifecycle when you should be looking at the copay offer and seriously consider changing it.