Is Cutting Costs on Your Copay Program Costing You?

Take these factors into consideration to avoid spending more over time.

Is Cutting Costs on Your Copay Program Costing You?

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One way to think about the long-term cost of your copay program is to approach your decision in the same way you might if you were buying a car. Maybe you’re thinking that you don’t need the Batmobile, you just need a vehicle that you can rely on to get you from home to work every day. So, you figure that buying a used truck makes the most sense because you don’t need all the fancy bells and whistles, and the price tag is under budget. But there’s one thing you might be forgetting – the lot price is just the first cost of buying your car. You’re also going to have to buy gas and invest in maintenance to keep it running. And because you chose an older vehicle, it is nowhere near as fuel efficient as a newer car, and the amount of maintenance could be high.  Now you are realizing that your decision that seemed economically smart might not be the best choice after all, and if you choose a newer, more advanced model, you would be better off in the long run.

Well, you may not realize it, but if you don’t use the same logic with your copay program, it could also end up costing you more over time.

Patient Benefit and Copay Program Admin Fees

Nearly all copay programs have two lines of spend: the program’s administrative fees and the patient benefit.

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As you can see in the diagram above, the patient benefit – the amount of money spent directly helping patients afford their medications by offsetting their copayment – is the vast majority of the spend. However, for most marketing, brand and procurement teams, the focus typically lands on the administrative fees, as these tend to be easier to negotiate in a RFP.

When selecting a patient access partner, if a brand only looks at who has the lowest administrative fees and not who can help them manage and use their patient benefit more efficiently, the cost to the brand could be significant.

Let’s use a fictional brand as an example. Brand A spends $2M on administrative fees and $100M on patient benefit spend. After careful deliberation, negotiation, and analysis, they select a new vendor with the lowest administrative fees, with a target of lowering spend by 20%, or $400K.

That’s a solid amount of savings, but it misses the big picture.  

Let’s think about if Brand A had focused on the full copay budget – administrative fees and patient benefit. They ask for a model of total spend and compare; this time with a vendor that offers 2% savings on patient benefit and flat administrative fees. At first glance, this seems like a bad deal compared to the 20% savings on administrative fees. But a 2% savings on benefit spend actually yields $2M – five times what the focus on fees would deliver.


Why Your Patient Access Strategy Matters

Working with a strategic patient access partner can optimize the patient benefit spend and drive significant savings (without impacting sales!).

In another example, you might be thinking that a generous $0 copay card might be a strong driver for sales. A free prescription can be very enticing for patients, sales reps, and brands. Here is where it is important to think about quality over quantity. A vendor could simply execute a $0 copay card program for you because it’s going to increase your script count…for now. A strategic partner would look towards the future, help you understand the relative cost and benefit of a $0 program, and ultimately help you make the right decision, potentially saving you millions in the long term.

When it comes to selecting a partner for your patient access programs, make sure you’re looking at the whole picture and understand the true cost of that partner. Keep in mind, though, that this doesn’t mean you should ignore administrative fees and cost. Overall, a holistic approach to assessing a partner is best in the long run, just the way it would be if you were buying a car. Account for all the ways your decision can help you save – or all the ways it could cost you.

Topics: Pharmaceutical Manufacturers, Trends, Insights & Analysis, Copay Programs

Posted by

Elizabeth Pattyn

Elizabeth Pattyn is a member of Truveris’ Life Sciences team. In her role as Vice President, Elizabeth leads the company’s efforts in delivering patient access programs for pharmaceutical companies. Elizabeth has a BA from Cornell University and an MBA in Healthcare Management from the Wharton School at the University of Pennsylvania.