Deductibles and the Consumerization of Healthcare: What Does it Mean for Biopharma Brands?

Deductibles and the Consumerization of Healthcare: What Does it Mean for Biopharma Brands?


The Rise of Healthcare Consumerism. It seems like it’s been the lead topic at every healthcare conference for the past decade. Its implications and impact seem to always be looming just around the corner.

But with the news cycle lately –  Amazon entering the healthcare and pharmaceutical space, the continued growth in funding of digital healthcare – at Truveris, we’re asking ourselves: are patients becoming better consumers of healthcare? And if so, what are the implications for biopharma?

Defining the Consumerization of Healthcare

Put very simply, we see the consumerization of healthcare as an evolution in which patients are empowered to become more active participants and decision makers in their own healthcare. Essentially, this allows patients – consumers –  to take the same critical thinking and decision-making skills used when buying a new pair of shoes on Amazon and apply it to decisions about medical care.

Much of this is rooted in the ability for a person to make tradeoffs between cost and quality. Is that designer shoe nice enough to warrant paying $300, or am I better off paying $100 for the knock-off? In healthcare, this has manifested itself through insurers putting more and more of the burden of healthcare costs onto patients through co-insurance, deductibles and other cost sharing mechanisms. If we have “more skin in the game,” we should be better consumers – so the theory goes.

And what better time to look into the theory than deductible season? This early part of the year, as we know, is when many patients are facing higher deductibles and steeper copays that may require them to make tradeoffs.

More Deductible Patients, More Cost Sharing, More Abandonment

It’s February, and many patients are now facing the reality that they will have to pay for most of their medical expenses until they work their way through increasingly large deductibles. Because of this, pharmaceutical manufacturers will see both a big increase in patient access program spend and increased patient abandonment – two things no brand team wants to see.

Our data shows that from December 2017 to January 2018, the average copay program has seen an increase of 12-15% in patients paying full price at the counter (before a copay card is applied). This is 2% to 6% higher than what we saw in the comparable period last year. Furthermore, across brands we see a much higher rate of patients with high copay costs using savings programs versus patients with low copays.  This indicates that cost sharing works, but so do copay cards. Higher costs drive patients to be better consumers of healthcare and “shop” for their medications – and copay cards are there to be the solution.

What Does this Consumerization Mean for Biopharma Brands?

The effect of consumerism on biopharma brands is clear: higher reversal rates, blown budgets, or both. However, with the right approach to patient access solutions, brands can not only better absorb the impact of cost sharing, but also set themselves up for long term success.  Below is a list of questions every marketer needs to ask before deciding on a strategy to address the impact of cost-sharing:

  1. How much do deductibles impact your patient population? Are your patients typically younger or older? Do they come from geographies known for having higher rates of deductible health plans? Identify those populations most impacted and target them with messaging about your access program.
  2. How much do deductibles really impact your therapeutic area? While all brands are somewhat affected, there are extreme differences across therapeutic areas. For example, birth control brands often see relatively low spikes in abandonment early in the year, so many plans cover birth control at no cost even during deductible season. Other brands, particularly those where patients can’t immediately see or feel that the drug is working, may see much higher abandonment at this time.
  3. Are there less expensive substitutes – and once patients switch, do they ever come back? For many patients, Q1 means switching from branded medications to less expensive alternatives. Do you see this in your patient population? Once they leave, do they ever come back? Knowing the longitudinal behaviors of your patients can help you decide how much extra you need to invest early in the year.
  4. Are patients in their deductible more or less price sensitive than other patients? Will patients in deductible plans pay a little more for the product earlier in the year because they expect to pay more? Understanding their propensity to walk away can help you understand how much you should or should not buy them down.
  5. Are your deductible patients actually making their way through their deductibles, or are they staying in their deductible all year? Some studies, including Truveris’ own, have shown that up to 70% of patients may never make it through their deductible.  Does it make sense to buy these patients through their deductible all year? This is a key step in determining if your standard copay design makes sense for these patients, or if you should put a special offer in place.

As the use of cost-sharing mechanisms continue to expand, it’s essential for brands to start asking new questions that enable them to see patients as individuals. Once these questions are answered, you’ll be better positioned to work with your patient access partner to align your strategy to adapt to the shifting market.


Topics: Trends, Insights & Analysis, Pharmaceutical Manufacturers, Patient Access Programs

Posted by

Jonathan Lanznar

Jonathan Lanznar is a member of Truveris’ Life Sciences team. In his role as Director, Jon leads the company’s efforts in delivering patient access programs for pharmaceutical companies. Jon has a BA from Emory University and an MBA in Healthcare Management from the Wharton School at the University of Pennsylvania.