Six Questions For Clients About Patient Costs

I’ve had a few “getting to know you/maybe we should work together” calls this past month. (BTW, #grateful) And two potential clients asked me what % I would estimate for pass-through for their respective copay programs. I asked what they were thinking, ballpark, for wholesale acquisition cost (WAC). One flat out balked at sharing (which is completely understandable, given that we don’t have a non-disclosure agreement). The other asked, with no hint of sarcasm, why did I need to know? I responded with formulary tier placement, deductibles (buying down a $2K patient deductible is different for a brand that costs $40K/year than a brand whose annual WAC is $10K), and patient willingness-to-pay decision points. But then I started thinking more broadly.

When you’re thinking through patient support problems, it’s worth asking if you’re trying to solve for the price (which the manufacturer owns), or market share (which HCPs drive with their prescribing decisions), or patient ability to pay (which public and private payers control). Manufacturer copay support programs can help solve only the last challenge and only for those patients with commercial coverage.

I worked on one copay program, and the pass-through costs were in the high tens of millions of dollars; for year one. The scope of work (SOW) between the drug manufacturer and the copay administrator needed C-level approval. I was very much sea level. Before the contract ever made it to the top, I needed to write an email summarizing the copay program and justifying the dollar amount. And I will never forget when a brand director sauntered over to my desk and said, with a kind smile,

“Hey, I just got your email. I didn’t want to put it this in an email back, but you need to check your math.”

I was horrified. Oh my gosh, oh my gosh, oh my gosh.

As he stood watching over my shoulder, I opened the email. I scanned it and saw no typos with the dollar amount.

“I’m so sorry; where’s the problem? My brain is not working; I’m sorry, I don’t see it.”

He’s still smiling. “Check your zeroes.”

I do. It’s the correct # of zeroes. I say as much.

The smile disappears. “Are you f*@#ing kidding me?”

We spent a solid two hours in a conference room diagramming copay process flows and tweaking .xls files, and the numbers stood. And he started inviting me to almost every one of his brand meetings. He became a friend and mentor, and we still joke about how copay is a lot sexier (financially speaking) than most people know.

I worked on another copay program, and there was a whole bunch of swirl and drama over whether the copay support program offer should be a “Pay As Low As (PALA)” $5 or $25 per fill. I didn’t get it; what was the problem? Someone gently pointed out that $5 was less than $25, which would mean the manufacturer would be paying more for the program.

If you price your Specialty product at $4,000 per prescription fill, the difference between buying down $1,995 (49.88% WAC) or $1,975 (49.38% WAC) in January is… half a percentage point. Your brand margin takes the heavy almost-50% hit at the beginning of the year thanks to patients’ high deductibles, not because you sweetened the copay support offering by $20/fill. In September, those January patients may only need copay support of $60/fill (1.5% WAC), and not because there were any changes to the drug’s price. They’ve met their deductible.

Here’s what Galway Group considers when thinking about patient out-of-pocket costs and how Manufacturers can help patients:

1) What is the brand trying to accomplish?

  • Ensure that patients can access your product, regardless of insurance coverage or their financial eligibility to pay?
  • Help patients with high out-of-pocket costs?
  • Establish market share in a competitive class?

These are three different, but not necessarily exclusive, objectives. Your strategy depends on your patients (payer mix), prescribers (market share), and payers (rebates, formulary tiers, ultimately, the patient’s out-of-pocket).

2) Is there a % gross-to-net (GTN) you absolutely cannot exceed?

If your leadership has promised a number to someone like the US General Manager or a Board of Directors, find out what that number is. Your leadership may give you either a dollar amount or a % WAC. You may not get the complete GTN analysis, but you need to know what amount, max, is up for grabs. I make Market Access VPs laugh when I say this:

You’re going to pay for your price.

It will be in rebates, contracting, or copay support spend, but one way or another, you will pay.

3) What do you anticipate for your patients’ payer mix?

Heavy Medicare/Medicaid/Public Insurance? Your patients won’t be eligible for commercial copay support if they have government insurance. You may want to consider how/if your organization donates to 3rd party patient assistance foundations. Or if some type of free goods program makes sense for Medicare patients in the donut hole.

Note: Galway Group doesn’t advise on 3rd party patient foundation donor strategy or patient advocacy group partnerships. These can be high-risk activities that have attracted much government scrutiny after much industry abuse. We’re happy to refer you to some outstanding attorneys who can advise on best practices in that space.

4) What is coverage going to look like?

Insurance does not equal coverage. 

  • Where do you think your product will land on plan formularies?
  • What type of out-of-pocket costs will your patients face AFTER their health plan has paid for the therapy? (Or, in the case of deductibles, before?)
  • These days, I operate under the assumption that half of the commercially covered patients have deductibles and that the average annual deductible is $2,000. I appreciate that other sources cite 31% for HDHP and $2300 as the average deductible. Technically, this is accurate in terms of plan structure, but we’re looking at patient out-of-pocket costs, total, for our copay modeling exercise, and not how plans achieve those costs.
  • Are you aware of any analog products? Have you had the opportunity to check out claims data for analogs to estimate copay support utilization and average manufacturer spend per redemption?

5) Can you describe patient costs related to treatment, and not just for your manufacturer’s therapy?

Your patients’ willingness to pay out-of-pocket for their medicine is influenced by ALL of their treatment costs: office visits, hospitalizations, scans/imaging, and other manufacturers’ therapies.

  • Where do they receive their medicine? 
  • Is it administered in a doctor’s office? 
  • Is it a shot given by an LPN, or do they need to be under an RN’s observation for an extended period after administration?
  • Infusion center? 
  • Dialysis clinic?
  • Two-night hospital stay? 
  • Shipped to them at home by a Specialty Pharmacy? 

6) If costs were no barrier, how likely are your patients to stay on therapy?

Solid clinical data can demonstrate improved patient health outcomes, but the medication’s benefits may not be readily apparent to the patient. Patient drop-off (AKA loss to follow-up) may require patient education and support to address challenges that have nothing to do with medication costs:

  • How often do the patients need to take this medicine?
  • Is it curative? Or chronic disease management?
  • Will they need to give themselves an injection? 
  • Do the patients see/feel an improvement in their health while on therapy?
  • What’s the safety profile? Is patient drop-off high due to GI or other side effects? 
  • What’s their pill burden? Are they on a bunch of other meds?

What patients pay for their medicines is driven more by payers, employers, and pharmacies than the public currently understands. Let’s be clear: I’m not letting Pharma Manufacturers off the hook, but they’re not quite the Big Bad Wolf. But it’s not just the dollars that should determine your Patient Support offerings; it should be a holistic understanding of the patient experience. Please don’t hesitate to reach out to learn how Galway Group can help.