Making the Case for the Value of Co-pay Cards

As PBMs have endeavored to tame pharma companies that play fast and loose with pricing, the co-pay card has been a rare mechanism that allows manufacturers to retain some semblance of control at the pharmacy counter. Photo credit: e-Magine Art/Creative Commons

The prescription co-pay/coupon card first appeared as a pharmaceutical marketing tool in the early part of this century. This tool allowed pharmaceutical manufacturers to offer an instant rebate directly to patients at the point of purchase, thus lowering out-of-pocket medication costs. Fast forward to 2015, when:

1. Ninety-two percent of privately insured workers/employees are facing a tiered cost-sharing formulary for prescription drugs.

2. The average 2015 monthly prescription co-pay amounts for preferred brands are now $31, with non-preferred brands costing $54 and specialty products costing $93, according the Kaiser Family Foundation Employer Health Benefit Survey.

See also: Loyalty Programs: Beyond the Co-Pay Card

3. Industry estimates suggest that there are currently more than 550 pharmaceutical products in the US for which a co-pay offset program is utilized—which represents a 35% increase in brands utilizing them as an adherence-boosting tool since 2012.

4. A 2014 ROI analysis conducted by my firm for a major pharmaceutical client indicated that investments in the co-pay offset program yielded approximately $2 for every dollar invested.

5. Those statistics don't paint anything approaching a complete picture, so perhaps the best way to analyze the potential future of co-pay programs is to look at all the players. Who likes co-pay cards? Who would prefer to see them go the way of the dodo bird? Read on.

Healthcare providers like them

Photo credit: Diabetes Care/Creative Commons

They believe that co-pay cards improve the affordability of branded medications for their patients. HCPs admit that the majority of the prescriptions they write are for generic medications. But when a branded medication is appropriate or necessary after generic medication failure(s), they want to be able to prescribe a branded alternative medication that is affordable (with a low co-pay or out-of-pocket cost) to the patient.

This is important. They know that poor adherence correlates with high out-of-pocket prescription drug costs. This was noted in the May 2014 edition of Health Education Research, in which the study's authors analyzed primary prescription medication adherence (first prescription fill likelihood) and noted that the primary barrier to first-fill adherence was patient out-of-pocket cost. Another recent study indicated that if a prescription co-pay was greater than $50, it was three times more likely to be abandoned (read: not filled) when compared with control medications that had a $0 co-pay. The abandonment rate was twice as high even if the out-of-pocket cost was only $25 for the first fill.

The media dislikes branded products

Photo credit: Lena Vasiljeva/Creative Commons

The media does not like branded pharmaceutical products, with or without savings offers. Let's face it, the pharmaceutical industry is once again in the middle of a terrible storm related to the pricing of branded products, especially in the US. In addition, the trade organization Pharmaceutical Research and Manufacturers of America hasn't done enough to raise public awareness of the scientific breakthroughs that improve and extend the lives of people across the globe.

By way of example, a recent US Congressional Budget Office study indicated that spending on pharmaceutical products currently accounts for only 10% of all healthcare expenditures. This small percentage of expenditures could not be responsible for the continued and dramatic rise in overall healthcare costs. The same CBO study indicated that every $1 not invested in a necessary pharmaceutical intervention costs the healthcare system $2 in future healthcare costs. Indeed, numerous other studies show that prudent use of prescription pharmaceutical therapies actually reduces overall healthcare utilization. It is unfortunate that PhRMA has not effectively communicated the value that our industry delivers to healthcare consumers. 

Pharmaceutical marketers respect their value

Pharmaceutical marketers respect the value that prescription co-pay offers deliver. Numerous ROI analyses of these offers conducted by our company for pharma marketing teams indicate that these programs deliver around $2 in incremental revenue for every $1 invested. For a marketing team leader, this is clearly welcome news. Such levels of marketing ROI are typically only matched or bettered by investments in the sales force and in branded TV advertising. If I were a marketing team leader, I would focus the majority of my time and resources optimizing these three promotional channels before I invested in any other area of the marketing mix.

Patients love co-pay/coupon programs

As indicated above, patients are more likely to fill their prescriptions when their out-of-pocket costs are lower. Many products also provide information that helps patients better understand their disorders and the value of treatment—and patients can often enroll in compliance, adherence and/or disease-education programs when they activate savings cards before they fill their first prescription. These programs are shown to enhance compliance and long-term adherence, which in turn improves patient outcomes.

Payers dislike these programs

Payers are the primary group that tends to dislike savings offer/coupon programs. In their eyes, co-pay programs undermine the formulary tier designation efforts that are negotiated between payers and drug manufacturers. This is seen to weaken insurers in two ways: First, by allowing HCPs to prescribe outside the tiered formulary system, it forces insurers to reimburse for more costly branded drugs when cheaper, on-tier drugs (both branded and generic) may be available; and second, by denying insurers rebates (contracted with drug manufacturers as part of the tier-designation negotiations) that might have been available had an on-tier therapy been prescribed. 

See also: Payer Pressure: Value-Able

But there appears to be a softening of payers' antipathy toward co-pay programs. I recently spoke with an executive at a leading co-pay program provider, who shared with me some interesting tidbits regarding recent interactions with payers. The executive said that payers' medical directors are typically more open-minded toward co-pay support programs than pharmacy directors, as they have the responsibility for the “entire patient” (meaning final outcomes and utilization of all services), and also noted that a good number of payers, among them PBMs, are beginning to recognize that co-pay support does indeed bolster adherence (and thereby increase clinical success rates), especially for high co-pay specialty brands. Could it be that we're seeing a thaw in the chilly relationship between co-pay program providers and the payer community? We can only hope so.

At the end of the day, proponents of co-pay programs are the likely winners, so to speak. HCPs and their patients see the value in these programs—and because those important constituencies value them, I fully expect that they will exist well into the future. In the process, they'll ensure that patients have greater access to medications that physicians believe are appropriate for their care.

Mike Boken is managing partner of Benchworks Consulting.