Pharma marketers become adept at refining coupon and voucher programs, while technology options multiply. Meanwhile payer criticism mounts
By Bob Sperber; posted @ Pharmaceutical Commerce.
While sampling has been the traditional method of getting patients to try new therapies, the use of coupons or vouchers—often targeted directly to consumers rather than physicians—are on the increase. ” target=”_blank”>In these difficult economic times, such financial incentives are attracting more consumer interest, and the availability of these consumer discounts is being magnified by Web-based promotions in addition to conventional print media. In parallel, coupons and vouchers are demonstrating value in raising or maintaining patient adherence to therapy—a good thing from most healthcare payers’ perspective—but are attracting more criticism from them when the incentives are plainly directly at countering higher-co-pay, higher-cost second- or third-tier formulary positions. The contention is that pharma marketers are circumventing the plans’ goals in steering patients to lower-cost drugs.
IMS Health told the New York Times, in an article published at the beginning of this year, that use of coupon programs has tripled since 2006. Coupon programs are even figuring in pharma companies’ Wall Street presentations: during J&J’s quarterly conference call in October, CFO Dominic Caruso told analysts that, in order to recover lost market share from its recent product recalls and competition from private-label OTC products, “our marketers are very good at knowing what they need to do to attract consumers [with] a mix of brand marketing and expenses, couponing, innovation, etc.—a surround-sound impact to get consumers back,” according to Bloomberg News.
Paul Kandle, VP and GM of Opus Health, a division of Cegedim Relationship Management (Bedminster, NJ). Opus was one of the first companies to capitalize on the “secondary adjudication” steps that were put into claims-processing systems at pharmacies, once a copay had to be linked not only with a specific health plan, but also with the identity of the drug being prescribed. Since then, it has run over 1,000 programs for manufacturers, and says that it has 250 programs currently. “These claims-processing systems allow manufacturers to overcome two obstacles to patient assistance: the complexity and difficulty of getting samples into the hands of patients after a prescription has been written, and the ability to provide a refund at the point of sale, rather than taking actions like mailing a coupon and receipt into a fulfillment center.” Vouchers (which figure primarily in getting free samples dispensed) enable the prescription to be filled at the pharmacy—and to be documented in the claims processing system—as opposed to being handed out by the physician; however, Kandle notes that there is still a perceived value by physicians in being able to hand out a sample directly.
On the copay side, the original need was to ensure that the pharmacist “would be made whole” financially if a discount on a copay were transacted; the secondary adjudication ensures that that happens. As these details were worked out, the overall economics of running coupon and voucher programs became more positive.
“Manufacturers always had pressure to reduce costs overall, but the pressure’s much greater today,” says David Merkel, senior vice president of business solutions for J. Knipper and Co. (www.knipper.com), Lakewood, NJ-based multi-channel marketing services firm. “Rightly or wrongly, pharmaceutical companies have been painted as the bad guys…and are being expected to absorb much of the costs.”
Free-trial vouchers, started as an alternative sampling vehicle to help contain those costs, says Merkel, “but have led to other components from direct mail to longer-term vehicles to promote patient persistency with other forms of patient co-pay assistance.”
And yet physician sampling programs are still a starting point for patient outreach, with 85% of manufacturers distributing trial samples directly to physicians through their sales reps or via direct-to-practitioner (DTP), according to a survey report presented in September by TGaS Advisors (www.tgas.com), and the PDMA Alliance (www.pdmaalliance.org) at September’s PDMA Sharing Conference in San Antonio. Kevin Sharp, director with TGaS, says trial vouchers are “generally utilized to address ‘white space’ concerns and facilities that do not receive physical samples. These particular channels have seen growth as pharmaceutical companies have changed the structure and size of their sales forces.”
Still, with the downturn in the economy and years of pharmaceutical mergers, prescription drug manufacturers are “looking for ways to do more with less. And because there are fewer reps out there, there’s less sampling going on than in the past,” says John Khantzian, senior principal, LifeLink Solutions, IMS Health (www.imshealth.com), Danbury, CT. “And where that sampling that does still exist, it’s being done based on priorities developed through physician and patient segmentation analyses.” So, for example, if there’s a managed care influence in a certain area, the manufacturer may modify their sampling tactics based on its formulary status. This helps to ensure that the physician will have its drugs on hand in the sample closet to provide until the patient fills an initial prescription.
While hand-delivered samples still dominate according to the TGaS study, those sampled – primarily drug-makers sample-accountability and PDMA compliance professionals – are also exploring other options at high levels: 90% of respondents use coupons; 76% use vouchers; 24% use a pre-paid card; and 17% offer co-pay assistance.
The most confusing aspect of analyzing these results is trying to discern the definitions of these vehicles – something that won’t soon be answered.
“There aren’t any consistent definitions across the board for coupons, vouchers, pre-paid cards and co-pay cards,” Sharp concedes. As a result, the survey listed those promotional options and asked respondents to check which method they used. On on end of the spectrum are one-time free trials; on the other are longer-term co-pay-assist card programs that foster loyalty. Given these parameters, it may be possible to discern what promotional vehicle works best for the drug maker-marketer.
IMS studied the success of three kinds of patient card programs for one branded pharma company’s (unnamed) chronic therapy (Fig. 1) for which there were a mix of branded and generic alternatives, with generics representing a significant percentage of market TRx (prescriptions written) volume:
• A multi-use co-pay card for use with multiple prescription fills per year, with a guaranteed maximum level of co-pay or patient out of pocket expense;
• A limited-use savings card program that guaranteed lower patient out of pocket costs to a fixed dollar amount and
• A free-trial voucher program for one free prescription fill.
The objectives of the three programs were to increase the flow of new-to-brand patients and drive brand loyalty. Patients selected were new to the brand, either newly diagnosed or switched from other medications) The result? Multi-use program patients purchased 61% more pills over a six month observation period, while limited-use savings card program patients purchased 28% more pills than the control group.
Interestingly, the free-trial voucher program resulted in lower sales than the control program. The drug may have carried unwanted side effects, but such speculation fell outside of the research, says Greg Mastrogiovanni, engagement manager, Commercial Services, IMS Health. He avoids such speculation, offering that this isn’t an uncommon occurrence, and that “a good percentage of patients try the product once because its free but never convert to paid therapy.” Beyond that, he didn’t speculate on why those who tried the free trial didn’t continue on the drug as often as the control group.
Such studies provide very useful data through the identification number printed on each voucher or card, which upon redemption is run through an anonymized, HIPAA-compliant patient-level database, explains Khantzian, providing data on “patient XYZ123… which tells us they used a coupon, voucher or co-pay card. That’s what allows us to create test groups and control groups to the measure adherence, compliance etc., of patients who get the card versus those who don’t. This way, a pharma company can evaluate the results of two different promotions for effectiveness and ROI.”
While pharma companies factor in costs, and ROI in promotional vehicles remain confidential to the brand, “The measurements around them – how they’re distributed and the ancillary materials – can be so remarkably, incredibly different,” says Tom Foley, director of business development for RxHope, one of the integrated multi-channel sampling and marketing companies of Triplefin (www.wearetriplefin.com), Cincinnati, OH. He says no “one size fits all” strategy can be applied to define a media mix or ROI; an osteoporosis drug for elderly women won’t use the same mix of tools and media as an erectile dysfunction drug; likewise, how a co-pay card or free trial will work depends on the drug, the patient population and when and how it’s deployed in the lifecycle.
Ned Finn, VP pharmacy at Inmar Corp. (www.inmar.com, Winston-Salem, NC), notes that coupon programs vary not only by therapeutic area, but also by the healthcare objective. “To drive better patient adherence, it may make sense to provide coupons to reduce copay for patients that have proven adherent to therapy. This can have a huge impact on patient clinical outcomes. If the goal is to cross-promote, there are opportunities to use coupons to promote OTC therapies or foods that address the side effects experienced by patients taking prescription drugs for specific health conditions. For example, an online coupon for moisturizers could be offered to someone searching for information on ways to manage side effects of chemotherapy; an online coupon could be offered for foods that address specific health conditions or lifestyle products such as smoking cessation products.” The company, which handles the equivalent of over $6 billion in coupons annually from a wide variety of consumer-goods companies, prints, distributes and then reimburses for coupons used in print media and online.
Tech serves brand experience
Opus Health, Knipper, Triplefin, Inmar and companies like PSK&W (www.pskw.com, Bedminster, NJ), Trialcard (www.trialcard.com, Cary, NC), Group DCA (www.groupdca.com, Parsippany, NJ) offer a variety of platforms and programs directed at consumers. Programs have evolved from distributing paper coupons to online, print-on-demand coupons, or loyalty cards that are used at the retail pharmacy to obtain an on-the-spot discount for copays. PSK&W has built out a system that integrates coupon distribution with relationship management tools (the DIVO platform) that it says provides a more complete interaction with patients. Most recently, the company linked up with HealthPrize, which is applying gaming technology to the patient adherence problem (Pharmaceutical Commerce, July/Aug 2010, p. 8) to power up its adherence offering.
Group DCA, for one, connects with the order-entry and reimbursement systems run by McKesson’s Relay Health unit to effect that on-the-spot discount with minimum workflow issues for pharmacists. Catalina Marketing (www.catalinahealthresources.com) says that it has 18,000 pharmacies, within a network of 50,000 retail outlets overall, through which it can manage copay assistance and adherence programs. (The company also runs CouponNetwork.com, said to be the largest print-on-demand coupon system in the world.)
Meanwhile, the growth of electronic health record (EHR) and e-prescribing systems at doctors’ offices and pharmacies is creating a new channel for electronic couponing. OptimizeRx Corp. (www.optimizerxcorp.com; Rochester, MI), now about a year old, is hoping to ride the EHR wave by integrating sampling and coupon programs with these e-prescribing systems, and has a partnership with Allscripts (Chicago) to bring pharma manufacturers’ programs into that channel. The company says that it has processed almost 70,000 coupons in the past year.
Medicare and other government-funded programs are ineligible for coupon programs, but Medicare Part D, and its infamous “doughnut hole” that requires patient payment up to a set level annually, has created an opportunity for patients. In helping to subsidize prescription drug costs by mandating a secondary payer field in the electronic claims process, the theory goes, Part D “gave manufacturers greater ability to offer financial assistance with new immediacy,” says Rick Randell, president of Triplefin’s National Patient Services (NPS). Because in contrast to old-fashioned snail-mail vouchers and the like, “the immediacy of on-the-spot secondary payer discounts at the pharmacy, and access to current multi-channel technology services, gave manufacturers the ability to finally make offers they needed to offset the expenses of being a non-formulary product, right at the point of sale.” While vouchers, coupons, co-pay cards and the like were already gaining popularity, the secondary payer field could be used not just for Medicare but for all transactions (Fig. 2).
It’s part of a tech explosion, he contends, that has brands more interested in tying and tracking promotional activities to Internet and mobile communication technologies. With consumer electronics and the Web now mainstream communication channels, and with patients actively managing their own Health Savings Accounts, more patients are taking to the Web where, says Randell: “A coupon isn’t just a coupon anymore. It’s an opportunity to communicate and work with the patient.”
Likewise, a website isn’t a website anymore. Beyond static display of information or perhaps printable coupons, brand sites can serving much of the informational role today as family doctors and neighborhood pharmacists did in days of yore. For example, Eli Lilly and Co.’s site for Effient (http://www.effient.com), for instance, offers a plain-English Esstential Habits program to help patients with stents adjust their diets and lifestyles in addition to offering a card that covers the portion of a patient’s co-pay over $25 up to a maximum of $20 each for the next 11 refills.
And Bristol-Myers Squibb’s website for Abilify (www.abilify.com), a treatment for depression, bipolar disorder and schizophrenia, guides visitors to identify the disorder for which they’re interested, state their informational needs as a patient, caregiver or information-seeker, and invites them to join its “ABILIFYAssist” (www.abilifyassistprogram.com) program for a free trial and “continued savings” with promotions for the healthcare provider, pharmacist, insured patient and uninsured patient (Fig. 3). Also, there’s a cost-and-coverage calculator, refill reminders and prior authorization assistance where the brand collaborates to help complete documentation and facilitate authorization.
“You can go on any brand’s website today and there will likely be a link to some sort of card program,” says IMS’ Mastrogiovanni, adding the prevalence of “relationship management programs” of the type illustrated above, where, beyond financial promotions, “there are patient education fulfillment materials and ongoing contact or touch-points via phone, e-mail, direct mail, et cetera – and we definitely see an increased trend in the industry toward these programs.”
In fact, any Internet, communication or media channel can be part of the mix, from TV commercial “ask your doctor” prompts and website “click here to print-out our coupon” features to opt-in email and text messaging elements, even mobile apps, which are emerging. (In September, Triplefin launched a new Innovations Mobile business to fill that need.) For some, this will beat the frustration calling a plan’s phone tree, although even that’s changing as new-generation IVR (interactive voice response) systems offer 24/7 services offering assistance with similar granularity to websites.
Given all these content-rich and personally tailored services, patients are much more likely to consider a brand’s value beyond the co-pay to build loyalty, or in the case of free trials, increase the value of the offer due to the trust the marketer builds using all of these technology-assisted services.
PBMs temper pharma zeal
It’s hard to manage a prescription drug promotional campaign when success when putting the brakes on a promotion can be as important as being proactive to patients’ needs. Viewed from one angle, that’s what happens when a pharma company offers too heavy a discount without offering also-deep discounts to the plans that would rather sell generics. But this is a simplistic view of a much more complicated set of considerations that make promoting prescription drugs a complicated affair.
Before the drug-maker can promote its drug, it has to establish its a preferred position in a drug plan by offering a sufficiently large rebate – in plain talk, discount – to pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for patients through the group health plans to which they subscribe through self-funded employer or labor union plans, health insurance plans, and Medicare Part D.
Those rebates act as a discount that’s factored into the formulary process to offset the cost of the drug, and they go “directly to the ultimate payer, such as the employer group, to offset their plan cost,” says Brent Eberle, VP of clinical services for Navitus Health Solutions (www.navitus.com), a PBM based in Madison, WI.
Once a manufacturer secures pricing and a preferred (or any) position, it then can turn to promotions such as patient co-pay assistance programs. Unlike samples and free-trial offers that don’t incur costs to anyone but the manufacturer, co-pay discounts are generally disliked by PBMs. The reason simple: A more expensive Tier 3 drug can appear to the patient to cost the same as a preferred Tier 2 drug when in fact its cost to the plan is almost always higher. Eberle says situations like this – aggressive marketing that crosses the formulary line – is “something we factor that into formulary decision making.
“If we feel a manufacturer’s marketing practices are too aggressive, that’s a manufacturer we typically going to be manufacturers we won’t partner with for that drug,” says Eberle. “There have been situations where we’ve been unhappy with a product’s marketing, and that has resulted in putting it in a non-preferred position with fairly aggressive ‘prior auth’ restrictions – even while we have other products of theirs that are in preferred positions.”
Integrating coupon/voucher/adherence programs with electronic medical records (EMR) systems will be the next frontier for these programs, says Opus Health’s Kandle. Currently, a contest is being waged between the EMR vendors and the patient-assistance providers over the cost of allowing a presence in the EMR network. At the same time, the EMR vendors are competing for share of mind with physicians and healthcare networks, so there’s going to be some equilibrium to be reached between the cost of having a presence in the network and the value to the EMR vendor for customer acceptance.