Direct-to-Patient Models in Pharma—A Harbinger of Things to Come?

In recent years, pharmaceutical companies have implemented a few direct-to-patient models in the United States to directly sell and distribute prescription pharmaceutical products to patients.

As with any prescription drug, these models require the patient to receive a prescription from a doctor and then go to a brand.com website and input this information. The physician can call-in the prescription, or the patient can mail, scan or fax the prescription, pay the co-pay or full amount and then receive the drug in the mail a few days later.

The potential value of these models is in their ability to bypass payers, create a direct relationship with patients (with their approval and knowledge) and stay in line with the ongoing consumerization of healthcare. They may also create opportunities to partner with select pharmacies or assist managed care organizations in taking the cost for particular therapies out of their budgets completely.

While pharmacos have pursued these models to fulfill different objectives, the models themselves may offer a glimpse at how some brands will go-to-market in the future—either at launch or post-loss of exclusivity (LOE) when generic copies can enter the market.

Before we go further, let’s outline three such models that have been used recently:

AstraZeneca’s Web Portal Dutoprol Direct Available From Launch

A launch brand, Dutoprol from AstraZeneca, was made available in a heavily genericized space via a direct-to-patient web portal called Dutoprol Direct. Dutoprol offered a good deal for patients: A 90-day supply at only $55, which is competitive with typical Tier 2 co-pays for mail order fulfillment. This deal was supplemented by retail value card Dutoprol Today, which enabled patients to fill their prescription at a pharmacy for $22. In both cases, web portal or pharmacy fulfillment, the brand did not require insurance because it was a cash offer (with wholesale acquisition cost at about $16 for a 30-day supply). Interestingly, the Dutoprol Direct portal no longer exists, and the brand appears to be covered by major managed care organizations.

Off-Patent Past Blockbuster Arimidex Direct Web Portal from AstraZeneca

AstraZeneca also introduced a direct-to-patient web portal for one of its off-patent past blockbusters, Arimidex, an aromatase inhibitor for the treatment of breast cancer. Arimidex Direct launched a couple years after the brand’s LOE to enable women to gain access to the original branded drug in response to their inquiries. The offer to patients at Arimidex Direct is to pay no more than $40 per month to have it delivered to their doorstep. If the patient has insurance that covers it at less than a $40 co-pay, it is processed via insurance. For patients without insurance, with restrictions on Arimidex or with co-pays greater than $40, the transaction is not processed via insurance, and the patient pays a $40 cash price.

Viagra Home Delivery Service from CVS Pharmacy

The best known direct-to-patient portal for branded drugs is likely the recently launched Viagra home delivery service, powered by CVS Pharmacy. The portal was launched to help patients avoid various counterfeit copies of Viagra available on online pharmacy websites.

An additional benefit for patients is the ability to avoid potential embarrassment while filling a prescription face-to-face with a pharmacist. Viagra’s website appears to require insurance information, but it would not be surprising if the back-end of the website was designed to enable cash offers for uninsured patients, those with restrictions on erectile dysfunction drugs or those with very high co-pays.

The Benefits of Direct-to-Patient Models

Only time will determine the true benefits of such direct-to-patient models, but they may have particularly useful implications in navigating an increasingly payer-driven market and leveraging brand equity to reduce the impact of generic copies.

As new “me-too” type products enter the market in crowded, high-volume therapeutic areas, increasingly restrictive payers will position manufacturers against each another to minimize net cost. These dynamics are firmly in place today in some categories. For new entrants, this may mean launching with very poor access, which limits the willingness of physicians to prescribe due to the high hassle factor of dealing with pharmacy call-backs, high co-pays and patient complaints. Assuming the price points are palatable to the manufacturer and patients, products can be made available via web portals (or at the pharmacy) for a cash price that does not require insurance, such that physicians and their patients have no managed care hurdles to overcome.

For manufacturers, the trade-off is one of price and volume. Does unfettered access—coupled with effective promotion—allow manufacturers to generate enough volume to offer prices low enough for patients to pay out-of-pocket rather than the co-pay? A proliferation of such an approach is consistent with the consumerization of healthcare. This perhaps makes drug insurance more like home insurance, as we would pay cash for minor repairs but use insurance for major damages.

A Potential New Post-LOE Approach

Branded pharmaceutical companies long ago became accustomed to generics taking more than 95% of their volume just a few months after patent expiration. Major brands live on with between 3% and 5% of their original pre-LOE volume at a price equal to or higher than their pre-LOE price. Direct-to-patient portals offer a possible solution to this leveraging of brand equity often developed during the marketed life of branded drugs. That brand equity may be more valuable than ever, given recent events that have caused questions to swirl around the production quality of generic manufacturers.

Patients usually learn about generic availability at the pharmacy—if the doctor prescribed Lipitor, the pharmacist can legally switch to generic atorvastatin, which is often further driven by the insurance coverage of patients (their plan may no longer cover the brand, or do so at a much higher co-pay). But what if patients were to fill their prescription on a branded website? The manufacturer could set the cash price at a point that many patients will pay, demanding a premium over generics and bypassing payer coverage decisions.

Driving a patient to such a website is no easy task, but if the brand equity and promotion encourage patients to use the site (or, in the future, perhaps an online pharmacy with all brands similar to Amazon), perhaps volume can be gained (again carefully weighed against price concessions). Even better, if patients develop a direct relationship with such portals before LOE, keeping them on the brand will be much easier. The combination of brand equity and a reasonable price could keep many patients well beyond the normal post-LOE decline. And, if brand equity is strong enough, this might enable pharma to bring in new branded patients even after LOE.

What types of products could benefit from such models? Newer brands competing in highly crowded spaces with relatively little differentiation might benefit, but they must carefully consider price/volume trade-offs and the ability to effectively promote a new way of obtaining a prescription. Brands facing LOE might also be good candidates—strong brand equity will likely be a prerequisite, and price/volume trade-offs must still be considered.

As is common in the pharmaceutical industry, the next five years will prove interesting. We typically look forward to seeing which incredible new breakthrough drugs will change the treatment paradigms for diseases with high unmet needs. Now, we also look forward to new innovative business models to leverage the power of the consumer to drive the success of less clinically differentiated brands.

  • Bill Coyle

    Bill Coyle is a Principal with ZS in its Princeton, NJ office. He focuses on sales and marketing issues in the pharmaceutical and biotechnology industries. Bill’s areas of specialty include market access and pricing, key account management, commercial organization design and sales effectiveness.

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