It is late in the evening, and your question actually goes into areas I have a less than complete understanding of.

So I turned to my BA, ChatGPT to help me out on this one. They gave a pretty good response as follows:

TLDR: The patient cops an excess in their plan depending on which “tier” the plan has classified the drug.

in terms of the $BOT assumption of $450 per month net, the inclusion of “net” clearly implies to me that they have taken into account all potential copayment contributions they will make, so that shareholders can judge revenue as (# scripts) x (net payment). Otherwise it ain’t net and would be misleading.

The gap (as we call it here) is likely to impact patient willingness to pay, if $BOT can’t eliminate it for whatever reason, through their pricing agreement with the payers. We find out soon enough I guess.

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Full response:

Understanding the interplay between copayments, deductibles, and drug tiers is crucial when evaluating the cost implications of a medication like Sofdra (sofpironium 12.45% topical gel) for patients in the U.S. Here’s a breakdown addressing your concerns:

1. Copay Assistance and Deductibles:

Botanix offers a copay assistance program for Sofdra, enabling eligible patients to obtain the medication with a $0 copay. This program applies regardless of whether the patient’s insurance covers and reimburses the product. However, it’s important to note that such copay assistance typically covers only the copayment portion of the medication cost and does not address the deductible. Therefore, if a patient’s insurance plan requires them to meet a deductible before prescription coverage begins, they may need to pay the full cost of Sofdra until that deductible is satisfied. Once the deductible is met, the copay assistance can then reduce their out-of-pocket expense for the medication to $0.

2. Drug Tiers and Deductible Bypass:

Insurance plans categorize medications into tiers, which influence the cost-sharing structure for patients. Typically, lower-tier drugs (e.g., Tier 1) have lower copayments and may be exempt from the deductible, meaning insurance coverage applies immediately. Higher-tier drugs (e.g., Tiers 3, 4, or 5) often require patients to meet their deductible before the insurance plan contributes to the medication cost. The specific tier placement of Sofdra can vary between insurance plans, and this placement determines whether the medication is subject to the deductible. Without specific information on Sofdra’s tier classification within a given plan, it’s challenging to ascertain if it would bypass the deductible.

3. Prevalence of Deductible Requirements:

The requirement for patients to pay a deductible before prescription coverage kicks in varies across insurance plans. Some plans have separate deductibles for medical services and prescription drugs, while others may have combined deductibles. Additionally, certain plans might exempt lower-tier drugs from the deductible, offering immediate coverage. Given this variability, it’s difficult to determine the exact percentage of plans that would require patients to pay a deductible for Sofdra without specific data.

4. Gross-to-Net Expectations:

Botanix’s expectation of a $450 gross-to-net figure likely reflects the anticipated revenue after accounting for discounts, rebates, copay assistance, and other factors affecting the net income from Sofdra sales. This figure may primarily consider scenarios where patients are only responsible for copayments, which the assistance program reduces to $0. However, it might not fully account for situations where patients must first meet significant deductible requirements, potentially leading to higher out-of-pocket costs before the copay assistance applies.

Conclusion:

While Botanix’s copay assistance program effectively reduces the copayment for Sofdra to $0 for eligible patients, the impact of insurance plan deductibles remains a critical factor. The necessity for patients to meet their deductible before insurance coverage begins can result in substantial out-of-pocket expenses for Sofdra, depending on the plan’s structure and the medication’s tier placement. To obtain precise information, it’s advisable to consult directly with specific insurance providers or review individual plan details to understand how Sofdra is covered and what costs patients might incur.