Wednesday, February 13, 2008

PLV: Patient Lifetime Value

Let's start talking about patient lifetime value (PLV) by finding a definition for it. I've discussed PLV with a few pharma executives over the past year: bottom line is that only a few have given it much thought, but their "re-engineering" sessions are taking a much closer look. Despite being around pharmaceutical education and marketing for the past 20 years, I was still shocked that few if any companies had internal reward or recognition systems for improving PLV.

PLV may be different for every brand. We're in the process of creating a simple PLV simulator, and wondering: Does the formula simply calculate the amount of prescriptions a patient could eventually fill over time? Should it factor in the aura of having a brand that is a leader vs. a laggard in patient persistence? Should it include the cost of capital or the interest rate? Should it factor in the retention cost? Planners in other industries (telecommunications, newspapers) use a three - to - seven year horizon for retention. I think a lot of pharma marketers would be pleased with just one year for many brands.