Insights & Case Studies

Pharmaceutical Case Study and Industry Insights

With the current focus on the repeal and replacement of the Affordable Care Act (ACA), several other significant elements of healthcare reform are being overlooked. One such regulation is the “340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties,” or 340B Final Rule for short, which was published in the Federal Register in January 2017.

Almost exclusively focused on pharmaceutical manufacturers, this directive concerns two important aspects of the 340B program: ceiling prices and civil monetary penalties. Seeking to clear up confusion caused by previous legislation, the act finalizes the methods by which companies must act in specific pricing scenarios. With the proposed date of enforcement only weeks away, manufacturers need to react quickly in order to adapt.

The Patient Protection and Affordable Care Act of 2010 considerably restructured the way in which healthcare is provided in the United States. Now, as congress plans its “repeal and replacement,”1 it may not be fruitful to speculate about potential superseding laws, but a reexamination of the parameters and impact of the Affordable Care Act (ACA) is appropriate. For pharmaceutical manufacturers, the changes brought on by the ACA were particularly substantial within their pricing, contracting, and revenue management divisions. Understanding these factors is critical to enable companies to better prepare for and respond to any forthcoming legislation, which appears to be rapidly approaching.
340B participation is mandatory for pharmaceutical manufacturers that take part in the Medicaid Drug Rebate program. However, vague program administration guidelines, coupled with a lack of effective oversight, has made managing the process difficult. This paper discusses business complications and compliance issues manufacturers need to address.
The concept of market share, in which a company’s product or service represents a percentage of the industry as a whole, has a specific operational significance for the managed care (MC) practices of a pharmaceutical company. Historically, the market share achieved by a drug within its therapeutic class has been linked to payment tiers made to contracted entities. In recent years, this once standard rebate strategy within pharmaceutical revenue management has been significantly under-utilized. Because the majority of prescription drugs are dispensed under MC programs, understanding this shift is a critical component in predicting where the industry is headed.
In November 2015, the Bipartisan Budget Act of 2015 was signed into law, bringing with it a host of changes for the scope and structure of a variety of governmental programs. One such affected entity is the Medicaid Drug Rebate Program. This amendment is particularly noteworthy for pharmaceutical manufacturers, not so much for its contents, but for the events influencing its speedy ratification.

The pressure on pharmaceutical manufacturers to meet statutory requirements for discount and liability accruals has never been greater, due largely to the increasing diversity and complexity of today’s marketing and contracting offerings. To meet this challenge,pharmcos are heavily investing time and resources to improve the gross-to-net (GTN) management process using forecasts to reconcile these items.Improving GTN management is not just about meeting statutory requirements. In fact, improvements in these areas can drive significant impacts in profit through a more robust understanding of the revenue and demand drivers, and how the discounts and liabilities affect these factors. In addition, greater accuracy in the accruals process leads to fewer adjustments, and greater predictability in cash flow.

The groups that comprise the Managed Markets division of a pharmaceutical manufacturer, despite their inherent overlap of job tasks, can often work in silos. Even when operating at full capacity, an exclusive focus on individual responsibilities can lead inevitably, and unknowingly, to downstream issues if not properly aligned with the needs of the other groups. Only when the Contract Management, Rebate Processing, and Government Pricing teams work harmoniously can optimal efficiency be achieved across the division.

The administrative tasks associated with rebate processing aren’t typically viewed as revenue generators for an organization. However, when managed effectively, these activities can undoubtedly provide considerable benefits to a company and contribute to the bottom line.  If left unattended or overlooked, a business can encounter compliance issues, misallocate time and resources, and suffer extensive financial losses. Consequently, a standardized rebate calculation process, coupled with validation and analytics, are necessary components of a successful practice. This paper explores how these procedures, when implemented appropriately, capture revenue leakage, measure efficiency, and provide real time insights needed for critical decision making.

A mid-size pharmaceutical company experiencing rapid growth driven by new product introductions needed help managing their Managed Care and Medicaid rebate processing.

A mid-market manufacturer’s contract management systems enviroment had functionality gaps in the areas of contract development, commercial rebate processing, admin fee calculations, operational and strategic reporting and workflow integration. The existence of these gaps necessitated excessive manual processing, which limited productivity and heightened regulatory compliance risk.

For a top-ten Pharmaceutical Manufacturer, streamlined their GPO Membership Confirmation Processes from a Labor-Intensive and Time-Consuming cycle that introduced Compliance Risks, to a centralized solution that Reduced and Eliminated Manual Processing by 45%, while Increasing Accuracy, ensuring enhanced relations with their wholesalers and Potential Savings.

Proper management of membership data poses a significant operational challenge for pharmaceutical manufacturers. Membership data is submitted by Wholesaler, Distributor and GPO (Group Purchasing Organization) customers in the form of “rosters” that are used by Manufacturers to determine eligibility for contract sales when adjudicating chargeback and rebate transactions.  Membership data also serves a second, and equally critical purpose, to assist Manufacturers in designating customer trade class for use in regulated price reporting and sales and marketing activities.

Financial accruals have become a major headache for corporate finance teams in the Life Sciences industry as they are increasingly difficult to manage, and can lead to major business issues if calculated incorrectly. The problem is that most companies don’t have an automated way of pulling all the data together, and calculating the appropriateaccrual rate…

On January 27, 2012, CMS published the much anticipated Proposed AMP Rule for implementing the Medicaid prescription drug provisions of the Patient Protection and Affordable Care Act (PPACA). These new guidelines will have a wide-reaching financial impact on the life sciences industry by creating serious administrative and operational challenges. Well, here we are over a year later and the final rules have not been issued.

The contract management process of an organization has long been considered a tedious, paper-pushing process that simply needs to be completed in order for the other more “strategic” groups within the organization to successfully complete their tasks. Many think of the contracting group, the group that manages this process, as playing an administrative role within the organization.

On January 27, 2012, CMS published the much anticipated Proposed AMP Rule for implementing the Medicaid prescription drug provisions of the Patient Protection and Affordable Care Act (PPACA). The new guidelines will have a wide-reaching financial impact on the life sciences industry by creating serious administrative and operational challenges that will have to be addressed relatively quickly.

Life science organizations are turning to technology to address the shifting challenges of contract management, particularly with respect to controlling potential revenue leakage, safe-guarding against compliance issues, and facilitating government reporting.

A multitude of business drivers are leading Life Sciences companies to evaluate and implement Revenue Contract Management (RCM) solutions. These include the need to ensure compliance in an ever-changing regulatory landscape, a systematic approach to commercial and government contract administration and the need for business intelligence required to effectively evaluate and implement innovative contracting strategies.


Global Pricing, Reimbursement & Market Access 

A perspective on the impact of international reference pricing from the Pricentric® team.

Over the past decade prescription drug shortages have increased significantly across the U.S. and Europe, impacting both essential and life-saving medicines. Drug shortages have a far-reaching influence across the entire healthcare system, impacting patients, hospitals, pharmacist, clinicians, policy makers and pharmaceutical manufactures.

A perspective on the impact of international reference pricing from the Pricentric® team.

The global pharmaceutical market faces a complex network of regulatory, R&D and competitive issues that impact business performance. One of the biggest challenges the industry faces is international reference pricing (IRP). With IRP, discounted launch prices are no longer confined to discrete markets, enabling price fluctuations in markets to negatively impact pharmaceutical manufacturers around the world. This has devastated margins and revenues for many pharmcos.

The U.S. healthcare scene has always experienced varying frequencies of drug shortages, which have caused numerous difficulties for clinicians, healthcare facilities, patients and federal regulators. The U.S. Food and Drug Administration (FDA) found that quality problems such as contamination and the presence of foreign particles, are the most common cause of drug shortages, accounting for nearly 70 percent of all drug shortages.

Unifying Contracting & Revenue Management: The Global Revenue Management Center of Excellence

As the pharmaceutical market expands and matures worldwide, siloed systems and processes are unable to provide the holistic view manufacturers need to contain lost revenue and maintain price transparency.

This white paper discusses how a Center of Excellence can provide a greater level of insight into and management of revenue.

The whitepaper covers:

  • Considerations for creating a Center of Excellence
  • Providing visibility for pharma reps and overcoming challenges
  • Aligning systems to support the Center of Excellence
  • The value a Center of Excellence can bring

Register now to receive a copy as soon as it is available.

A mid-sized pharmaceutical company was struggling to manage over 1500+ annual price changes with a department of less than 5 pricing experts, and could not keep up or quantify fully the price erosion impacts of these decisions in advance.

A pharmaceutical manufacturer required competitor prices and reimbursement information to support a range of global issues at a very short notice. Having limited resources, they were looking at optimizing their activities.

The company recognized a need to assess the potential impact that the pending Marketplace Exchanges would have on drug access strategy, contracting, and account management. Managers were fielding strategic questions from senior leadership about this potential impact without sufficient data or market intelligence, and the field force was looking for direction on how to engage their clients about this new marketplace.

The company needed help developing their price, reimbursement, and market access strategy for an orphan drug. Strong clinical evidence was under development, but serveral gaps were apparent. The company struggled due to limited resources, lack of industry insights, and information infrastructure.

With the emergence of a new national health insurance Marketplace, insurance shopping has a new level of accessibility that has resulted in a broad-spectrum shift of health insurance operations. October of 2013 began this paradigm shift with the start of open enrollment for the Accountable Care Act (ACA)’s Marketplace. The Marketplace ushered in new insurers, formularies, and an array of benefits designed to meet the new health coverages and actuarial expectations stipulated by the law.

As of April 19, 2014, over 8 million people signed up for a Marketplace plan with an additional 6 to 7 million enrolled in Medicaid, the majority being previously uninsured. This exceeded the original 6 to 7 million enrollment projections. The Marketplace is poised to grow to over 24 million members by 2016. Depending on how the current small and large group employer market responds and evolves, it could mean expansion beyond that by tens of millions.

The Gulf Central Committee for Drug Registration (GCC-DR) was approved on the 15th of May in 1999 by the Executive Office for Health Ministers in Riyadh, Saudi Arabia. The GCC-DR committee consists of two state nominated representatives from Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

Market access is the ultimate goal for medical device and pharmaceutical companies, yet it remains one of the biggest current and future challenges for the industry. Spiraling drug development costs mean the pressure is on to ensure successful and effective market access.

To uncover the specifics on the challenges and key success factors, we recently conducted a survey with global and local stakeholders to find out more. 91 stakeholders were included from a variety of pharmaceutical and medical device roles in pricing, reimbursement, market access, health economics outcomes research (HEOR) and policy.

The healthcare sector is widely regarded as a defensive play in the stock market. Healthcare is thought of being less elastic than normal goods because when people are sick they will use it with little thought of price.

We attempt to answer if the pharmaceutical and biotechnology sectors are defensive plays during a bear market, and how they compare in a bull market? We analyzed the performance of a pharmaceutical and a biotechnology index from March 2000 through April 2013 alongside the S&P 500.

Background and Motivation for this Study:

  • Price of drugs do not vary with macroeconomic variables like GDP per capita or inequality
  • If price elasticity of medicine demand varies with macroeconomic variables, then it is possible to increase profit by allowing prices to differ
  • There is ample empirical evidence that price elasticity decreases with income

Download the paper to see our methodology, results and conclusions.

With expectations to reach 30% of the nearly $1.2 trillion US global spend, and 50-70% of the $70 billion annual US growth forecasted in the pharmaceutical sector by 2016, it is clear why emerging markets are considered the new frontier. They are the new hope for a pharmaceutical industry that is seeking new strategies and partnerships to balance the stagnation in more mature markets…

Increasing price transparency and global competition are key challenges faced by companies across all industries. Today’s pricing decisions cannot be based on instinct or informal methods due to the high level of risk incurred through inaccurate practices.

Predicting the price change percentages and timings of drugs is important to policy-makers, pharmaceutical companies, and even investment firms, to aid in sound policy and product decision making. If it were possible to use advanced modeling to predict these changes, informed decisions could be made based on these forecasts.

We examine how much of the cross-country drug price differences can be explained by macroeconomic conditions. Specifically, we use the following explanatory variables to model cost: real GDP per capita, openness, population, and corruption.


Commercial Operations & Analytics

Today, physicians and patients expect to interact with pharmaceutical brands in the same way they connect with consumer brands in their everyday lives. This has put pressure on pharmaceutical brands to step up their game or be left behind. Information often beyond core brand content needs to be readily available on the customer’s terms – the channel, format, and timing of his or her choosing. While the industry has embraced both digital and traditional channels to deliver brand messages, this doesn’t mean physicians have easy access to the information they need when and how they want it.

Download this white paper to learn key strategies that help keep physicians engaged with your brand.

The pharmaceutical industry is shifting to a customer centric business model in order to drive growth and deliver cost efficiencies. As many other industries have already made this shift, the effectiveness of this approach has been proven and beckons for pharma to follow. This new environment requires brands to think differently about their relationships with customers. The customer centric approach recognizes that consumers want to reach out to a brand on their terms to get the information they want for their individual needs.

A mature hypertension brand’s lifecycle strategy was to manage for profitability through promotion optimization. Existing efforts focused on personal promotion to high-prescribing GPs. Our challenge: Refine targeting and develop a non-personal promotional strategy that would sustain prescribing behavior projections through LOE.

A major Pharmaceutical company had outgrown their existing home-grown Commercial Operations information management platform. The CIO had a vision; to dramatically change the paradigm for both information design AND delivery.He knew that building a custom system would eventually have the same issues;poor data quality and poor performance in meeting business requirements. In addition, the CIO challenged its suppliers to come up with a financial model that transformed information delivery from a fixed cost to a variable expense.

On February 8, 2013, CMS  published its long-awaited Final Rule for Sunshine Act implementation, giving manufacturers less than seven months to prepare their cross-enterprise stakeholders, business processes, transactional systems, and customer data management technologies to accurately capture and aggregate reportable spend beginning August 1, 2013.

Mobile Solutions Yield Increased Access, Value Added Physician Interactions and Business Intelligence leading to improved Sales & Marketing Results.


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