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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 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 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 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.
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