Thoughts and Perspectives on Model N’s Rainmaker 2015

“Change” was a pervasive theme at this year’s Rainmaker conference, hosted by Model N, a partner of Alliance Life Sciences, at the Westin Hotel in San Francisco, California. Model N seemed eager to show that it is evolving, much like the industry it services. The breakout sessions, chaired by Model N employees and representatives of pharmaceutical manufacturers, ranged from software demonstrations and panel discussions to traditional podium speakers.

The new developments exhibited by the company all carried a similar theme of being proactive.  Rather than toe the line or change reactively, a concerted effort is being made to stay ahead of industry standards and forge new best practices. These advances include new customer relationship programs, “Revenue Management as a Service” offering, “Express” implementations, and a new customer relationship management (CRM) platform entitled, Revvy Sales.

Model N prominently displayed its transition into cloud revenue management. Both Adobe and Salesforce were present to share their experience with “Transformation to the Cloud,” providing insight into the tangible benefits. Their latest concept, CRM2, is the combination of CRM and cloud revenue management, although they warned that users should not “cloud themselves into a corner.” In other words, while “speed is the new currency,” such advances should not sacrifice efficiency for the sake of expediency. Clearly, innovation is critical to Model N’s business model, but remains tempered by the necessity to deliver quality service.

While robust in scope, the product offerings from Model N represented only about one-third of what was presented during the event. The balance of the presentations covered a large cross-section of the revenue management space in pharma: commercial transactions, contracting strategies, government pricing policies, gross-to-net analysis, master data management, forecasting, accruals, and global pricing – to name a few. Model N’s theme of “change” was represented across the other presentations, as well. With talks such as “Future of MedTech – Disruption and the Advent of Big Data” and “Cranking up the AMP Volume: A Diagnostic of the New Ruling,” there was a decidedly forward-thinking atmosphere, in terms of anticipating industry trends and hypothesizing solutions to the shifting environments.

It was fascinating to see industry thought leaders discuss the likelihood and practicality of healthcare moving from a Fee-For-Service (FFS) to a Fee-For-Outcomes model in “Life Sciences 2020.” “Maximizing Revenues and Optimizing Customer Experience with Customer Master Data” examined frequently overlooked ways of streamlining business efficiency by improving data cleanliness. Hearing about more precise indirect sales management in “Updates on 340B Eligibility,” and creative managed care rebate solutions in “Innovative Contracting Strategies,” provided keen insight into optimal commercial operations.

Perhaps the most engaging aspect of these discussions was the spirit of knowledge-sharing that made them possible. Through the collaboration of various industry stakeholders, the insights gleaned from the conference were both eclectic and comprehensive. If current expectations become reality, the revenue management space in pharma will undoubtedly face a number of interesting developments in the future.

Optimizing Contract Management and Operations

For the Managed Markets division at a pharmaceutical manufacturer working in silos, along with an exclusive focus on individual responsibilities can lead to downstream issues if not properly aligned with the needs of other groups. When the Contract Management, Rebate Processing, and Government Pricing teams work harmoniously together, optimal efficiency can be achieved across the division. However, failing to do this can impact processing speed and integrity, squander company time and resources, and incur unnecessary financial penalties.

Strategies and Language

The life cycle for managed care contracts begins with the negotiation of the paper contract. This is critical for the groups implementing contract strategies to have an understanding of the downstream impact this can have on the organization. Prior to entering into contractual agreements, knowledge of the gross-to-net and government pricing calculations needs to be effectively communicated between all involved groups. Since contract management groups are seldom involved in day-to-day operations, creative and innovative pricing strategies, which appear to be saving the manufacturer money, may actually be extremely problematic. Potential savings can be lost due to language that is left open to interpretation.

Revenue Management System Setup and Maintenance

The majority of Life Sciences companies purchase a revenue management system for administering contracts with Managed Care Organizations (MCO) and Pharmacy Benefit Managers (PBM). While the benefits of these systems are evident – accurate calculations, prompt payments, and a centralized secure data warehouse – it is only with the proper configuration, realistic contract strategies, and efficient processes that a manufacturer can see the true benefits. To configure these environments most effectively, it takes years of industry and system specific experience and continuous communication between all parties involved. Without such coordination, the system may seem, at best, burdensome, and at worst, create a significant bottleneck in the rebate payment process.

While there are a variety of ways to set up a contract in a system, it is critical to understand the manufacturer’s long-term needs in order to develop the most efficient setup.By effectively translating the terms of a paper contract, a consequent improvement can occur to the bottom-line as a result of minimizing late fees and eliminating unnecessary headcount. While processing time varies by the complexity of the contract, failure to perform adequate evaluation is often the catalyst for future dysfunction.With contracts configured in the optimal format, an experienced rebate analyst should be able to process submissions against even the most complex agreements in less than 90 minutes. Spending more time than that is likely the result of a poorly configured contract.

Downstream Effects

Oversights that may seem minor in the initial stages can trigger a ripple effect that has significant consequences. Vague contract language can have the greatest impact on an organization and end up costing millions of dollars in additional rebates. It is recommended that the Government Pricing and Contract Management teams collaborate to develop the proper language within contracts. Once this is completed, the Rebate Processing team can configure systems properly and work to ensure all necessary calculations such as the Average Manufacturer Price (AMP) are accurate. Understanding the impact and interplay between contract negotiations, day-to-day operations, and Government Pricing is a crucial component to achieving long-term success.

Operating at an optimal capacity is a feat all companies nominally strive to attain, but few are able to achieve. Alliance Life Sciences can help you establish practices that are proactive and communicative to benefit you company across the spectrum of contract life cycle.

Click here for more information on our services.