Commercial Pricing and Contracting 101

Transcription

1 Commercial Pricing and Contracting 101 Reimbursement and Contracting CBI Conference Philadelphia, PA February 4, 2016 Althea Danzey, Director of Contracting Tina Still, Senior Manager of Contracting Eisai Inc.

2 Disclaimer The views/observations expressed in this deck are the personal views/observations of the speakers and do not reflect the views/observations of Eisai Inc. 2

3 Agenda I. Introductions II. Topics to be Covered: Breakdown Contract Structure and Strategy Best Approaches to Contracting Operationalize a Program/Process How to Communicate Value to Commercial Payers Analysis of a Successful Negotiation How to Measure Success in Contracting III. Questions 3

4 Contract Structure & Strategy 4

5 Contracting Philosophy Contracting is a by-product of a business partnership that results in a mutually beneficial arrangement between the Manufacturer and the Contract Organization Contracting IS NOT: Getting the biggest discount for my customer Giving the account what they asked for Offering the maximum allowable rebate/discount to the account Contracting IS: A process of learning about your customer Finding a business solution that provides fair value and meets the needs of all parties Offering the right rebate/discount to secure the business partnership 5

6 Commercial Contracting Segments Commercial Contracting Segments: Managed Care Commercial, HIX & Medicare Part D Group Purchasing Organizations Integrated Delivery Networks Specialty Pharmacies 6

7 Pricing & Contracting Strategy Goals Pricing and Contracting Strategies provide a unique opportunity to leverage the brand imperatives within your organization: Provide access and remove barriers for patients Create and increase Market Awareness Promote growth 7

8 Pricing Considerations Product Life Cycle Considerations: Newly launched Loss of Exclusivity date Established Product Competitive Environment/ Landscape Contract Organizations MCO vs. Med D, GPO vs. IDN Product Market Buy and Bill vs. Retail Legislative Impact ACA, 340B, Government Pricing AMP, ASP, BP Barriers vs. Opportunities 8

9 Contracting Considerations Annualized sales volume and number of lives in contracted account Account s ability to drive market share of product Current utilization patterns in contracted account Impact on Metropolitan Statistical Areas(MSAs) or Nation of being off / on formulary Proposed formulary positioning and contracts relative to competition. For example, Copay differential or Tier level Position on formulary PA / Step-edits used Other competitive capabilities Contracted account s view of the product and market/class Align contracting with sales representatives deployment 9

10 Best Approaches to Contracting 10

11 Contract Management Life Cycle Brand Strategy Contract Strategy Contract Performance & ROI Access Opportunity Identified (i.e. GPO, Payors, Medicaid) Contract Pull Through Contract Discussions & Offer Analysis Begins Contract Rollout & Implementation Contract Negotiations Occur Contract Execution 11

12 Contracting Best Practices Standardize Your Process Ensure Account Management & Sales are educated, informed and have appropriate tools Monitor Performance and ROI Accurate tracking and calculation of incentives Assess ROI of contract offers Build compliance management into your process Establish Guidelines and formalize Exception Process Establish SWPs and update as needed Create an online repository for contracts, terms and frequently used clauses 12

13 Best Practices Standardize Your Processes Standardize your processes within the Contract Management Life Cycle Offer Analysis & Submission Develop models for Offer Analysis Establish Offer Review Process and Approvers Contract Negotiation & Execution Define Roles (Contracting, Legal and Account Management) Terms and Conditions (Acceptable vs. Exceptions) Contract Rollout and Implementation Define key activities that must occur Define roles and leads for implementation and rollout Establish timelines for implementation Contract Pull Through Define roles (Sales, Account Management) Determine goals and gain agreement across stakeholders Determine activities for successful pull through Establish communication plan and metrics to identify challenges, wins 13

14 Best Practices Educate Educate the key internal stakeholders within the organization: Brand Market Access Field Sales Organization Sales Training Trade Relations Contract Administration Finance Provide the appropriate tools to support assessment of opportunity and successful pull-through 14

15 Best Practices Process Flow The goal is to create a process that follows each contract offer from discussion to execution to evaluation. Define Opportunity Account Managers (AM) Customer Discussions held AM compiles pertinent information (product specifics, size, formulary, copay structure, requested offer, placement, terms etc.) AM discusses recommendation and gains approval Conduct Offer Analysis AM compiles data in scoring model/offer Analysis and submits to Contracting AM schedules conference call with Contract Manager (CM) to discuss Customer CM reviews analysis and seeks approvals Submit Offer CM Prepares Offer (Bid, LOI) CM Submits Offer to AM or directly to Customer. AM Follows up with the Customer to see if Offer has been accepted. AM Communicates status to CM Negotiate Agreement If Bid/LOI is accepted, CM drafts agreement CM Submits Agreement to Customer & AM CM negotiates Redlines with Customer Execute Agreement Customer Submits agreement for Execution CM scans and sends executed agreement to Legal and Contract Administration Contract Performance CM Evaluates Contract Performance Quarterly CM Set up discussion with AM to discuss contract performance 15

16 Define Opportunity Define Opportunity AM participates in discussion with Customer AM compiles pertinent information (product specifics, size, formulary, copay structure, requested offer, placement, terms etc.) AM discusses recommendation and gains approval When meeting with the Customer below are examples of the information that should be compiled: When is the bid due? What Products are they interested in? Customer Size: Total number of members, commercial lives, Part D lives, etc. Formulary Structure/ Formulary Design information (Managed Care) Primary Class of Trade (GPO) Is the Customer affiliated with a larger PBM? What is the General structure for Tiers? Tier 1, Tier 2, Tier 3, Preferred, Non-Preferred, Generic, Specialty etc. What is the co-pay cost per tier? Are there any barriers or restrictions? (PA, QL etc.) What is the Impact if we don t bid? (Will we fall to a lower tier? will we be blocked? Will a competitor be preferred?) If looking for a 1 of 2 preferred brand offering, where will remaining medications be placed? (i.e.. T3 vs. T2?) Standard or Rider benefit? 16

17 Conduct Offer Analysis Conduct Offer Analysis AM compiles data in scoring model/offer Analysis and submits to Contracting AM schedules conference call with Contract Manager (CM) to discuss Customer CM reviews analysis and seeks approvals Using the information the AM compiled from their meeting with the Customer, tell the story of the Customer in a Scoring Model/Offer Analysis Form. The Model will be a mixture of qualitative and quantitative questions. The more information provided in the model the easier it will be for Contracting decisions to be made. The Model will also assist with post contract evaluations and future contract strategies. Once the model has been submitted the to Contracting, schedule a time to speak with your AM Discussion topics can include opportunity, recommendation, timelines, terms, barriers, Manufacturer paper vs. Customer paper, the model, next steps etc. CM will prepare the background, recommendation and rationale and meet with Management to discuss the opportunity and gain approval. 17

18 Scoring Model Design and Intent Designed to organize critical information for each Customer into a standardized format Designed to evaluate the relative level of control or influence each Customer has on pharmaceutical prescriptions for its covered lives Designed to focus contracting initiatives around those market factors that the Manufacturer values most highly for any given product Designed to maintain consistency and auditability when contracting with like entities Designed to establish a partnership between Account Management and Contracting to develop a contract that provides the best business solution for the Customer and the Manufacturer Collaborative effort: Account Management, P&C, Brand, etc... One size does not fit all All contracts must fit with the overall contract guidelines 18

19 Scoring Model Collected Information Account Classification: How much control does a customer have over its plans or clients, how can it drive utilization, how many lives under management Formulary Details: Where is the Manufacturer s and competitive products on formulary including: restrictions, tier and copay differentials, prior authorizations, step edits, etc Account Assessment: Free form text for Account Management to detail their customer intelligence including: RFP details, customer meetings and/or discussions, customer requests, etc Contract Recommendation: Free form text for Account Management to quantify impact to achievement of the product strategic objectives Approved Guidelines: Included to permit Account Management and Contracting leadership to see the recommendation as well as approved ranges 19

20 Offer Analysis Design and Intent Supportive tool to provide assistance and provoke thought and discussion Designed to engage Account Management and P&C in discussions and financial impact Designed to provide Account Management with tool to support understanding of impact of offer to business Designed to create opportunity for discussion internally as to potential barriers, challenges and opportunities for growth 20

21 Submit Offer-Bid/Letter of Intent (LOI) Submit Offer CM Prepares Bid/LOI CM Submits Bid/LOI to AM or directly to Customer. AM Follows up with the Customer to see if Bid/LOI has been accepted. AM Communicates status to Contract Manager Within X Days of recommendation approval CM Prepares the Bid/LOI to include: Contract Type Product Terms Length of Agreement Bid/LOI must be accepted prior to contract agreement can be supplied to Customer CM submits Bid/LOI and copies AM AM should follow up with the Customer as to the status of the Bid/LOI. If the Bid/LOI has been rejected, AM should get as much detail as to why the bid was rejected and communicate this back to the CM. This will help us with future offerings. 21

22 Negotiate Agreement Negotiate Agreement If Bid/LOI is accepted, CM drafts agreement CM Submits Agreement to Customer & AM CM negotiates Redlines with Customer Once Bid/LOI is accepted, CM will draft agreement. If the Customer would prefer the agreement to be on their paper, Customer will submit an agreement to be redlined by CM within x business days. If the Customer is ok with the agreement being on Manufacturer paper, CM will use template to draft agreement and submit to Customer within x business days. When CM is done with redlines/template, they will submit the agreement for legal review within x business days. Once legal review is complete, agreement is submitted to Customer for their review. This step is repeated for as many versions of redlines are submitted between the two Customers 22

23 Execute Agreement Execute Agreement Customer Submits agreement for Execution CM scans and sends executed agreement to Legal and Contract Administration After all redlines have been finalized, CM will submit the agreement to Customer for execution. ( x Business Days) Customer signs then Dir. Of Contracting signs Executed agreement is scanned, saved and sent to Legal, Contract Administration and the Customer. ( x Business Days) AM is copied on the executed agreement CM logs the terms of the agreement in our contract tracking database Contract Administration Loads Terms into contracting system and notifies appropriate parties (i.e.. Wholesalers) 23

24 Operationalize Processes/Procedures 24

25 Contract Management/Authoring Tool Investigate opportunity for on-line contract management or authoring tool Why? Provides oversight of the entire contract process from request to execution to post-execution Allows for easy access to important terms and conditions Single repository to track redlines and manage version control Increased efficiencies and support KPIs within the department Facilitates reporting and compliance 25

26 Communicating Value to Payers 26

27 The Value Proposition The number one factor that is overlooked when developing a pricing strategy is coming up with a value proposition that can be used when selling to the payer Often the manufacturer will craft a value proposition to the prescribing physician but if it s not on formulary then the doctor may not prescribe the drug Price, value and medical necessity can determine whether or not your product is placed on formulary If the payer doesn t see the value in a drug, it may become a barrier to whether or not it gets prescribed Crafting a message that includes the clinical and economic need, addressing the health policy and shaping the patient experience. This will require working with your Brand, Account Management and HEOR teams 27

28 Analysis of Successful Negotiation 28

29 Successful Negotiation Be Prepared and Informed Know your Customer Know Your Product Know the Competitive Landscape Show Value Seek input for Internal Experts HEOR MSLs 29

30 Measuring Contract Success 30

31 Contract Performance Contract Performance CM Evaluates Contract Performance Quarterly CM Set up discussion with AM to discuss contract performance Using Rebate submitted data and the initial Scoring Model/Offer Analysis, CM will perform quarterly evaluations on contract performance to determine how the contract is doing when compared to the initial offer analysis. Review Formulary Coverage CM will review contract performance and will set up quarterly business reviews with respective teams to discuss performance and open opportunities 31

32 Importance of Tracking Performance Tracking results in the market place is key to measure the success strategy Are you getting what you promised you would when you implemented the contract? How is your formulary access with the payers? Are you seeing market share uptake? Are you seeing volume uptake Tracking results will educate and inform key stakeholders on contract performance Brand Market Access Sales Finance Tracking results will initiate discussions re: barriers, challenges, opportunities Key factor with performance metrics updates is to ensure they are utilized and provide value 32

33 Key Components to Success Partnership Value Compliance Efficiency 33

34 Ensure Partnership There are several key partners to consider when developing a contracting strategy. Manufacturer Physician Payer Pharmacy Distributor Patient Failing to look at contracting strategically from the point of view of each partner may result in errors that will impact the effectiveness of your strategy. 34

35 Interaction with Key Stakeholders Contract Development Government Pricing & Regulations Contract Administration Chargebacks Legal Trade Relations Finance Contracting Decisions will cause a ripple effect on other areas It s important to understand the impact prior to implementing any new contracting Strategy 35

36 Demonstrate Value Internally It is important to also demonstrate value internally within your organizations Define the value that access thru Contracting provides: First and foremost: Clinical Value Providing medicines to patients Improving quality of life Supports financial goals of the organization to continue to provide access to products that add value to consumers Share the value message through: Lunch and Learns Intranet Sales or Brand Meetings Stay informed about your product Attend advocacy events Interact with patients, families, and caregivers 36

37 Compliance Measures Establishing Contracting Guidelines will provide compliance measures within your organization: Guidelines are designed to: Support business sales, share targets Minimize financial exposure Minimize legal risk Establish SWPs for your processes and review and update regularly Stay informed regarding changes in legislation Partner with Legal & Government Affairs 37

38 Establish Efficiencies Establishing efficiencies is integral to a successful rollout and implementation of a contracting strategy Review and Revise your contract management life cycle Identify gaps and develop process efficiencies that are: 1) Effective; 2) Meaningful and 3) Supported If done right efficiencies can: Reduce redundancies Mitigate barriers t0 pull-through Support effective communication 38

39 Questions? 39

40 Contact Info Althea Danzey Director, Contracting Eisai Inc. Tina Still Senior Manager, Contracting Eisai Inc. 40