According to Kalderos, at least 5% of commercial rebates are paid for prescriptions that also have discounts under the 340B Drug Pricing Program. Micah outlines why it's more than a feeling that manufacturers struggle to walk away from these duplicate payments. But as he explains, reliable data is crucial to avoid hearing that old song that PBMs play.
To learn about Kalderos’ Commercial Discount Monitoring solution, close your eyes and slip away with Micah at his free webinar on November 1, 2023, at 2:00 p.m. ET: Sharpening Focus: How Data Analytics Transforms Commercial Contracting Strategies.
Read on for Micah’s insights.
More Than a Feeling: Five Key Challenges When Walking Away From Commercial/340B Duplicate Payments
By Micah Litow, Chief Operating Officer, Kalderos
It's not hard to see the pressures. With a massive $115 billion in pricing concessions paid to commercial payers last year, even small margins of duplicates lead to sizable revenue losses. According to Kalderos’ current best estimates based on the data we’ve analyzed, at least 5% of commercial rebates are duplicate discounts with 340B—amounting to $6 billion or more.
When it comes to the terms of commercial contracts, it’s a mixed bag; not all contracts with payers fully exclude 340B duplicate discounts. Even if they do, the complexity of the data can make the terms challenging to enforce.
While manufacturers often vent their commercial challenges to us in emotive terms, there are evidence-based root causes behind these experiences. In short, to quote 1970s rock band Boston: “It's more than a feeling.”
Here are five reasons commercial contracts are so challenging when it comes to 340B:
1. THE LACK OF STANDARDIZED DATA
Data is essential for managing 340B exclusions. But the process of acquiring it can be onerous.
Generally, retrieving data requires some form of Secure File Transfer Protocol (SFTP), portal, or data sharing among parties—which is further complicated because of time limits on accessibility. Many manufacturers simply don't have the people and technology to acquire and utilize this data.
Another hurdle to data standardization is the discretion that large payers have in deciding what data they will share and how they will provide it. While there is some standardization in file formats for data sharing, there is no obligation to follow the sharing requirements.
Generally, retrieving data requires some form of Secure File Transfer Protocol (SFTP), portal, or data sharing among parties—which is further complicated because of time limits on accessibility. Many manufacturers simply don't have the people and technology to acquire and utilize this data.
Another hurdle to data standardization is the discretion that large payers have in deciding what data they will share and how they will provide it. While there is some standardization in file formats for data sharing, there is no obligation to follow the sharing requirements.
2. THE LACK OF STANDARDIZED CONTRACT TERMS
Similar standardization challenges stem from contract terms. Commercial contracts are not uniform across factors like payment terms, rebate frequency and exclusion language, creating a grueling manual process for rebate management teams.
Contract variability extends to other operational items, such as the lookback window for any historical rebates processed. We've seen contract terms for the time window for manufacturers to review past claims range from 30 days to six months or more. With such variability, managing exclusions and judging contract performance from different contracts can feel like starting from scratch every time.
Contract variability extends to other operational items, such as the lookback window for any historical rebates processed. We've seen contract terms for the time window for manufacturers to review past claims range from 30 days to six months or more. With such variability, managing exclusions and judging contract performance from different contracts can feel like starting from scratch every time.
3. THE "TRUST GAP" BETWEEN KEY STAKEHOLDERS
Observers have noted the impressive market power of PBM payers—three companies process 80% of the claims. This leads some observers to suggest that there is an imbalance between stakeholders when it comes to contract negotiations. This dynamic was highlighted recently in a lawsuit filed by the state of Ohio, whose attorney general argued, “both drug buyers and sellers have little choice but to play the game by the PBMs' rules.”
This reported tension between stakeholders can hinder data sharing and agreeing on mutually beneficial contract terms.
This reported tension between stakeholders can hinder data sharing and agreeing on mutually beneficial contract terms.
4. INCOMPLETE DATA SETS
There is a consistent challenge caused by incomplete data sets. Nationally utilized data sets such as dataQ, which provides data from the National Council for Prescription Drug Programs (NCPDP) to payers and manufacturers, are far from comprehensive, which creates conspicuous gaps in claims-level data. Because some dataQ data fields are voluntary for pharmacies to complete—and not audited by any authority—accuracy is rarely assured.
This means that manufacturer teams rely on data sets that are known to be suboptimal. This reliance can result in the miscalculation of rebate dollars due, inevitably leading to revenue leakage for manufacturers.
This means that manufacturer teams rely on data sets that are known to be suboptimal. This reliance can result in the miscalculation of rebate dollars due, inevitably leading to revenue leakage for manufacturers.
5. THE ABSENCE OF DATA-BASED CONTRACT COMPARISONS TO INFORM NEGOTIATIONS
Manufacturers are also faced with less data on how contracts—and the different 340B exclusions contained within contracts—perform. This becomes a stumbling block when it is time to go back to the negotiating table, especially in the highly dynamic 340B space. How can you decide which exclusions to advocate for without sufficient data on how certain exclusions performed in the last contract?
The common thread here is data. We’ve seen trouble accessing it, trouble standardizing it and how a lack of actionable data inhibits stakeholders from driving accuracy and impact.
The common thread here is data. We’ve seen trouble accessing it, trouble standardizing it and how a lack of actionable data inhibits stakeholders from driving accuracy and impact.
Kalderos’ Commercial Discount Monitoring solution addresses the root data issues behind these commercial challenges. With enhanced data and analytics integrated with detection of 340B noncompliance, Commercial Discount Monitoring gives users actionable insights on the terms and performance on their contracts: one company identified $45 million in commercial exclusions over a four-year period using our solution.
If you'd like to hear more about how Kalderos is giving manufacturers peace of mind on their commercial contracts, join me for a free webinar on November 1, 2023, at 2:00 p.m. ET: Sharpening Focus: How Data Analytics Transforms Commercial Contracting Strategies.
Sponsored guest posts are bylined articles that are screened by Drug Channels to ensure a topical relevance to our exclusive audience. These posts do not necessarily reflect our opinions and should not be considered endorsements. To find out how you can publish a guest post on Drug Channels, please contact Paula Fein (paula@DrugChannels.net).
No comments:
Post a Comment