Case Study #2
Client Profile
Type of Business:
Top 10 Pharmaceutical Company
Functional Area:
Contract Analysis and Administration
Project Description:
Utilize PharmaMetrics "Rational Pricing" methodology to Improve Managed Care ROI
Challenge
The organization felt that there was a "disconnect" between the "contract negotiation"
business function and the "contract analysis" business function. The belief was
that contract performance was not living up to the contract expectations determined
at the onset of the agreement. The organization requested that PharmaMetrics help
determine if the investment was valid/worthwhile true by apply their "Rational
Pricing" methodology to their pricing process.
Business challenges:
- The current administrative system did not have the ability to identify and
break out key terms and conditions. This information was needed to complete
a comprehensive analysis. This required PharmaMetrics and the customer to
review and extract specific terms and conditions.
- The administrative data was inconsistent and incomplete. This required us
to identify and utilize other data sources.
- Additional 3rd party data sources were integrated into the PharmaMetrics
database to enhance the analysis processes.
Solution
PharmaMetrics analyzed over two years of data for two highly promoted brands from
a combination of sixteen strategic PBMs and/or HMOs within the managed care market.
We were given internal data from the administrative systems and loaded it into
our business tool. Our software identified any gaps and inconsistencies,
then analyzed the data from a performance perspective.
Results
As a result of PharmaMetrics' "gap analysis" we were able to identify non-performing
and marginally performing investments that were not generating the expected ROI.
PharmaMetrics also assisted the organization in profiling the accounts under review,
to determine an "optimum" and rational price for each account.
- Based upon PharmaMetrics analysis for one of the products, six accounts
were identified as non-performing or marginally performing. Approximately
$26 million per year was identified as non-performing investments
- The other product had four non-performing accounts, generating $34 million
per year of non performing investments
- Over $79 million was identified as investments in accounts that were underperforming
vs. national and regional performance
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- Customer Prioritization
and Rational Pricing
- Pre-Deal Analysis
- Post-Deal Analysis
- Formulary Compliance Auditing
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