An effective internal strategy for managing the downsides of reform is equally, if not more, important than being on the right side of voter sentiment. Reform is ultimately not about good public relations, but about preserving profitability in a much more dynamic commercial environment controlled increasingly by a few lead payers with vast purchasing power.
The signal to industry is clear: Flexibility and scalability of response in processes, data and systems is paramount now and in the future. Given that healthcare reform (HCR), in essence, is more about improving access to healthcare and less about cost containment, it is reasonable to expect even more cost-saving mandates in the future if the spiraling cost of care does not slow down.
HCR requires some 20 different and major programmatic changes in how companies approach different aspects of their sales to the Medicaid, Medicare, PHS, and in some cases even commercial markets.
Key pricing, revenue and compliance provisions of HCR:
» Material increase in Medicaid drug rebate liability for branded, generics, and special categories of drugs resulting from higher required rebate percentage, expansion of rebate eligible programs, and narrowing of sales in the AMP definition
» Expanded 340B discount program with provisions dealing with price integrity, retroactive adjustments, and refunds for overpricing to eligible hospitals or facilities. Penalties for intentional overcharges
» New rule for transparency and public reporting of AMP and FUL "prices" for multiple-source drugs
» Manufacturer discounts of 50 percent on brand name drugs for certain Medicare Part D enrollees in the coverage gap
» An annual flat fee on pharmaceutical manufacturers beginning in 2011, to be allocated across the industry according to market share of utilization under Medicaid, Medicare Parts B and D, VA, and Tricare. The fee does not apply to companies with sales of branded pharmaceuticals of $5 million or less.