Roundtable: Deficit Reduction Act - Pharmaceutical Executive


Roundtable: Deficit Reduction Act

Pharmaceutical Executive

CLINTON: Here you have this new challenge facing companies, with some problems that look more or less insoluble. What are the smart folks doing to get ready?

ZANT: There are two pieces to it. Part one is for the specific obligation. It's obviously helpful to have the technology that supports you in doing your government pricing. It takes some of the burden off the human beings. It takes some of the risk of error out of the process. And it potentially enables analyzing these volumes of data more easily.

The second part, though, is just getting ready for ongoing change. If the Deficit Reducation Act isn't the last thing we see—and next year there's something else—the pharmaceutical industry still needs to have a systematic approach, a repository of data, an ability to understand what they've done in the past and make changes on some kind of a rapid basis when the legislation changes in the future.

HEPBURN: At the end of the day, you make your assumptions. Even in today's environment where there's not a lot of clarity, you just have to say, "Here are the assumptions we're going to make. Here's how we're going to do it." Be consistent. Try and match your assumptions to intent, but be consistent.

And if that involves estimation and using other sources to get data, then that's what you do. That's what we do today. We have policies today that interpret our view of what the law and CMS requires, and we document them and follow them consistently. We think that's the best you can do from a compliance perspective.

CLINTON: Is there an upside in all the additional data people have to collect?

ZANT: Certainly, as these data are automated, additional commercial analytics and contracting analytics can be performed. You can be more proactive in how you contract. You can use a bigger repository of data to analyze customer trends or product trends or discount trends.

But, you know, that's even a step beyond what we are talking about in getting these government systems in and managing the regulations within those systems, because you need to invest even further to get a comprehensive data warehouse or a comprehensive analytical tool. That can be a challenge, particularly for the smaller and mid-size pharmaceutical companies.

WINTERTON: That's a great question. If you look at the landscape of pharmaceuticals, there's really a blending of commercial and government markets. This started back in '91 when the law passed.

The more control pharmaceutical companies have over their data, the better they can understand the relationship between the commercial and government markets. And understanding the impact of commercial pricing decisions on the government market is a huge, very much untapped resource for pharmaceutical manufacturers.

That's where the industry is headed. Look at the acceleration of the regulations, the integration with Part D, and now more integration here with DRA. The sense is that we are building momentum to combine the impact of commercial and government pricing. We're not splitting it. It's becoming more integrated.

ZOCCHI: In some senses, is it an upside or is it really just a necessary aspect of doing business in this environment now? The line between your commercial and your government business is becoming very fine. Pretty soon, it may not exist.

In addition to the automation that this type of legislation is driving, there's a need to come up with architectures that combine your business in a much more holistic way, so you can start to look at implications. What about Medicare contracts? How do I treat those in this particular business? What do I do with my authorized generics?

WINTERTON: How do I go to market? How do I keep my business strategies one step ahead of regulations? I mean, that's really what we're talking about.

CLINTON: Or only one step behind?

WINTERTON: Yes, or only one step behind.


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