Complete Pricing Transparency Can Help Trump Government Intervention

DATE: June 20, 2018

Published by Pharmaceutical Processing

As the Trump Administration’s plan to lower the cost of prescription drugs continues to develop and unfold, transparency during rebate negotiation is emerging as a top priority. Because President Trump’s speech addressed the American people as a whole, the emphasis appears to be on the transparency between manufacturer and patient, or insurance company and patient.

However, as Lisa Bair, CEO of Quantuvis, points out, better and clearer communication between drug manufacturers and pharmacy benefit managers (PBMs) is a crucial part of the discussion.

Quantuvis is a healthcare IT company providing solutions for data-informed decision making. After decades of working with payers and pharmaceutical manufactures, Bair found that when it came to rebate negotiation, the procurement of critical data and information proved to be a significant challenge. It is of little surprise, then, that she began to receive requests from multiple pharma and payer companies asking for a way to gather and analyze data to help inform them when negotiating.

Crossing i’s and Dotting ‘tees’

To better account for this lack of information, Bair explained the history of drug negotiation to Pharmaceutical Processing, saying, “The reality is that for decades, the process of negotiating drugs was very, very manual. One way might be a phone call where notes are taken, and some kind of deal is drafted. Two, you had an email, so the terms were there in the body. And three, and I’ll say this with a little tongue in cheek, these conversations took place on the golf course. It was that informal of a structure to negotiate.”

She adds that although a more sophisticated way of negotiating was developed recently—through which a PBM drafts a word document that is sent to the pharma companies—there still was no consistency in what either party was asking for.

“They were asking for generalized terms and conditions, and so what they got back would have big gaps that would have a huge impact on whether the deal is profitable both for the pharma company and the payer,” Bair said. “So the past (had) over $100 billion of rebates being captured in a very informal way.”

With Bair’s solution, the Quantuvis platform, PBMs can create the bid with specific terms and conditions and within minutes, push it out to pharmaceutical companies. More importantly, the platform holds on to all the information from previous deals, allowing both drug manufacturers and payers to revisit every step of previous negotiation processes undergone by their companies.

Repeating History

This is particularly crucial for pharma companies because even if a previous account manager is no longer with the company, the entire bid history is available to them, along with every back and forth communication, and so there are no open questions about how the earlier terms were agreed upon and settled.

“They are able to better establish if there (are) changes they want to make,” Bair explains. “It’s critical that pharma tap into that data so that they are better informed when negotiating.”

Additionally, Bair explains that as the number of PBMs continues to dwindle, situations in which a larger player buys out a smaller one are increasing. PBM mergers have been a strong trend for some time now.

Express Scripts, for instance, acquired Medco Health Solutions in 2011, and then went on to buy EviCore in 2017, only to be acquired by Cigna earlier this year in a $52 billion deal.

The trend not only continues, but seems to be accelerating. One of the more significant mergers taking place currently is CVS’s plan to buy Aetna for $69 billion.

Mergers like these often are a headache for pharmaceutical companies because as separate entities, the two PBMs probably had different rates. These rebates will need to be leveled out and a new deal will need to be negotiated, a process that typically takes three to four weeks to complete due to its level of sensitivity and potential risk.

A tool like Quantuvis centralizes all the data, allowing a pharma company at the time of a PBM merger announcement to perform an informed calculation between the two rebate spreads and conclude what the risk is in the event that the merger goes through. This type of foresight was nearly nonexistent before tools like Quantuvis were developed.

Further, in response to feedback from the pharmaceutical community, Quantuvis has evolved the Quantuvis Rebate Negotiation module to accommodate the addition of bid data for all payers.

“All pharmaceutical companies can currently utilize the technology to include rebate bid data for all payers they negotiate with directly by creating a repository for all bid data, even for PBMs and payers that are not Quantuvis customers,” Bair says. “The idea is for Quantuvis to become the industry standard for housing negotiation data for all customers.”

Click here to see the original article on the PharmPro website.