Discount Reallocation Management

Ensuring Compliance with Bundled Sales Reporting Requirements

One area of continued focus by pharmaceutical industry regulators is on drug
manufacturers' discounting strategies and their impact on prices the government pays for particular drugs. In particular, regulators have focused on the concept of a bundled sale, i.e. typically where a discount on one drug is conditioned on the purchase of another drug. The government response to the issue of bundled sales for the largest purchasing programs (Medicare and Medicaid) has been to require the manufacturer to reallocate any discounts proportionately to the value of each drug sold in that arrangement during the period prior to calculating and reporting those drug prices. As a result, pharmaceutical manufacturers are investing in bundled sales compliance initiatives to avoid inaccurate or incomplete reporting that could trigger fraud and false claims cases by Federal and State authorities.

Model N Discount Reallocation Management

Model N Discount Reallocation Management (DRM) solves these issues by allowing
users to define discounts into bundles. After bundles are defined, the reallocation
engine spreads discounts across products that are part of the bundle based on the value of the products sold. Built-in integration with Model N Revenue Management solutions such as Contract Management and Government Pricing as well as interoperability with third-party systems of record enable installation flexibility. In an integrated environment, DRM can use contract information in bundle setup. In addition, price types such as Average Manufacturer Price, Best Price, etc. that require reallocated discount accounting can use reallocated discounts while price types not requiring reallocation can use non-reallocated discounts. Price lists such as Best Price can be used as a validation in contract setup and approval.

Accurate, Consistant, and Auditable Reallocations

DRM manages all aspects of the discount reallocation process, from setting up
reallocation policies to reallocating, analyzing, and publishing the results. Analysts can create bundle reallocation policies with discounts from single contracted or
non-contracted arrangements or from more than one contract. Bundle policies can
differ or be the same for each price type and support member and contract level
reallocation depending on the entity that earns the discount. Once the bundles have
been set and approved, reallocation sets specific to that discount, period of time, and price type can be calculated automatically or manually at any time.

When a reallocation set is created in DRM, all the policies, methodologies, filters, and business rules of the associated reallocation policy are applied in order to compute the desired reallocated discount values. Analysts can easily view reallocation summaries for that set as well as examine the effects of the reallocation on a product-by-product basis. Analysts can then focus on particular reallocation sets that have exceptions or validation errors. Formula components and transaction data can be viewed to research and resolve the exceptions. Once reallocation sets have any exceptions resolved, they are submitted by the analyst for approval by authorized managers through the integrated Model N approval route workflow. Analysts are notified of the approver’s actions and can then further revise or publish the reallocation results.

Discount Reallocation Management at a Glance

Manage Agreement Classification	Defines which agreements and discounts should be reallocated, when the reallocations should occur, and what type of reallocation is appropriate
Define Reallocation Methodology	Defines and manages bundle reallocation policies including filtering, periodicity, transaction valuation, price types, and reallocation level Provides a very granular level of control over the reallocation process
Perform Reallocations	Allows users to perform the calculations necessary for the reallocation and then view the results Enables drill downs and product-by-product views for transaction-level analysis of the results if appropriate.
Approve and Publish	Allows users to submit their results for internal approval Approval route workflows ensure proper evaluation of the results When approved, users can then publish the results for use in government pricing calculations
Compliance and Auditability	Stores both the reallocation results and the policies that created them to provide an audit trail of reallocation activities Policies and results are viewable at any time by authorized users