The Life Sciences industry is evolving at a faster pace than ever before and drug manufacturers are tasked with managing unprecedented frequency, uncertainty, and complexity of reporting requirements. In concert with maintaining compliance across a broad range of government regulations, companies must also align their gross-to-net strategies across their business. A slight error in calculations can cause millions of dollars in overpayments, and on average, manufacturers have paid $7.35 million for a single overcharge penalty since 2012. Moreover, in the past five years, twice as many overcharge cases have been brought against manufacturers than in the previous 10 year period.
The Medicaid program has also expanded over the last decade, experiencing a growth of more than 50% in enrollment, due in part to the requirements of the Affordable Care Act. With Medicaid expansion and costly penalties that can be both financial and reputational, manufacturers are challenged to find a solution that combines rapid performance with scalability and accuracy, while also ensuring compliance.
Model N’s Government Pricing and Medicaid products combine to comply with government price regulations, translate strategy into execution, and optimize business with insights into ongoing operations. A major component to remaining compliant, Model N quickly responds to regulatory guidance by releasing Regulatory Update Packs (RUPs), of which four have been released just within the past 18 months right after massive AMP rule changes released in 2016, as part of RUPs 16.1 and 16.2. RUPs contain software and documentation which enables customers to easily update to the latest regulatory changes. Here’s an overview of the last few RUPs:
RUP 17.1, Included with the Winter ‘16 Release, December 7, 2016
RUP 17.1 assures compliance following CMS Release 97 and includes AMP Final Rule FAQ changes. Under CMS Release 97, manufacturers are responsible for calculating additional rebates for non-innovator multiple source (N) drugs, which went into effect January 1, 2017. This is in response to the Bipartisan Budget Act (BBA) of 2015 and effectively tracks when the AMP becomes higher than the rate of inflation. 17.1 therefore includes modified calculations to incorporate N-type drugs in various rebate calculations, depending on the product launch date.
RUP 17.2, Included with the Summer ‘17 Release, August 2, 2017
RUP 17.2 enables customers to quickly adapt to the Health and Human Services’ (HHS) rule, “340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation.” This rule affects all manufacturers that provide drugs to entities covered under the 340B program.
The rule, published January 5, 2017, has since been delayed until July 1, 2019. While manufacturers already adhere to the stipulations outlined in the rule, RUP 17.2 ensures users can more easily configure PHS price calculation formulas and validations directly from the application, based on default definitions. For example, an error notification occurs if the PHS result value is less than or equal to $0.01 per unit, per the rules of penny pricing.
Other improvements include changes made to nominal price and customer prompt pay discount in the DDR Quarterly Filing report, per the updates made by CMS. Though both are minor enhancements, these changes are essential to continue keeping customers in compliance.
RUP 17.3, Included with the Winter ’17 Release, December 6, 2017
RUP 17.3 enables Powered by Flex Medicaid customers to generate electronic versions of ROSI and PQAS reports. Apart from using more updated means of communication, this also eliminates unnecessary paper usage, prevents additional work and reduces compliance concerns.
Model N has also provided the ability to configure new RPU formulas, per the requirement on the California Supplemental change to the AMP-based agreement, effective as of the quarter four 2017 invoice period.
RUP 18.1, Included with the Summer ‘18 Release, August 1, 2018
Released just this past month, the Summer ‘18 Release features a number of regulatory enhancements. RUP 18.1 includes two new reports introduced on the ASP filing page for product data and financial data filing. With CMS’ new online platform for accepting ASP filings, the filing format was modified as well. Customers can now generate the new reports or continue using manual filing based on their own specifications. Though the rule’s implementation has been delayed, Model N is ready with the RUP solution update, and is ahead of the curve.
While some of the enhancements made over the last 18 months have been minor, manufacturers must constantly monitor the regulatory ecosystem to avoid costly penalties. Companies that have already transitioned into our SaaS delivery model, Revenue Management as a Service (RMaaS), receive RUPs through normal release packs or as part of seasonal releases for evaluation. This, in addition to immediate access to improved usability, performance and industry best practices. With an average of 25% of Life Sciences companies revenues are being paid out in rebates, chargebacks and fees, and those programs becoming more and more innovative which increases regulatory risk, having solutions that respond to inevitable regulatory changes is pivotal to a manufacturer’s success. As regulations continue to change, Model N will adapt accordingly to ensure customers remain compliant. For more information on past RUPs, please visit help.modeln.com.
Find the Model N team in October at the Medicaid Drug Rebate Program summit in Chicago, October 1-3. Be sure to catch Model N’s presentation, “Actionable Insights: GP Calculations and Analytics” and don’t miss the opportunity to see our most innovative government pricing solution to date with “proof of concept” product demonstrations. These demos will ensure best-in-class capabilities by enabling users to provide feedback in advance of product releases. Join us at booth #13 and for our social event at the House of Blues on October 2 at 7 pm!
Sources: Medicaid.gov, CMS, Public Citizen