Leader in Cloud Revenue Management Uncovers the Industry’s Focus on Finding New Efficiencies, Managing Revenue and Changing the Dialog on Drug Pricing
SAN MATEO, Calif. — Oct. 28, 2020 – Model N, Inc. (NYSE: MODN), the leader in cloud revenue management solutions, today announced the results of a new survey designed to provide better understanding about the pharmaceutical and medtech industry’s response to the global coronavirus pandemic as well as public-facing issues associated with drug pricing.
Issues around drug pricing have been a major point of national conversation given President Trump’s recent executive order to explore reducing the cost of prescription drugs, with broad initiatives aimed at price-setting, drug importation, rebates, and insulin prices. The administration’s focus is to gain “most-favored nation” pricing such that Medicare pays the same drug prices as other developed countries.
However, implementation of such orders would face significant barriers, including an overhaul of a complex system of incentives and rebates as well as initiatives designed to address the technological and regulatory constraints under which the industry currently operates. Model N’s survey data supports this assertion, as some 86% of the respondents believe there is a disconnect between pharmaceutical companies and the general public when it comes to the perception of drug pricing. The top reason cited (76%) was a lack of understanding of the complexity behind how a drug is paid for and how it gets to patients. Other reasons cited by survey respondents, comprised of professionals in the pharmaceutical industry, for the disconnect include pricing disparity and international pricing differences (46%) and government regulations (also 46%).
Pharmaceutical and medtech executives also have concerns about revenue issues, as Model N’s survey revealed that government regulations, as well as pricing and rebates, are the top concerns for solving revenue problems, at 41% each. While only 9% say COVID-19 has not impacted their revenue this year, 46% reported that it has impacted their revenue by delaying the process of bringing new products to market. There is awareness that technology is key to solving these issues, however, as some 67% believe their companies need to invest more in technology to solve their financial and revenue management challenges.
“There is no doubt that we are in turbulent times in the industry, and these survey results reflect the uncertainty that we’re all experiencing,” said Melonie Warfel, VP and GM of Life Sciences for Model N. “However, there is broad awareness that implementing technology solutions can have a positive effect on operational and financial efficiencies – including management of gross to net revenue – as well as a potential effect in terms of illuminating the conversation around drug pricing and how organizations can message and communicate around these issues.”
In addition, pharmaceutical and medtech company executives seem open to exploring new approaches to resolving revenue concerns, while at the same time addressing public concerns about drug prices. They cite better management of government regulations (26%), as well as pricing and contract compliance (25%), as two key opportunities for fixing pricing issues and avoiding “leaving money on the table.” Assistance with value-based pricing is another area where industry professionals think technology can offer a useful assist, at 44%.
Model N’s Warfel also explained that pharmaceutical and medtech companies can achieve potential benefits by leveraging technology to find efficiencies and cost savings, as well as explain these issues to the public. “While there is a lot of very energetic public dialog about drug prices, there is very little that posturing can do about it, and we should seek more informative and fact-driven public dialog,” she observed. “What can be done is to achieve a fundamental shift in the way that data, as well as products and money, are actually distributed in this massively complex system between all the payers. This is precisely where solutions like Model N Revenue Cloud come in and can make a difference for manufacturers.”
Poised for Recovery
When polled about a broader, post-pandemic recovery, 76% of those in the industry report they have been satisfied with the industry’s response to COVID-19. Some 49% emphasized recovering from COVID-19 as their top priority, while 45% said eliminating system or process inefficiencies was their biggest priority for the remainder of 2020. Overall, 40% said technology will be a key enabler in helping their firms recover from COVID-19. In terms of corporate planning, 55% of respondents report that current or new product launches are the top priority for the remainder of this year.
About the Survey
Model N fielded its survey to more than 100 pharmaceutical and medtech professionals in July 2020 in order to understand more about key financial issues. Survey topics included financial challenges and the issues associated with drug pricing and attitudes around technology.
About Model N
Model N enables life sciences and high tech companies to drive growth and market share, minimizing revenue leakage throughout the revenue lifecycle. With deep industry expertise and solutions purpose-built for these industries, Model N delivers comprehensive visibility, insight and control over the complexities of commercial operations and compliance. Its integrated cloud solution is proven to automate pricing, incentive and contract decisions to scale business profitably and grow revenue. Model N is trusted across more than 120 countries by the world’s leading pharmaceutical, medical technology, semiconductor, and high tech companies, including Johnson & Johnson, AstraZeneca, Stryker, Seagate Technology, Broadcom and Microchip Technology. For more information, visit www.modeln.com.
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