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Finding new efficiencies, managing revenue and changing the dialogue on drug pricing
Proposed moves aimed at gaining ‘most-favored nation’ drug pricing so that Medicare pays the same drug prices as other developed countries would face significant barriers to implementation, according to results of a survey released this week by Model N, Inc., a technology provider for many large pharma companies.
Model N fielded its survey to more than 100 pharmaceutical and medtech professionals in July 2020 in order to understand more about key financial concerns, public-facing issues associated with drug pricing, attitudes around technology, and to gauge the industry’s response to the global coronavirus pandemic.
Results indicated that a program requiring an overhaul of today’s complex system of incentives and rebates, as well as initiatives designed to address the technological and regulatory constraints under which the industry currently operates, would face an uphill battle.
Some 86 percent 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 percent) 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 include pricing disparity and international pricing differences (46 percent) and government regulations (46 percent).
Pharmaceutical and medtech executives also have concerns over revenue issues, with the survey showing that government regulations, as well as pricing and rebates, are the top concerns for solving revenue problems, at 41 percent each. While only 9 percent said Covid-19 has not impacted their revenue this year, 46 percent 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 the issues, as some 67 percent believe their companies need to invest more in technology to solve their financial and revenue management challenges.
In addition, the 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 percent), as well as pricing and contract compliance (25 percent), 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 percent.
When polled about a broader, post-pandemic recovery, 76 percent of respondents report they have been satisfied with the industry’s response to Covid-19. Some 49 percent emphasized recovering from Covid-19 as their top priority, while 45 percent said eliminating system or process inefficiencies was their biggest priority for the remainder of 2020.
Overall, 40 percent said technology will be a key enabler in helping their firms recover from Covid-19. In terms of corporate planning, 55 percent of respondents report that current or new product launches are the top priority for the remainder of this year.
Model N offers visibility, insight and control for complex commercial operations and compliance, along with cloud revenue management technology in order to automate pricing, incentive and contract decisions. It serves such major pharmaceutical, medical technology, semiconductor and high-tech companies as Johnson & Johnson, AstraZeneca, Stryker, Seagate Technology, Broadcom and Microchip Technology.