Case Study: Improving Managed Care ROI

Business Type

Top-10 pharmaceutical company

Functional Area

Contract Analysis and Administration

Challenge

The manufacturer felt that there was a disconnect between the contract negotiation business function and the contract analysis business function. The belief was that contract performance was not living up to the contract expectations determined at the onset of the agreement. The manufacturer requested that we help determine if its investment was optimized by applying our Rational Pricing methodology to its pricing process.

Business Challenges

• The current administrative system did not have the ability to identify and break out key terms and conditions. This information was needed to complete a comprehensive analysis. This required us and the customer to review and extract specific terms and conditions.
• The administrative data was inconsistent and incomplete. This required us to identify and utilize other data sources.
• Additional third-party data sources were integrated into the us database to enhance the analysis processes.

Solution

We analyzed more than two years of data for two highly promoted brands from a combination of 16 strategic PBMs and/or HMOs within the managed care market. We were provided with internal data from the administrative systems, and we loaded it into our business tool. Our software identified any gaps and inconsistencies and then analyzed the data from a performance perspective. 

Results

As a result of our gap analysis, we were able to identify non-performing and marginally performing investments that were not generating the expected ROI. We also assisted the manufacturer in profiling the accounts under review to determine an optimum and rational price for each account.

Key Takeaways

• Based on our analysis for one of the products, six accounts were identified as non-performing or marginally performing; approximately $26 million per year was identified as non-performing investments
• The other product had four non-performing accounts, generating $34 million per year of non-performing investments
• More than $79 million was identified as investments in accounts that were underperforming against national and regional performance