How Government Pricing Professionals Became Pharmaceutical Industry Change Agents

The world of government pricing (GP), once a mystery to many in the pharmacy industry, is considered to be a key component of strategic and compliance activity. For pharmaceutical manufacturers, government business is a top priority.

When Dorothy landed in Oz, she said, “Toto, I’ve a feeling we’re not in Kansas anymore…” If a government pricing (GP) professional from 10 years ago were transported to 2013, he or she would also be in a strange new world!

In the past, GP professionals were a mystery. We read the available guidance, performed our calculations, and processed claims. We spoke an acronym-filled language that meant little to others in the finance department, contracting groups, and senior executives. The world of GP—primarily Medicaid, the US Department of Veterans Affairs, and the US Department of Public Health Service—meant little to most people.

But just as Dorothy’s black-and-white world changed overnight, the GP professional has now become key to strategic and compliance activity.

Government business is now a top priority. In 2007, change accelera-ted with the Centers for Medicare & Medicaid Services (CMS) Final Rule and its minimal certification requirements. Additional program requirements quickly followed, including TRICARE and the Patient Protection and Affordable Care Act (PPACA). Now, existing programs are expanding, new programs are being created, and the pharmaceutical manufacturer’s financial liability has increased exponentially. Program integrity is crucial. Manufacturers face potentially devastating double- and triple-dipping, which can result in a manufacturer paying the government for its drug!

Finance and contracting functions need GP professionals to help navigate this new environment—to understand what is happening today and what will happen tomorrow. Topics include gross-to-net computations, bona fide service fees, fair market value, and script level validations. Accruals and forecasting have become high-priority topics, with the lines blurring between the commercial contracting and government functions.

When I started presenting my GP 101 courses years ago, participants only focused on compliance, administration, and operations. Now, C-level executives attend GP courses. Their jaws drop when they realize GP’s importance to their businesses.

To be compliant, a manufacturer must show good faith effort. This means it must make reasonable business assumptions, review them with consultants and legal counsel (when appropriate), document them, and then develop consistent processes and procedures. We are operating in a sub-regulatory environment, waiting to see how the forthcoming CMS Average Manufacturer Price Final Rule will impact our work. In the meantime, manufacturers must still calculate correctly and certify the results. This “good faith effort” theme was specifically addressed by the court in the Streck case, as I blogged about last year.

GP professionals need venues to talk, listen, and learn. We need to understand the key issues that deal with uncertainty and plan for 2014 and beyond. It is crucial to know how others are examining the issues while simultaneously demonstrating your own company’s good faith effort to be as compliant as possible.

I look forward to future discussions with my GP peers to discuss guidance, learn about trends, and create best practices as we continue our path down the Yellow Brick Road. SPT

Compliance Implementation Services (CIS) is a consulting firm focused on helping life sciences clients proactively manage complex compliance requirements and offers a broad portfolio of services and solutions that expand deep into the clinical, manufacturing, and commercial disciplines and align with clients’ strategic priorities and business operations. CIS continually provides leadership, global regulatory knowledge, industry experience, and a problem-solving culture that responds to today’s compliance and commercial challenges. The objective of the “Compliance Corner” series is to raise awareness about compliance challenges across the industry and the unique operational challenges of manufacturers.

About the Author

Chris Cobourn is senior vice president of commercial compliance at CIS and works closely with pharmaceutical manufacturers in areas related to the management of government programs, including policy review, methodology development, policy and procedure documentation, systems implementation, and class of trade and related commercial systems. He supports manufacturers as they work with the federal government in self reports, restatements, and investigative activity. He has also worked closely with compliance and audit departments to develop monitoring and audit plans and in conducting wholesaler audits, vendor audits, and internal audits related to government programs. Chris specializes in helping businesses evaluate, assess, and prioritize risks, and helps them put practical and manageable compliance programs in place.