The ever-evolving landscape of pharmaceutical regulations has long been challenging to navigate, but now pharma companies face additional complexities with the introduction of the Inflation Reduction Act (IRA) and the ongoing implementation of the 340B drug pricing program. In recent years, the IRA has made waves for its impact on the pharmaceutical industry, including proposals to allow Medicare to negotiate drug prices for the first time and imposing rebates on drug price increases that outpace inflation. Additionally, the 340B Drug Pricing Program, which was created in 1992, is a U.S. federal government program that aims to allow healthcare organizations to offer affordable prescription drugs to underserved and low-income populations. In 2021, 340B backed entities purchased $43.9 billion worth of covered outpatient drugs under the program.
To get a clearer sense of how the industry can navigate these challenges, Pharmaceutical Processing World sat down with Suresh Kannan, chief product officer at Model N. In the interview, Kannan discussed the latest tools and strategies for managing regulatory hurdles, the impact of the IRA, and the intricacies of the 340B program. He also shed light on insights from Model N’s 2023 State of Revenue Report, which confirmed that the Inflation Reduction Act was a top worry for pharma executives.
Can you describe the process that led Model N to develop the new 340B Vigilance enhancements?
Kannan: Model N is continuously engaging with our customers to understand their evolving business needs. Customer feedback consistently highlighted the complexities associated with the 340B program, particularly regarding duplicate discounts, underscoring the need for better tools to manage and prevent revenue leakage. A major uptick in published manufacturer policies limiting contract pharmacies, as well as other regulatory and litigation developments, further prompted the development of the 340B Vigilance enhancements. We designed our capabilities specifically to simplify compliance for pharma manufacturers.
How are Model N’s customers responding to the IRA-specific master data attributes, and what has been the impact on their Medicare price negotiation strategies?
Kannan: Model N’s 2023 State of Revenue Report showed that Inflation Reduction Act compliance was one of the greatest concerns for pharmaceutical executives. By adding IRA-specific master data attributes to our product, manufacturers are better positioned for compliance and price negotiation. The first 10 products selected for negotiation under the IRA directly impacted many of Model N’s customers, triggering the need for an immediate solution. Customers recognize how these enhancements will allow them to more easily comply with Centers for Medicare & Medicaid Services requirements.
Could you share some success stories or case studies where Model N’s offerings have improved compliance and revenue optimization for your clients?
Kannan: Specifically with respect to 340B Vigilance solution, our customers have shared that they were able to reduce revenue leakage by $10M per year or more and in some cases, significantly more. 340B compliance remains a top priority for pharmaceutical manufacturers and Model N. We’ve recently added new functionality to help our clients identify ineligible service providers, validating covered entities up front to avoid “pay and chase” and ensure compliance.
How is Model N preparing for future regulatory changes?
Kannan: At Model N, we’re continuously monitoring industry trends and policy changes that affect our life sciences customers. As a result, we are investing in robust data analytics and automation tools to help customers navigate, track, and comply with regulatory changes, as they occur. We leverage insights from regulatory bodies and industry experts to anticipate potential changes. By doing so, Model N can adapt its solutions to address incoming regulatory requirements, ensuring that customers remain equipped to manage future compliance challenges.
There are several ways in which we continue to prepare and anticipate future regulatory changes and assist our customers in doing the same. Some examples include:
- Model N continuously monitors public and non-public sources of information, and provides public comment and feedback to regulatory agencies. This year alone, we participated in two rounds of public commentary regarding the IRA implementation. We also provided public commentary on the Proposed Final Rule (CMS-2434-P).
- Model N deploys Regulatory Update Packs (RUP) to all supported versions as part of standard operating practices. For example, over the summer, our team discovered an unannounced technical change in the way manufacturers are supposed to calculate Medicaid rebates under some narrow circumstances. Model N – not the CMS – published an advisory, and the Fall 2023 release includes an appropriate regulatory update. This is why our customers continue to rely on Model N expertise to stay on top of a dynamic regulatory landscape.
How easily do Model N’s enhancements integrate with existing pharma manufacturing systems?
Kannan: To help customers get up and running quickly, we pre-configure our solutions in such a way that they can realize the value quickly. In addition, Model N offers comprehensive professional customer success services and support. Functional and technical implementation experts help optimize Model N’s solutions to the needs of each business, integrating seamlessly with existing systems and ensuring processes are aligned with industry best practices.
