Wednesday, September 15, 2010

MDRP 2010 Conference - Quantifying the Impact of the Medicaid Expansion on your Business

Eirik Olsen – IMS Managed Markets Services
John Glover – IMS Managed Markets Services

The most important part of Medicaid/GP is looking at the data. Not only looking at the data for use in your calculations and for rebates, but to use in forecasting, as well as heading off or preparing for any spikes in the numbers.

Currently most manufacturers are seeing their Medicaid numbers in the 10%-12% range of their business. As it stands now 16 states do not have Managed Medicaid, 14 states have “Carve-outs” of the pharmacy benefits, and 21 or fewer states have Managed Medicaid… again that is for now. Some analysis of the rebates paid during 2009 seems to show an average increase of 3% over the previous year, with some anticipation of up to a 30% increase over the next year due to the new healthcare regulations. Having said that, you must remember that with any issue in Pharma, the type of drug and the demographic of your patients will determine how much your rebates will go up or down. With an increase in volume, the analysts may see an increase in workload. Are you going to get more than one invoice? Will it be one per NDC? Will it be consolidated into one invoice? And will you now have more claims to look at for outliers, as well as more opportunities for those outliers?

In addition to the increase in the utilization, manufacturers have seen the increase in the minimum rebate per unit. With healthcare reform the base rebate manufacturers pay has gone up, sometimes significantly, depending on the type of drug. So, even without the increase in Managed Medicaid populations you are paying a higher rebate for the same number of units that you paid last year.

Okay, enough of the bad news. Good news may be that your company is one of the lucky ones that will see some offset from your supplemental agreements? Many companies see the inverse reaction of “if one goes up, the other goes down”. Will your supplemental invoices see enough of a decline to make it less of a hit to the reimbursement bottom line? And will the marketing end of your company want to aggressively pursue the Managed Medicaid business by offering higher reimbursement rates through your product’s formulary position?

These are important questions that you must ask of yourself and of your company. Look at the data and it will help you to be able to expect the unexpected.

Happy Calculating!

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