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Drugs and Devices Do Mix: Challenges                                                                    and Opportunities ...
Agenda                                                                                    OVERVIEW       CONTRACTING      ...
Overview – History and Future   PHARMACEUTICAL AND MEDICAL DEVICE COMPANIES   Historical Context:    Pharmaceutical and m...
Overview of Current Contract       Environment
Contract Management Environment   OVERVIEW OF PROCESS AND REVIEW REQUIREMENTS – FOR BOTH For both types of companies, the...
Contract Management Environment   FUNCTIONAL REQUIREMENTS – SIMILARITIES AND DIFFERENCES    There are many functional and...
Approach for OptimizingProcesses and Systems
Merging Operations and Systems   OVERVIEW OF A FOUR PHASED APPROACH During a merger, contract management and government p...
Merging Operations and Systems   PHASE I: UNDERSTAND THE “AS-IS” ENVIRONMENT                                              ...
Merging Operations and Systems   PHASE II: DETERMINE FUNCTIONAL REQUIREMENTS FOR DESIRED STATE                            ...
Merging Operations and Systems   PHASE III: DETERMINE SYSTEM REQUIREMENTS FOR DESIRED STATE                               ...
Merging Operations and Systems   PHASE IV: DEVELOP IMPLEMENTATION ROADMAP                                                 ...
Merging Operations and Systems   SUMMARY OF KEYS TO SUCCESS AND LESSONS LEARNED    Project management is one of the most ...
Recap and Key Takeaways
Recap and Key Takeaways Combining pharmaceutical and medical device companies is more difficult than many companies consid...
Contact Us         ATLANTA OFFICE                                                           NEW YORK OFFICE         Six Co...
Drugs and Devices Do Mix: Challenges and Opportunities for the Integrated Life Sciences Manufacturer
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Drugs and Devices Do Mix: Challenges and Opportunities for the Integrated Life Sciences Manufacturer

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This presentation was given at Rainmaker 2013, hosted by Model N, March 5-7.

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Transcript of "Drugs and Devices Do Mix: Challenges and Opportunities for the Integrated Life Sciences Manufacturer"

  1. 1. Drugs and Devices Do Mix: Challenges and Opportunities for the Integrated Life Sciences Manufacturer March 7, 2013© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
  2. 2. Agenda OVERVIEW CONTRACTING ENVIRONMENT APPROACH FOR IMPLEMENTATION PROCESSES AND KEYS TO SUCCESS SYSTEMS RECAP AND KEY QUESTIONS TAKEAWAYS© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 2
  3. 3. Overview – History and Future PHARMACEUTICAL AND MEDICAL DEVICE COMPANIES Historical Context:  Pharmaceutical and medical device companies have existed separately for a long time.  The historical perception is that they have different cultures, products and regulatory requirements. Changing of Times:  Due to continuous pressure on companies to grow, pharmaceutical and medical device companies are joining each other today.  The integration between the two can create a long list of operational and regulatory challenges that are difficult to manage This session will discuss some similarities, differences, as well as some of the key issues and opportunities to consider if during a merger.© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 3
  4. 4. Overview of Current Contract Environment
  5. 5. Contract Management Environment OVERVIEW OF PROCESS AND REVIEW REQUIREMENTS – FOR BOTH For both types of companies, the following chart displays the functions and review requirements around commercial contracting that are similar: Manage Process and Functionality Contract Chargebacks / Incentive Contract Offer / Contract Contract Customer Execution / Distributor Rebates / Strategy Development Admin Compliance Implement Rebates Admin Fees Department Review, Execution and Maintenance Sales/ Marketing Legal Sales/ Marketing Sales/ Marketing Sales/Marketing/Finance Compliance with Execute Develop draft Conduct profitability Manage company and Contract contract analysis and finalize payments, pricing requirements with customer and discounts© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 5
  6. 6. Contract Management Environment FUNCTIONAL REQUIREMENTS – SIMILARITIES AND DIFFERENCES  There are many functional and operating differences and similarities that exist in both types of companies. Below please find some of the similarities: Below please find some of the differences: Device • Contract Pharma Device Pharma Creation • Payer • Legal Review • Payer Contracts • Contract Header • Medicaid • Hospital Requirements • Market Basket Contracts • Contract Review • PHS Contracts • Admin Fee • Tier Discounts • Hospital • Contract • Managed • Member Contracts Execution Care Management • Master Data/ MemberMgmt • VA • Medicare© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 6
  7. 7. Approach for OptimizingProcesses and Systems
  8. 8. Merging Operations and Systems OVERVIEW OF A FOUR PHASED APPROACH During a merger, contract management and government pricing systems can be optimized to satisfy all business, process, functional, and technical requirements. Utilizing elements of a system development life cycle methodology will help identify full requirements for merging systems and operations The following is a sample approach in four phases of how to ensure this integration and implementation are successful: Phase 1 Phase 2 Phase 3 Phase 4 Create Baseline Determine Determine Inventories System Create Functional Requirements Roadmap Requirements for For Desired Desired State State© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 8
  9. 9. Merging Operations and Systems PHASE I: UNDERSTAND THE “AS-IS” ENVIRONMENT Phase I Approach Phase I Challenges Create Baseline  Pharmaceutical companies typically have robust solutions for Inventories chargebacks, rebates and similar transactions. To address these challenges, companies may consider the following:  Medical-device companies need these systems but can be less  Document the “as-is” commercial contracting and developed. government price reporting processes for both the pharmaceutical and medical device business units  Processes are not fully developed or  Create an inventory of existing master data elements integrated (i.e. customers and classes of trade for both business  Different business units are involved units)  Create an inventory of systems used for contract and priorities differ management and government price reporting, that  Managing uncertainty include: • Functionality for each system/module  Organization may not be aware of all • Department that uses the application and purpose necessary review or reporting • Integration requirements for source and “downstream requirements “systems (SAP, CRM, Healthcare Professional Spend Reporting, etc.)© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 9
  10. 10. Merging Operations and Systems PHASE II: DETERMINE FUNCTIONAL REQUIREMENTS FOR DESIRED STATE Phase II Approach Phase II Challenges  Planning/Implementing for regulatory Determine Functional changes Requirements ‐ Requirements for Health Care Reform To address these challenges, companies may consider the  Resistance to change following:  Develop a functional vision for the “to-be” operation  Looking for software solutions prior Create an inventory of existing master data elements to understanding the business needs, (i.e. customers and classes of trade for both business process and regulatory requirements units) of both the pharmaceutical and  Develop process/work flow descriptions that identify medical device business units areas of commonality as well as differences in the  Legal and commercial contracting operations between the two business units  Identify all functional processes, regulatory departments need tools and requirements, work flow requirements and templates to define their new interdepartmental dependencies responsibilities, and how they will  Identify required data elements to satisfy process, serve all units of the expanded regulatory, work flow and interdepartmental company. requirements© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 10
  11. 11. Merging Operations and Systems PHASE III: DETERMINE SYSTEM REQUIREMENTS FOR DESIRED STATE Phase III Approach Phase III Challenges Determine System  Companies look for software solutions prior to understanding the Requirements business needs, process and requirements of the company they are To address these challenges, companies may consider the acquiring. following:  Differences in regulatory  Conduct review based on objective evaluation criteria requirements, i.e. less government for the new “to-be” environment reporting for medical device  Identify gaps that exist between existing system companies, lowers the perception for capabilities and “to-be” functional requirements (even if the system comparisons are between off-the-shelf the need for change; systems, custom built or hybrid)  Gaps in data collection can be a  Identify root cause for gaps identified – not all gaps are result of gaps in policy or result from system related business processes not being • Identify approach for closing identified gaps followed  Identify required data elements to satisfy process, regulatory, work flow and interdepartmental requirements© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 11
  12. 12. Merging Operations and Systems PHASE IV: DEVELOP IMPLEMENTATION ROADMAP Phase IV Approach Phase IV Challenges Create Roadmap  Management overseeing the post- merger effort wants to contain or To address these challenges, companies may consider the minimize merger costs and looks for following: opportunities to save budget for post-  Identify dependent integration conversion efforts (i.e. merger activities JDE to SAP)  Implementation efforts may be  Identify dependent internal business or corporate affected by mandatory deployment milestones milestones  Identify expected regulatory changes that may affect contracting and government price reporting  Regulatory changes may introduce requirements and have a plan around these items need to reevaluate implementation  Develop implementation project plan based on best milestones and resource distribution practice methodologies and not an arbitrary or forced milestone date  Plan for extended testing  Ensure regulatory requirements and controls are considered upfront© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 12
  13. 13. Merging Operations and Systems SUMMARY OF KEYS TO SUCCESS AND LESSONS LEARNED  Project management is one of the most important needs to ensure that the solution implementation is successfully deployed on-time, within scope and budget.  Project Management needs to ensure the structure and procedures established the following so they can proactively manage expectations: • Project Schedule • Project Budget • Issues and risk – technical, compliance and business  There is an importance of assigning a skilled project manager full-time, who must have subject matter, compliance, and IT PM skills  The testing cycle needs to be thorough and well documented. If this step is rushed and the cycle is shortened there is a risk that critical data will not be properly recorded or calculated.© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 13
  14. 14. Recap and Key Takeaways
  15. 15. Recap and Key Takeaways Combining pharmaceutical and medical device companies is more difficult than many companies consider because of contracts in products, operating models, and regulatory requirements. Here are a few takeaways:  Ensure you have a plan in place in the form of an implementation roadmap so that system at the end should not only satisfy operational requirements but also regulatory requirements as well.  Ensure you do not select a solutions prior to understanding the business needs, processes and requirements. • Avoid the “Ready, Fire, Aim…” approach at all costs  Ensure that the project is staffed appropriately with enough project management resources that have the necessary skill sets© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 15
  16. 16. Contact Us ATLANTA OFFICE NEW YORK OFFICE Six Concourse Parkway Suite 1500 | 599 Lexington Avenue, 25th Floor| Atlanta, GA 30328 New York, NY 10022 Clay Willis, Manager Mark Linver, Managing Director Phone: 404-825-3319 Phone: 312-515-1677 Email: cwillis@huronconsultinggroup.com Email: mlinver@huronconsultinggroup.com© 2013 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 16
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