The pharmaceutical industry operates in a highly regulated environment, and government pricing is a critical aspect of compliance. Recent regulatory changes and increasing complexity have made it challenging for manufacturers to accurately calculate and report their government prices.

What is Reallocation?

Reallocation is a process where manufacturers must proportionally allocate discounts associated with bundled product sales. This ensures that the discounts are accurately assigned to individual products, allowing for precise government price calculations.

Why is Reallocation Important?

• Compliance: Proper reallocation is essential to adhere to government regulations, particularly the Deficit Reduction Act, which provides specific guidelines for discount allocation.
• Accurate Reporting: Accurate reallocation ensures that manufacturers report correct data to government agencies, avoiding potential penalties and legal issues.
• Strategic Decision-Making: By understanding the impact of different contracting strategies, manufacturers can make informed decisions about their pricing and discounting practices.

Types of Bundles and Reallocation

1. Single Multi-Period Bundle: This involves one or multiple products within a single contract for all customers or specific customer groups. Reallocation is typically done within a specific period, such as a year.
2. Fixed Period Bundle: This type of bundle considers discounts within a fixed date range, regardless of product or customer. Reallocation is based on this fixed period.
3. Temporal Bundle: In this scenario, rebates are contingent on prior period performance. Reallocation becomes more complex as it involves linking current period discounts to past performance data.

The Reallocation Process and Its Impact on Price Calculations

Reallocation is a crucial step before calculating government price types like AMP, BP, and others. It ensures that the transactional data used in these calculations accurately reflects the discounts associated with each product.

Stacking and Blending: Key Concepts in Reallocation

• Stacking: This involves identifying and grouping transactions to calculate net price points for best price calculations. It helps determine the actual price paid by the customer, considering various discounts and fees.
• Blending: This process groups related products, such as relabels or authorized generics, to calculate their respective price points.

Navigating the Complexities of Government Pricing

Manufacturers can effectively navigate the complexities of government pricing by:

• Leveraging Advanced Technology: Employing specialized software solutions can automate reallocation, stacking, and blending processes, reducing errors and ensuring compliance.
• Partnering with Experts: Consulting with experts in government pricing can provide valuable insights and guidance on regulatory requirements and best practices.
• Staying Informed: Keeping abreast of regulatory changes and industry trends is essential to adapting pricing strategies and maintaining compliance.

By understanding the intricacies of reallocation, stacking, and blending, pharmaceutical manufacturers can make informed decisions, optimize their pricing strategies, and ensure long-term success in the government market. IntegriChain now offers Discount Reallocation, Price Stacking and Product Blending solutions. 

For more information on pricing strategies, contact sales@integrichain.com