IdealNet and iContracts GP Presentation

2933 West Germantown Pike
Building 2, Suite 204
Fairview Village, Pa 19409
USA
Toll Free : 800 618-0836
Fax : 610 666-1006
Email : info@idealnetinc.com
USA
Toll Free : 800 618-0836
Fax : 610 666-1006
July 2010
Government Pricing
How IdealNet, Inc. and iContracts, Inc. can help
you to ensure full compliance

© 2010 IdealNet, Inc.Page 2
Taking Your Business to the Next Level™
Agenda
• Government Pricing Program Discussion
• Government Pricing Compliance Infrastructure Requirements
• Government Pricing Program Best Practices
• Government Audit Initiatives
• iContracts/Government Pricing
• How IdealNet and iContracts can help
• Questions & Discussion

What is Government Contracting?
The contracting landscape for a manufacturer is segmented into two different end customers – commercial customers and
government customers. Contracting with each customer segment demands different pricing strategies and compliance
responsibilities.
– contracting landscape –
GPO
PBM
WHLSR
HOSP
HMO
PHARMACY
MAIL ORDER
commercial government
MEDICAID
PROGRAM
STATES
VA
PRIME VENDOR
PHS
ENTITIES
DSH
ENTITIES
FSS
ENTITIES
• Pricing discounts range between 5% - 20% as driven by
competition
• Contract compliance is required by Terms and Conditions or
incentive structures
• Pricing is lower than commercial and reflects the largest discounts
• Compliance is required by legislation and may carry severe monetary
penalties and criminal charges if violated

What does it mean to contract with the Government?
Government Sector
Manufacturer
CMS
(Centers for Medicare &
Medicaid Services)
VA
(Veteran Affairs)
DOD
(Department of Defense)
PHS
Entities
(Public Health Service)
+
Medicaid
Agreement
Federal
Supply
Schedule
Agreement
Pricing
Agreement
Other
Programs
(State or Assistance
Programs)
+
If a pharmaceutical company
elects to contract with the
Government sector, it will
enter into several agency
agreements making its
products available to all
government entities.
Selective contracting is not
allowed in the government
sector (e.g., participate in
Medicaid but not in PHS
pricing is not allowed).
A manufacturer can elect to contract with the government sector to position their product in the Medicaid Drug Rebate Program as
well as make its products eligible for purchase by all Federal entities.

How is Government Contracting administered?
CMS &
State Agencies
CMS &
State Agencies
ManufacturerManufacturerManaged Care
Entities
Managed Care
Entities
Pharmacy /
Retail
Pharmacy /
Retail
Medicaid
Rebates
Chargebacks
Prescription
Claims
Prescription
Claims
Rebate ($)
Rebate ($)
Rebate Contract
Product
Shipment
Product
Shipment
Product Shipment
Purchase Product
Bid Contract
Utilization DataUtilization
Data
Rebate Agreement
WholesalerWholesaler
1
2
3
VA contracting
PHS pricing
GPO, Hospitals,
Government,
Other
GPO, Hospitals,
Government,
Other
As part of the overall contract administration process, specific administration of government contracting is focused in three areas –
Medicaid pricing & claims, VA contracting and PHS pricing.

Government Pricing Programs
• The Medicaid Drug Rebate Program, Veterans Health Care Act and
Federal Supply Schedule reporting and compliance requirements create
an interconnected Web of obligations for healthcare manufacturers:
– Each program requires various submissions and reporting to government
agencies
– All three programs use the same data as the basis for required reports
and submissions
– All three programs allow the government to audit related submissions for
compliance
– All three programs can expose a manufacturer to significant penalties for
non-compliance

Government Pricing Programs
• A company’s ability to remain compliant with each program is reliant
upon its ability to access, manage and analyze transaction level sales
and pricing data
• A strong compliance program must also provide the ability to recreate
and reconcile pricing submissions at some future point to support an
audit or other Government inquiry
• The Government expects program participants to employ a consistent,
re-creatable compliance process, driven by strong standard operating
procedures and policies

Infrastructure Requirements
Government Pricing Compliance
• Policies
– Clearly defined interpretations for each program
• Standard Operating Procedures (S.O.P.’s)
– Documented method for administering each aspect of the program, including price
calculations
• People
– Trained in each Government pricing program
– Understanding of commercial business as it relates to each pricing program
• Systems
– Automated processes to enforce a consistent approach to: data access; pricing
calculations; securing each policy; calculating rebate payments; and deliver
against audit requests

USA
Toll Free : 800 618-0836
Fax : 610 666-1006
USA
Toll Free : 800 618-0836
Fax : 610 666-1006
Government Pricing Program
Best Practices

Best Practices
• Data Integrity
• Consistent Implementation of Government Pricing Policies
• Preserving and Protecting Government Pricing Compliance
Methodologies
• FSS Tracking Customer Creation and Monitoring
• Government Audit Response Capability

Best Practices
• Data Integrity
– Properly classifying transaction level data for use in Government Pricing
calculations
– Employ a consistent process for accessing ERP, contract management
and legacy data
– Data “cleansing” – ensure the data is accurate and valid
– Data storage – store and secure all transaction level data used in
calculations

Best Practices
• Consistent Implementation of Government Pricing Policies
– Maintain a formal written Government compliance policy and procedure
document
– The ability to apply a consistent set of Government pricing policies that
reflect corporate S.O.P.’s
– Need to provide the capability to take the transactions and calculation
logic and apply them on a consistent Qtr to Qtr basis
– The ability to filter transactions, classes of trade, customers, etc., when
building policies

Best Practices
• Preserving and Protecting Government Pricing Compliance
Methodologies
– The ability to secure your Government Pricing compliance methodologies
to eliminate risks of:
• Lost documents
• Pricing policy documents becoming outdated / inaccurate
– Deal with the “loss of corporate memory” when key people leave the
company
– The ability to properly handle business changes, and reflect those
changes within Government pricing policies and submissions

Best Practices
• FSS Tracking Customer Creation and Monitoring
– Historical transaction analysis to identify “like” customers and comply with
CSP requirements
– Employ a monitoring process that effectively analyzes all tracking
customer related activity:
• Research and understand price violations
• Resolve and document violations
– When tracking customer price violations occur, properly recalculate and
monitor the new tracking price
– Disclosing all FSS tracking customer price violations within the mandated
window of time

Best Practices
• Government Audit Response Capability
– The ability to quickly and accurately respond to government audits and
information requests
– Deliver the exact set of transactions, calculations and pricing data
previously submitted to the Government
– Reach back in time to properly articulate
the company’s policies and interpretations
– Manage the cost, stress and business disruption that can occur during a
Government audit

Government Audit Initiatives
• Certain companies targeted each year based on their turn in queue
• Others based on past issues and performance
• Can be requested by contracting officers and other officials
• Voluntary Disclosures generally result in some sort of review by the
government
• How can the risks associated with potential adverse findings be
mitigated?

USA
Toll Free : 800 618-0836
Fax : 610 666-1006
USA
Toll Free : 800 618-0836
Fax : 610 666-1006
Application Overview
iContracts/Government Pricing

USA
Toll Free : 800 618-0836
Fax : 610 666-1006
USA
Toll Free : 800 618-0836
Fax : 610 666-1006
How IdealNet and iContracts can help

Assessment of current policies, procedures, controls and
systems
• Medicare Part B – Average Sales Price
• Medicaid Drug Rebate Program (Average Manufacturer Price, Best Price,
Unit Rebate Amount, nominal price and prompt pay discount pricing)
• Public Health Service – 340B price offering and membership eligibility
• Federal Supply Schedule – Non-Federal Average Manufacturer Price (Non-
FAMP) and Federal Ceiling
• Price (FCP)
• Medicare Part D
• 2010 Healthcare Reform Legislation
• Various other governmental agency price reporting requirements

Implementation of updated policies, procedures, controls
and systems
• Practical recommendations and solutions that take into consideration the
needs and reporting environment of the manufacturer
• Develop calculation methodology policy and standard operating procedures
(SOPs)
• Develop and present training materials to all levels of management and
operations
• Expert testimony and assist counsel related to:
– Qui Tam Allegations
– Whistleblower Allegations
– DOJ inquiries and investigations
– Anti-Kickback Statute and False Claims Act Violations
• Corporate Integrity Agreement (CIA) preparation and negotiation
• Independent Review Organization (IRO) as required under the CIA

Support iContracts implementation
• Document all required calculations
– Generate detailed formulas for each specific calculation
– Create corresponding documents which detail and facilitate
implementation of the formulas within the iContracts environment
• Create detailed data flow/integration functional and technical specifications
for all required interfaces to and from the iContracts environment
– Based on other existing manufacturer systems to be interfaced
– Can also supplement iContracts technical personal with interface
designers and coders
• As needed, provide targeted business expertise to iContracts technical staff
during the implementation
• Generate and execute manufacturer specific test scenarios in partnership
with iContracts

USA
Toll Free : 800 618-0836
Fax : 610 666-1006
USA
Toll Free : 800 618-0836
Fax : 610 666-1006
Questions & Discussion

USA
Toll Free : 800 618-0836
Fax : 610 666-1006
USA
Toll Free : 800 618-0836
Fax : 610 666-1006
IdealNet, Inc. Overview

IdealNet, Inc. Overview
• Expert business and technical consulting firm to the Life Sciences industry since
1994
• Domain expertise:
– 16+ years focused on optimizing contract management processes across multiple industries
– Design, development and deployment of leading industry solutions including SOP’s, training
materials, filing guidelines, and GP software package implementation
– Only employs seasoned staff with relevant expertise
• Business strength:
– Track record of successful commercial and government pricing projects with many Tier 1
Pharmaceutical manufacturers as well as Biotech and Medical Device manufacturers
• Industry leading Medicaid and Government Pricing compliance support services:
– Production of complete Policy and Procedure frameworks required to maintain compliance with
the Medicaid Drug Rebate, Veteran’s Healthcare Act and Federal Supply Schedule laws

USA
Toll Free : 800 618-0836
Fax : 610 666-1006
USA
Toll Free : 800 618-0836
Fax : 610 666-1006
Learn how iContract’s Government Pricing solution can
help your organization in conjunction with IdealNet’s
expert Government Pricing services
Contact Todd Venetianer at tvenetianer@icontracts.com
Contact Christopher C. Biddle at cbiddle@idealnetinc.com
Thank You
Visit us online at www.idealnetinc.com

IdealNet and iContracts GP Presentation

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