SOURCE: Cutting Edge Information

Cutting Edge Information

June 19, 2015 08:49 ET

US Pharma Companies Allocate $2.7 Million for Government Reimbursement Budgets, According to Pharmaceutical Intelligence Firm Cutting Edge Information

RESEARCH TRIANGLE PARK, NC--(Marketwired - June 19, 2015) - Companies' budgets for government reimbursement activities either increased or remained constant between 2012 and 2014, according to a recent benchmarking study by pharmaceutical intelligence firm Cutting Edge Information.

The study, "US Government Reimbursement: Winning Key Formulary Positions and Managing Pricing Systems" found that, on average, drug companies' budgets for government reimbursement activities in 2014 was $2.7 million, which is an 8% increase over the average 2013 budget of $2.5 million.

Digging into the budget allocations further, Cutting Edge Information's study found that companies allocate the majority of the US government reimbursement budget to employee compensation. Although individual companies vary in how they spend their budgets, all surveyed companies dedicate the largest percentage of their spending -- an average of 58% -- to account manager compensation.

"Government reimbursement is one area where company size does not seem to play a role in the amount of funds allocated to these activities," said Jacob Presson, senior research analyst at Cutting Edge Information. "We didn't really find any significant differences between how small and Top 50 pharmaceutical companies allocate these budgets."

The second largest budget allocation, which averages only 16% of budgets, is senior management compensation. Companies generally have fewer senior managers than account managers, so the difference in budget allocation is not surprising. The greatest differences in companies' budget allocations are found in technology, audits and other overhead costs. Technology expenses include customer relationship management (CRM), price databases or any other items that could help companies with government reimbursement. Budget allocations for technology vary between 5% and 25%.

"US Government Drug Reimbursement" provides a roadmap for better navigating government drug reimbursement amidst the growing influence of the Affordable Care Act. The report, derived from primary resources and direct interviews, focuses exclusively on US government reimbursement strategies and trends, draws on quantitative and qualitative data from top-performing life science executives to provide actionable insights for winning and maintaining formulary position. Additional guidance outlined in the report includes:

  • Anticipating government payer needs and developing strong market access strategies;
  • Managing payer relationships before and after product launches to maintain formulary position; and
  • Understanding compliant government reimbursement practices in the United States' new healthcare environment.

To learn more about Cutting Edge Information and its research report offerings, please visit http://cuttingedgeinfo.com/.

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