Factors to Consider When Acquiring and Launching A Previously Marketed Pharmaceutical

Evaluate the product viability and sustainability including what barriers of entry exist and the current market landscape.

1. Are there competing products with tentative approvals coming sooner than initially anticipated? Competitor products coming to market could mean a smaller market share cap for your product and consistent reductions in margins, or create challenges that require different marketing solutions than initially planned.
2. How stable is the supply line now? What is anticipated for the future? Difficulty supplying a drug in the market can be both a challenge and an opportunity. At certain times, even large market players have difficulty supplying certain drugs to key customers. If you can step in and fill that void it can be an opportunity for your company. However, if the product’s supply line looks unstable for your organization, this can present additional risk and can even result in monetary penalties by customers if you enter into agreements that you can’t fulfill completely. It is important to consider all aspects of your own manufacturing and supply line to ensure that the structure you have in place is sustainable and reliable.
3. Is the Active Pharmaceutical Ingredient (API) readily available without undo cause for concern, allocated supply, or limited supply? If the API is difficult to acquire and/or manufacture, this can limit competition. If that is the case, can your current partners/facilities deliver as promised?

Understand the product’s history.

1. Have a good understanding of your customer utilization, rebate liability by segment, and customer or payer mix. Understanding these dynamics is critical for focusing your contracting and marketing efforts.
2. During an acquisition, will there be existing inventory under a different manufacturer or labeler? If so, what is already in the various distribution channels versus work-in-process? Knowing this and the expiration dates could identify a myriad of returns that may need to be negotiated before the acquisition.
3. Discuss and identify key cutoff dates with any other parties to determine who will pay rebates and for how long. If you are acquiring an entire labeler code, liabilities will continue to follow any associated products for years. It is not uncommon to get adjusted Medicaid invoices for multiple years following the initial dispensed date of a product. Who is going to be responsible and how will this be structured? If you don’t know, you may end up incurring additional liability for which you have not planned and accrued dollars, as CMS will hold the current owner of that NDC or labeler code responsible for payment.
4. Ensure there are no pre-existing debts, recalls, lawsuits or penalties. If there are, who will pay and how will they impact the future commercial viability of the product?
5. Explore the multitude of State Price and Financial Disclosure Reporting requirements. Have all reporting requirements in the past been completed on a timely basis and satisfied with each state requiring reporting and notifications? Are there any fines or penalties from prior periods that were not reported or reported incorrectly? The penalties and fines can be severe and are NDC-specific. State regulators will expect someone to pay for penalties, so it is vital to understand the current landscape and plan accordingly. To remain compliant the launch price will need a review if it is changed or newly set to determine if any reporting is necessary. (Read our recent white paper on this subject here.)

Dig into the contracts.

1. Unfavorable pricing on a contract may need to continue. Unfortunately, this could impact Best Price on the Government side, further compounding the negative impact on your bottom line. Sometimes simply terminating a contract or price could harm the customer or relationship. The business and revenue could be lost for months, years, or even indefinitely. Assessing the impact of keeping or losing an agreement will have lasting effects on the lifecycle of a product or pharmaceutical company.
2. What current commercial agreements exist and what are their terms? Have any penalty triggers such as price protection been hit? Would you realize any real benefits from these agreements? Will these carry over with an acquisition of a product or will you be responsible for contracting with these entities? If there is large commercial utilization on a product, payers may be expecting a rebate on all utilization, and if you don’t have a contract with them, you could be excluded from their formulary.
3. Has the product been subject to a CMS MDRP Agreement? If an NDA/ANDA was previously marketed and a Baseline AMP was established on a Medicaid Drug Rebate Agreement, this could result in additional rebate liabilities. Find out how understanding Baseline AMP rules can help you avoid pricing decision disasters.
4. Has this product been covered by the Public Health Service (PHS/Section 340B)? Like the Medicaid Drug Rebate Agreement, there is potential to have a less than favorable PHS price that could evenly result or lead to “penny pricing.” This scenario essentially results in manufacturers giving away their products to covered entities.
5. Is the product covered by the Veterans Affairs/Federal Supply Schedule? This contract may offer some leniency in the first full year of a product acquisition; however, be mindful to any inherent pricing and the duration of if/when an inflation penalty could exist. Furthermore, any future pricing and contracting strategies can impact this price as much if not more severely than what is currently established.

Implement and manage the plan. Adapt if necessary.

Gathering the right resources and investing the time in creating a complete analysis of a potential product acquisition and subsequent launch, along with building a detailed commercialization plan for your new product, will go a long way toward ensuring success—assuming all of the analytics are positive for a go to launch. Be sure every aspect of your plan has specific deliverables, deadlines and accountable individuals, and assign a project manager with executive level access to ensure that all resources are accomplishing their key deliverables on a timely basis.