Escalating GTN Reductions Puts Pressure on Sales

Pharmaceutical manufacturers have a funnel, depicted below, clogged by escalating gross-to-net (GTN) reductions. GTN Sales Funnel Components of the GTN Sales Funnel are as follows: Gross Sales at a drug’s Wholesaler Acquisition Cost (WAC). Note that gross sales are for prescriptions filled representing prescriptions written less reductions attributable to payer restrictions, patient abandonment due to [...]

2024-05-14T12:39:17+00:00Blog|

Estimating GTN Accruals

Pharma companies prefer stable predictable sales and earnings growth. Unexpected material GTN true-up adjustments results in earnings volatility and may significantly impact the stock price. A disappointing surprise occurred in the fourth quarter in the example depicted below due to true-up adjustments for higher commercial rebates, more Medicaid & 340B business and unanticipated levels of [...]

2024-05-14T12:39:16+00:00Blog|

Implications of GTN Adjustments Resulting in Unprofitable Prescriptions

The implications of the cumulative effect of multiple GTN adjustments resulting in negative net sales and unprofitable prescriptions are far-reaching. Pharmaceutical companies may need to refine physician targeting and salesforce incentive programs to avoid a disproportionate number of underwater unprofitable prescriptions. Examples of Unprofitable Prescriptions Commercial Rebates Coupled With Copay Buydown A $600 copay buydown [...]

2024-05-14T12:39:15+00:00Blog|

Understanding Provisions and Implications of the Inflation Reduction Act

The tangled web we weave… Enactment of the Inflation Reduction Act (“IRA”) was a long winding road. IRA opens the proverbial door to a new frontier of complex prescription drug provisions with far-reaching implications. For the first time in history, the federal government will negotiate prices for high-cost drugs covered under Medicare. Medicare price increases [...]

2024-05-14T12:39:12+00:00Blog|