Inputs for Pre-Launch GTN Forecasting Modeling: You know you need the modeling capability, but what do you need to make it happen?

Business assumptions and data inputs are necessary assets to project various Gross-to-Net (GTN) forecast results. Yet obtaining these data sets and assumptions is often one of the most challenging aspects of GTN forecasting, particularly for pre-launch products where there may be a dearth of available data sources.

Here are some best practices to consider, ideally well in advance of attempts to perform actual GTN forecast analysis.

Deriving a Demand Forecast:

Syndicated data trending

If there is syndicated data available for your therapeutic class or an identified analog product, ensure that someone in your organization has an approach to trend that data and applying future market events in an organized and auditable manner.

Patient-driven methodologies

Absent reliable data from syndicated sources, many manufacturers rely on the translation of epidemiological assumptions into patient counts per time. Combining these assumptions with expected days on therapy and dosage rates frequently produce reliable demand forecasts pre-launch end even through earlier post-launch periods.

Repeatable and Regular Forecasting

Regardless of the approach or methodology, ensure that the tool(s) for producing the demand forecast is repeatable and refreshed on a regular basis with newly available data. Ultimately, Demand and GTN forecasting should be generated on a separate but related cadence, with Demand flowing into the GTN process as a critical input.

WAC Pricing Assumptions:

Consistency Across Business Functions

Of all the inputs to a GTN forecast, WAC price is one that many other business functions are utilizing, including Demand Forecasting, Accrual and Reserve Analysis, and Sales Reporting. Obtaining WAC price as an input for GTN forecasting is obviously critical, but making certain that the WAC price is consistent with the assumptions of other business functions is equally important to ensure that those in key management and finance roles aren’t mixing apples and oranges. Performing what-if analysis on the results of different WAC prices is also a best practice, but be sure you have an ironclad means of separating what-if scenarios from your regular forecasting cycle outputs.

Contracting and Discounting Assumptions:

Market Research

Developing and evolving assumptions around mix of business across channels and customers is typically something a good forecasting model can inform over time, but when it comes to determining the necessary discount levels, there is no substitution for market research. This includes primary research with payers, buying groups and providers to inform everything from the necessary rebates to achieve desired levels of access, to the off-invoice discount price to ensure a competitive and feasible price point with providers in the case of buy-and-bill products. Failing to support pricing and discounting decisions with good research can have disastrous consequences post-launch when many manufacturers make hasty decisions in response to new information without understanding regulatory and commercial constraints.

The Importance of a Contracting Strategy

In the pre-launch environment, there is frequently an over-emphasis on analysis and assumptions related to the channel or market segment that has been deemed the most important. But time and again, we observe manufacturers who overlook cross-channel dependencies and experience suboptimal performance in “smaller” channels. Sometimes, sub-par performance in channels with a lower mix-of-business these results become problematic. This highlights the need to ensure that the establishing of everything from WAC price to the discounts for every channel / customer type has been vetted through scenario modeling in a comprehensive GTN forecasting model before finalizing an overarching strategy. In this way, the strategy is both an input and an asset to be informed by GTN Forecasting outputs.

Government Pricing (GP) Policies and Assumptions:

Determining Program Participation and Implications

Understanding the government pricing programs that are relevant for a given therapeutic is fundamental to developing a comprehensive GTN Forecasting model. It’s also a critical factor in determining the optimal WAC pricing strategy for a given drug since some of the GP results that depend on WAC price turn into calculation elements that will remain in place for the life of the product. Early in the strategy development process for your product, be sure to have worked with well-informed GP experts so that dependencies and constraints have been factored into all appropriate go-to-market plans.

Formal GP Policies

Regardless of the manufacturer, one thing is always true: government pricing regulations continue to provoke questions when it comes to reasonable interpretation in the context of a given therapeutic. How a drug physically gets to market… how the drug is administered to patients… the types of customers who will or won’t take possession of drug… these product and commercial aspects (and more) must be considered to arrive at a reasonable interpretation of GP regulations that aligns with your situation. For this reason and others, every manufacturer must have a formal policy document for each program applicable to at least one product in their portfolio.

What do we mean by formal? These documents should be drafted by individuals with strong knowledge of GP statutes and regulations, they should be reviewed and informed by the advice of external counsel with the requisite expertise, and they should be reviewed and approved by the manufacturer’s multi-disciplinary Contracting and Pricing Committee. In addition to these documents acting as an input for GTN Forecasting models, they are fundamental to your company’s compliance.

If the list of items above is daunting, the good news is that there are ways to guide GTN Forecasting efforts with assumptions at many stages prior to launch. Pharosity’s consulting services cover the vast majority of what we’ve outlined above. Contact us for a free consultation. pharosity.com/contact