Model N Readies Revenue-Management PackageModel N Readies Revenue-Management Package

Model N Inc. next month will ship a suite of revenue-management applications designed to help pharmaceutical companies manage complex pricing policies, contracts, and payment-settlement procedures with distributors, health-care providers, and government agencies.

Revenue management is a tricky business in the pharmaceutical industry. Pharmaceutical makers have to set prices and sign contracts with a wide range of customers, including drug distributors and wholesalers, pharmacies, managed health care networks, and government agencies. Those contracts often involve rebates and administrative fees. And drug manufacturers are required by law to offer state and local governments the same rebates they provide other customers.

But pharmaceutical companies typically manage all that using spreadsheets and other manual methods, according to Model N. The result is that pharmaceutical companies sometimes overpay rebates and fees, allow drug prices to erode, or have to pay financial penalties when they don't comply with government regulations.

The new suite from Model N includes contract management, sales management, product marketing, strategic pricing, financial analysis, and compliance-analysis applications. Pricing for the Model N apps will be based on the size of the buying company, starting at $350,000 per application.

The strategic-pricing software, for example, helps managers set revenue and profit-margin guidelines for drug contracts, establish drug-volume prices, and analyze the performance of existing contracts. The financial-analysis app helps calculate rebates and fees and schedule price adjustments. The applications operate individually or can be integrated to operate as a single business process. They also work with customer-relationship management and enterprise resource planning applications from other vendors.

Reliant Pharmaceuticals LLC is installing the contract management application. "We now have a very manual process to manage our contracts," CIO Ron Calderone said. Reliant runs the danger of overpaying contract claims from distributors with the spreadsheets and paper records the company has been using to track contracts, the CIO said. The Model N software will help the sales force develop more standard contract terms.

Calderone plans to have the government-compliance application installed by September. The CIO says tracking payment regulations, which differ from state to state, "is a job in itself." He expects to have all the Model N software installed early next year.