In the pharmaceutical industry, many rebate contract managers spend hundreds of hours manually identifying key data points from thousands of contracts. Rebate contracts can impact up to 25 percent of pharmaceutical manufacturing revenue, so the on-going critical management of the relationships between drug makers and its distribution partners is mission critical. This legacy time consuming approach of managing rebate contracts increases the risk of errors, affecting the company’s revenue and bottom lines. While rebates reduce costs for payers and patients, they introduce complexities that impact the healthcare system. Rebates determine distribution, acquisition costs and regulatory compliance, emphasizing the importance of managing contracts between manufacturers and the healthcare community. These complex documents are difficult to manage and interpret, involving many stakeholders in the rebate process.
The Challenge
Contract managers face numerous challenges, from handling complex and varied contracts to ensuring compliance with stringent regulatory requirements. The current manual process of finding and analyzing datapoints in literally thousands of contracts and amendments can no longer be done manually. The tedious, time-consuming discovery of specific datapoints and manual extraction to spreadsheets is dragging down the potential of rebate management while increasing risk of compliance. That is why the pharmaceutical manufacturing industry is now looking to AI-driven technologies that accelerate the speed of analysis to better determine business position in real time.
Changes in healthcare policies, both domestically and internationally, are also continually reshaping the landscape of rebate contracting. Policy changes, such as alterations to drug pricing regulations or shifts in reimbursement methodologies, necessitate rapid adjustments to rebate contracts. While rebate programs open new avenues for collaboration and partnerships, allowing companies to access a broader range of resources and expertise, they also introduce added complexities in contract management, as they are often amended and changed.
The AI Solution
Automating many of a contract manager’s tasks with AI can vastly improve efficiency and accuracy. AI can quickly and accurately extract and analyze contract data, freeing contract managers to focus on strategic activities such as vendor relationships or negotiations. Robust AI technologies support effective data use in contracts, preserving profitability and enhancing distribution. Natural Language Processing (NLP) and Machine Learning (ML) technologies can automate the extraction and analysis of contract data. This not only reduces the manual effort involved but also ensures consistency and accuracy across all documents.
The pharmaceutical industry is turning to AI-driven technologies to speed up analysis and better determine business positions in real time. For contract managers, this means eliminating tedious data entry, unlocking the potential of rebate management, and reducing compliance risks.
For instance, a leading pharmaceutical company recently utilized AI technology from my company to develop a digital transformation ‘smart search’ capability. This solution involved enhancing Optical Character Reading (OCR) document processing and integrating it with the company’s record management system. The result was a system capable of extracting and visualizing key contract information in real-time. This more efficient system led to over 3000 hours saved in one year. For context, contract landscape updates can take roughly 400 hours per quarter across 10 full time employees.
AI technologies emerge as a catalyst for streamlining operations and enhancing efficiency, enabling contract managers to stay ahead of these policy changes and evolve their approach to contract management at scale. Through supervised machine learning and AI-powered analytics, contract managers can access and localize key data points from vast datasets, and compare pertinent rebate data such as drug names, eligible product units, average selling price, contract start and end dates, termination periods, shipping and liability terms with ease.
Additionally, AI-powered analytics can revolutionize rebate contract management by identifying patterns to predict future market dynamics, optimize rebate strategies, minimize revenue leakage, and enhance negotiation outcomes.
Key Benefits
Implementing AI in rebate contract management brings several significant benefits:
- Efficiency and Time Savings: AI dramatically reduces the time required for tasks, enabling managers to respond to contract queries in minutes instead of weeks.
- Improved Data Quality: AI-driven systems ensure accurate and consistent data extraction, minimizing human errors and missed opportunities. High-quality data is crucial for effective AI tools.
- Enhanced Decision Making: Real-time insights and analytics allow managers to make informed decisions, shifting their focus from routine tasks to strategic activities.
- Scalability: AI solutions manage increasing volumes of contracts and data efficiently, accommodating growing workloads without additional resources.
The Impact
Rebate contract management play a pivotal role in the financial ecosystem of pharmaceutical companies, often representing significant portions of their revenue and spending. However, managing rebate contracts effectively requires more than just paperwork and a can-do attitude. It demands a sophisticated organizational approach that leverages data analytics for better decision-making. Manually addressing this task—even with highly trained teams—puts contracts at risk of inaccuracies that can have huge consequences in revenue management down the line. In such a scenario, the integration of quality data and AI-powered technology solutions can equip contract managers with the tools they need to thrive in the ever-changing world of rebate contracts.
By adopting AI, pharmaceutical companies can create new business value, improve operational efficiency, and enhance collaboration across teams. AI not only augments human judgment, but also frees up valuable time for contract managers to focus on more strategic activities. The transformation brought about by AI is redefining rebate contract management, making it more efficient, accurate, and scalable.
The Future of Rebate Contract Management
At EncompaaS, we strongly advocate for the rapid adoption of AI-driven solutions to streamline the analysis and visualization of contracted agreements. When applied in the complex world of pharmaceutical rebate contracts, it provides an automated way of tracking the performance of drugs against contracted terms—enabling pharmaceutical manufacturers to maximize the revenue potential of every rebate contract. With EncompaaS, contract managers don’t need to learn another software application; they can spend their time learning more about their rebate data to drive better outcomes for their organization.
The integration of AI into rebate contract management in the pharmaceutical industry offers a powerful tool for addressing the challenges faced by managers. It provides a scalable, efficient and accurate solution that enhances decision-making and operational efficiency. As AI technology continues to evolve, its impact on rebate contract management will only grow, driving further innovation and improvement in the industry.
By David Gould, Chief Customer Officer, EncompaaS