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MODULE 32: MANUFACTURER RELATIONS & LIMITED DISTRIBUTION ACCESS
Section 32.5: Reporting and KPI Requirements for Manufacturer Partners
Demonstrating ongoing value: Understanding and meeting the specific data reporting requirements and Key Performance Indicators (KPIs) mandated by manufacturers.
SECTION 32.5
Reporting and KPI Requirements for Manufacturer Partners
Speaking the language of data and proving your performance, quarter after quarter.
32.5.1 The “Why”: The KPI is the Contract
You have won the RFP. You have built the data feeds. You have aligned with the Hub. The LDD contract is signed. It is a moment of triumph for you as a founder. Now, you must understand that this contract is not a trophy; it is a performance agreement. The contract is not the end of the race; it is the start of a new, much longer one, and it is measured in data.
In Section 32.3, we established that your daily data feed is the “raw material”—the 1s and 0s that prove you are operational. In this section, we focus on how the manufacturer *uses* that raw material to create your “report card.” That report card is a dashboard of Key Performance Indicators (KPIs). These KPIs are not “suggestions” or “goals”; they are the explicit, contractual metrics against which your pharmacy will be judged, scored, and, most importantly, paid.
For a manufacturer, data is the only objective tool they have to manage their multi-billion dollar LDD network. It is their *only* way to answer their three most critical business questions:
- Are we getting new patients on therapy fast? (Measured by Time-to-Fill)
- Are we keeping patients on therapy? (Measured by Adherence)
- Are our partners (you) effective and efficient? (Measured by all other metrics)
As a pharmacy founder, your new job is to become a master of this data. You are not just a Chief Executive Officer; you are now the Chief Data Officer for your organization. You must live and breathe these KPIs, build your internal SOPs to optimize them, and—most critically—be able to tell the story behind the numbers. This is the final and most important layer of your manufacturer partnership.
Pharmacist Analogy: The Investment Fund Manager
You are no longer just a pharmacy owner. You are now a high-stakes Investment Fund Manager. A group of massive investors (the Manufacturer) has entrusted you with $1 billion of their capital (their Drug) and a portfolio of 1,000 of their most important clients (their Patients).
Your LDD contract is your investment prospectus. It explicitly states your performance targets (the KPIs). For example, you are contractually obligated to deliver a “90% client retention rate” (Adherence) and a “3-day client onboarding time” (Time-to-Fill).
Your daily data feed (from Section 32.3) is your “daily stock ticker”—the raw data that shows your activity. But the investors don’t read the ticker. They are waiting for your formal Quarterly Business Review (QBR). This is your “Quarterly Investor Report.” In this meeting, you must present a dashboard showing your performance against their targets.
What happens if you fail?
- Scenario 1: You Miss a Metric. Your retention rate was 88% (you “missed” your adherence KPI). The investors don’t fire you… yet. But they put you on notice. They also reduce your performance bonus (Financial Penalties).
- Scenario 2: Your Competitor Wins. The investor also gave $1 billion to another fund manager (your Competitor, e.g., Accredo). Their quarterly report shows a 94% retention rate. The investor is impressed. The next quarter, when the investor has 500 new clients, they give 400 to Accredo and only 100 to you. This is Referral Triage.
- Scenario 3: You Fail Repeatedly. You miss your KPIs for three quarters in a row. The investor calls you. “We are liquidating our position with your fund. We are pulling our capital and all of our clients and moving them to a fund that can meet the terms.” This is Contract Termination.
Data and KPIs are not “IT functions.” They are the core of your business relationship. Your performance is your survival.
32.5.2 The Manufacturer’s “Big 6” Dashboard: Deconstructing the Core KPIs
When you negotiate your LDD contract, the “Performance” or “Services” exhibit will explicitly define the KPIs you are bound to. While the specific numbers may vary, these six metrics are the universal standard. You must build your internal dashboard to track these in real-time.
Masterclass Table: The Core KPIs That Define Your Performance
| KPI Category | The Metric | How It’s Calculated (Simplified) | Why the Manufacturer is Obsessed with It |
|---|---|---|---|
| SPEED | Time-to-Fill (TTF) (or Time-to-Therapy) |
(Date of First Dispense) – (Date of Referral Intake) – (Toll-Gated Time) | This is the #1 KPI. Every day a patient waits is a day of lost revenue for them and, more importantly, a day the patient can “leak” (abandon therapy). Fast TTF is your #1 value proposition. |
| ADHERENCE | Proportion of Days Covered (PDC) | (Total Days “Covered” by Fills in a Period) / (Total Days in Period) | This is the #1a KPI. It measures persistence. High adherence proves their drug has good real-world outcomes (vital for payer negotiations) and maximizes the lifetime value of a patient. |
| EFFICIENCY | Referral Conversion Rate | (Total Patients Shipped) / (Total Referrals Received) | This measures your overall effectiveness. If they send you 100 referrals, how many do you actually get on therapy? A low rate means you are “leaking” their patients. |
| EFFICIENCY | (Total Referrals Canceled) / (Total Referrals Received) | The inverse of conversion. They demand this be broken down by rejection reason code (e.g., 20% `PA_DENIED`, 10% `PATIENT_UNRESPONSIVE`) so they can identify the real barriers to access. | |
| CLINICAL | Clinical Intervention Rate | (Total Clinical Interventions Documented) / (Total Patients) | This is your “proof of value.” It shows that your pharmacists are not just dispensing, but actively managing patients (e.g., side effect counseling, adherence calls, dosing changes). This is how you justify your fees. |
| INVENTORY | Days on Hand (DOH) | (Average Inventory Value) / (Average Cost of Goods Sold per Day) | They need to know you are managing their physical product. Too high DOH = you are hoarding their capital. Too low DOH = you risk an out-of-stock and a patient missing a dose. They demand balance (e.g., 15-20 days). |
32.5.3 Deep Dive: “Toll-gating” & Time-to-Fill (TTF)
This is, without question, the most important and most complex KPI concept you must master. A manufacturer’s contract will not just say, “TTF must be 3 days.” It will say, “TTF, excluding toll-gated time, must be 3 days.”
“Toll-gating” (or “Time-gating”) is the process of pausing the TTF clock for delays that are outside of your pharmacy’s control. This is the entire reason the “Referral Status Codes” (from Section 32.3) exist. They are your contractual mechanism for stopping the clock and proving that a delay is not your fault.
If you fail to use these codes correctly, your Total TTF will be 15 days, and you will look like a terrible partner. If you use them perfectly, your Contractual TTF will be 2 days, and you will look like a superstar. Same patient, same timeline—the only difference is data discipline.
A Visual Guide to a “Toll-gated” Patient Journey
Let’s follow a single referral to see how this works. The contractual goal is TTF < 3 Days.
Patient: John Smith // Total Timeline: 11 Days
Days 1-2: Pharmacy “On-Clock”
Referral received (`S_NEW`). Your team performs BI and discovers a PA is needed. Your team submits the PA.
Your TTF Clock: 1 Day
STOP CLOCK
Code `S_PA` Sent
Days 2-8: Payer “Toll-Gate”
The payer (Aetna) is reviewing the PA. This time is outside your control. The clock is paused.
Your TTF Clock: 0 Days
START CLOCK
PA Approved
Days 8-9: Pharmacy “On-Clock”
PA is approved. Your team confirms financial aid (`S_FA`) and calls the patient to schedule. Patient is unresponsive.
Your TTF Clock: 1 Day
STOP CLOCK
Code `S_INFO` Sent
Days 9-10: Patient “Toll-Gate”
Your team leaves voicemails for the patient. This time is outside your control. The clock is paused.
Your TTF Clock: 0 Days
START CLOCK
Patient Responds
Days 10-11: Pharmacy “On-Clock”
Patient calls back. Your pharmacist performs counseling. Your team schedules delivery and ships the drug (`S_SHIP`).
Your TTF Clock: 1 Day
Final Calculation
Total Calendar Days
11 Days
Total Toll-Gated Time
7 Days
(6 Payer + 1 Patient)
Contractual “KPI” TTF
3 Days
(1 + 1 + 1) -> METRIC ACHIEVED
32.5.4 Deep Dive: “Adherence” & Proportion of Days Covered (PDC)
After TTF, adherence is your most important metric. It proves your clinical value. Manufacturers and payers measure this using Proportion of Days Covered (PDC), not the older “Medication Possession Ratio (MPR).”
- MPR (Old): (Total Days Supply) / (Days in Period). This is flawed. If a patient refills 3 days early every month, their MPR can be >100%, which is meaningless.
- PDC (New): (Total Days “Covered” by at least one dose) / (Days in Period). This is the standard. It counts each day in the period as either “covered” (1) or “not covered” (0). It correctly handles early refills and cannot exceed 100%.
$$ \text{PDC} = \frac{\text{Number of Days in Period ‘Covered’}}{\text{Total Number of Days in Period}} $$
Tutorial: Calculating PDC
Let’s track a patient over a 90-day measurement period (e.g., Q1). The contractual goal is PDC > 90%.
The Patient’s Fills (30-Day Supply):
- Fill 1: Day 1 (Covers Days 1-30)
- Fill 2: Day 28 (Covers Days 28-57) <- Patient refilled 2 days early
- Fill 3: Day 65 (Covers Days 65-94) <- Patient refilled 7 days late!
PDC Calculation (Day-by-Day):
- Days 1-27: Covered by Fill 1.
- Days 28-57: Covered by Fill 2. (Note: Days 28-30 are “double covered,” but PDC just counts them as “1,” which is correct).
- Days 58-64: GAP IN THERAPY. These 7 days are NOT COVERED. This is where your adherence score is lost.
- Days 65-90: Covered by Fill 3. (Fill 3 also covers Days 91-94, but those are outside the 90-day measurement period).
The Result:
- Total Days in Period: 90 Days
- Total Days NOT Covered: 7 Days (Days 58-64)
- Total Days Covered: 90 – 7 = 83 Days
- Final PDC: 83 / 90 = 92.2% -> METRIC ACHIEVED
How Your SOPs Drive This Metric
Look at the 7-day gap (Days 58-64). This is the “failure” that your clinical program is designed to prevent. That patient was due for a refill around Day 58 (30 days after Fill 2). Why were they 7 days late? Did they forget? Did they have a side effect? Did they run into a new copay issue?
Your Action: Your specialty PMS should have automatically flagged this patient as “due for refill” on Day 50. Your “Monthly Adherence Check-in” call (from Section 32.4) should have happened *before* Day 58. Your case manager would have called, discovered the problem (“I’m nauseous and stopped taking it”), and escalated to a pharmacist. The pharmacist would have counseled on nausea management, contacted the MD for an anti-emetic, and saved the refill.
This is the entire point. Your adherence calls are the proactive intervention to prevent the “gaps” in therapy that kill your PDC score.
32.5.5 The “Other 5” KPIs: Your Full Performance Picture
Beyond TTF and PDC, manufacturers track a basket of other metrics to gauge your overall health as a partner. You must be prepared to speak to every one of these in your QBR.
Masterclass Table: Secondary & Tertiary KPIs
| Metric | Typical Goal | Why They Care & How You Win |
|---|---|---|
| Referral Conversion Rate | > 85% | This is your “batting average.” A low score means you are “leaking” patients, and they are losing sales. You win this by having a world-class PA and Financial Assistance team that can overcome access barriers. |
| Referral Leakage (by Reason) | < 15% | This is the “autopsy” for the 15% you *didn’t* convert. You MUST provide a pie chart showing *why* they were lost (e.g., 40% PA Denied, 30% Patient Refused, 20% Unresponsive, 10% Provider Canceled). This is priceless market intelligence for them. |
| > 90% | This metric separates the “paper pushers” from the “clinical fighters.” A high score proves your team writes excellent clinical appeals and is tenacious with payers. This is a huge value-add. | |
| Financial Assistance Utilization | > 95% | This shows you are an expert at using their PSP. For every commercially-insured patient with a copay > $100, did you successfully apply their copay card? A 100% score here proves you are a good steward of their affordability program. |
| Inventory: Days on Hand (DOH) | 15-20 Days | This is a financial and safety metric.
|
32.5.6 The Quarterly Business Review (QBR): Telling Your Data Story
The daily data feed is the “ticker.” The KPI dashboard is the “numbers.” The Quarterly Business Review (QBR) is the “story.” This is your formal, 60-minute presentation to the manufacturer’s leadership team (Trade Relations, Brand Managers, Clinical Leads). As a founder, you lead this meeting.
This meeting is your single greatest opportunity to strengthen your partnership, and it is the single easiest place to destroy it. Do not make the amateur mistake of simply reading the numbers on your KPI dashboard. They already have that data. They are not testing your ability to read; they are testing your ability to think.
The QBR is your chance to answer the “so what?” for every metric. It is your opportunity to be a proactive, strategic partner, not just a reactive vendor.
QBR “Kiss of Death”: How to Fail Your QBR
- Hiding the “Red”: You try to bury your “missed” KPI (e.g., TTF was 5 days, goal was 3) on the last slide, or you mumble through it. This is the fastest way to lose all trust. They already know. They are testing if you know, and if you have a plan.
- The “Blame Game”: You say, “Our TTF was 5 days, but that’s because Payer X is terrible and the prescribers are slow.” This is defensive, unprofessional, and useless.
- No Solutions: You present the “Red” metric and say, “We’ll try to do better next quarter.” This is a fireable offense. It proves you are not a manager; you are just an observer.
Tutorial: The Perfect 5-Slide QBR Agenda
This is your script. It’s concise, transparent, and solution-oriented.
Slide 1: Executive Summary & Partnership Overview
“Good morning. This quarter, we serviced 250 patients for [Drug Name]. We achieved a 92% PDC, exceeding the 90% goal. Our TTF was 3.1 days, just missing the 3.0-day goal, and I will be providing a deep dive and a corrective action plan for that today. We also saved 14 patients from discontinuing therapy via pharmacist intervention.”
Slide 2: The KPI Scorecard (The “Red/Green/Yellow”)
A simple, clean dashboard showing all 6 KPIs, their contractual goal, and your performance (e.g., `TTF: 3.1 Days` [YELLOW], `PDC: 92%` [GREEN], `Conversion: 88%` [GREEN], `DOH: 17 Days` [GREEN]).
Slide 3: Deep Dive: The “Greens” (Our Successes & Value)
“Our PDC was 92% this quarter. This was driven by our new ‘Day 7 Side Effect’ call, which our data shows saved 14 patients from dropping off in the first 30 days. This proves our clinical model is working and protecting your brand’s persistence.” (You are connecting your action to their goal).
Slide 4: Deep Dive: The “Reds/Yellows” (Our Challenges & Solutions)(This is the most important slide)
Slide 5: Strategic Recommendations (Our “Value-Add”)
“As your partner, we’ve identified a market trend. We saw 15 referrals this quarter from [City], which is a new market. All 15 were for [Competitor Drug]. Our analysis shows this is all from one new practice. We recommend a joint educational visit from your local MSL and our Clinical Director to this practice to educate them on [Your Drug]. We believe we can convert this practice.” (You have just transformed from a “vendor” into a “strategic partner” who is helping them grow their business.)
32.5.7 The Consequences: When the Data is Bad
As a founder, you must understand the contractual consequences of failure. These will be written into the LDD agreement. Your survival depends on avoiding them.
Level 1: Financial Penalties
The contract will often link your fees directly to your performance. This is the “stick.”
- Example: “Failure to meet a contractual KPI (e.g., PDC < 90%) for a given quarter will result in a 1.5% reduction in the Dispensing Fee for all claims associated with that program for that quarter.”
- Impact: This is a direct hit to your bottom line. If you had $1,000,000 in revenue from that drug, you just lost $15,000 because your team failed to make their adherence calls. This is how you, as a founder, justify investing in clinical staff—they are not a “cost center,” they are a “revenue protection” center.
Level 2: Referral Triage (The “Silent Killer”)
This is the most common and most dangerous penalty. It is not written in the contract. It is the Hub’s operational response to your poor performance. The Hub’s #1 job is to meet the *manufacturer’s* KPIs. If you are dragging down their average, they will simply stop sending you patients.
- The Scenario: The Hub has two pharmacies in its network: You (a startup) and Accredo (a giant).
- Your Scorecard: TTF = 4.5 Days, PDC = 88%
- Accredo’s Scorecard: TTF = 2.8 Days, PDC = 91%
When a new, “easy” referral comes in, who does the Hub’s algorithm send it to? Accredo. They are the proven, high-performing partner. You will only be sent the “problem” referrals. Your referral volume slowly dries up. Your revenue plummets. You are not “fired,” you are “starved.” This is how LDD pharmacies fail.
Level 3: The Corrective Action Plan (CAP) & Termination
This is the final step. You have failed your QBRs for 2-3 quarters in a row. The manufacturer’s Trade Relations team will place you on a formal Corrective Action Plan (CAP).
- What it is: A 90-day, “do-or-die” probation. You must provide a formal, written CAP (like the one you should have already made for your QBR) and you must show *significant, documented improvement* on the “Red” KPIs by the end of the 90 days.
- The Result: If you succeed, you are taken off probation. If you fail, you will receive a 90-Day Notice of Contract Termination.
- Termination: This is the “kiss of death.” You must transition all of your patients to another pharmacy in the network (a “patient transition plan”). Your revenue from that drug goes to $0, and your reputation in the industry is severely damaged, making it harder to win the next LDD contract.
Your entire business as a specialty pharmacy founder rests on this simple, brutal feedback loop. Your staff’s daily actions (using status codes) become your daily data feed. That feed becomes your quarterly KPIs. Those KPIs become your QBR story. And that story determines your referral volume and survival. As the founder, you must own this process from top to bottom.
