Asia-Pacific Dispatch: HCP Engagement and the Road to Proactive Risk Management

05.01.18 | By Lisa van de Kamp and Michael Arbini

Over the past decade, Life Sciences companies have seen a definite trend of increased scrutiny by associations and government bodies around the world.

In recent years, the Asia-Pacific region is seeing this same trend. Pharmaceutical and medical device companies in the region are finding that they must take a more proactive and systematic approach to HCP/HCO engagements and the risks associated with managing these relationships.

Several factors are driving the need for companies to focus on compliance. FCPA investigations by the US Department of Justice (DOJ) and Security Exchange Commission (SEC) continue at a steady pace.

For instance, on average, companies or individuals from the Asia-Pacific region made up 20% of US enforcement actions of the 199 enforcement actions related to alleged bribery of foreign officials from 1977-2015. In 2016, this trend was superceded as Asia-Pacific contributed the largest percentage of cases in numbers and penalties (47% of the DOJ cases, and 65% of civil resolutions by the SEC). That year was clearly a peak for FCPA cases and amounts paid.

Even if total activities in 2017 prove not to be as high as the previous year, FCPA enforcement specific to Life Science companies still amounted to 27% of the cases, a substantial percentage.

In addition of the FCPA enforcement actions, regulatory agencies within countries are performing more investigations, further illustrating why companies need to focus carefully on managing relationships with HCP/HCOs.

In the Asia Pacific region, the cases range across several countries and multiple companies. The key and recurring topics in these cases over the past decade are:

  • Distributor commissions are paid to HCPs and / or government officials
  • Agencies are used to pay for travel, cash payments, gifts, entertainment
  • Employees provide inappropriate cash payments, hospitality, gifts, support international travel, conference sponsorships to HCPs, and;
  • Travel agencies are used in sham events to transfer value.

In regard to transparency reporting requirements, we’ve seen a substantial increase over the last year and a half. Already, three more countries in the Asia-Pacific region have adopted regulations that require companies to provide the government more insight on their activities: Indonesia, South Korea, and The Philippines.

In Japan, the Clinical Trial Act, which took effect on 1st April 2018, includes additional transparency requirements, adding onto the existing transparency codes implemented by industry associations. This trend of transparency legislation is another big catalyst for Life Sciences companies to get things in order as they are required to collect more data.

Activities from the last decade make it clear that enforcement actions are to be taken seriously. The increasing transparency regulations, aggressive expansion of the FCPA focus on foreign affiliates, increased global enforcement and cooperation and rising charges and penalties, increase the overall risk companies bear. All these risks need to be properly managed.  Oftentimes, it is not just a fine that is levied or the inherent reputational risk that needs to be managed, but the risks can include actions that impact insurance reimbursements for products, or could even result in incarceration.

Therefore, companies are renewing the focus on their compliance programs and exploring different solutions to the realities they are encountering. For instance, companies are clearly putting more effort into improving their HCP/HCO engagement or activites in order to reduce the risks.  While ensuring that all the HCP/O related activities actually happened is key, other factors are also important to reduce anti-bribery and anti-corruption risks. These include confirming that the events in question align with SOPs, using FMV consistently, and handling contracts appropriately. Monitoring all these elements also shows the organizations have key controls in place.

Many companies have some form of a compliance program in place that covers specific policies and SOPs, FMV methodology, and monitoring and auditing programs around HCP/O interactions and collecting payment details. Whether this is developed locally, provided by a global or regional team, and is in early or mature stage, differs by organization.

A comprehensive framework to successfully manage HCP/O engagements, should include:

Process Automation to make sure all employees follow the same process and SOPs

Within the development of the overall program, the first step we often see is the harmonization of the HCP engagement and contracting processes in order to use this as a strategic tool to reduce risk that can highlight or flag risky transactions. However, significant challenges exist in regard to adapting the regional and local aspects of the compliance program to the ever-changing regulatory environment while still effectively managing activities. Especially in cases where companies need to manage from 10,000 to 100,000 HCP events/activities. The challenge is do so while staying efficient and ultimately mitigating risks for the company.

Given the complex and varied obligations of each company, the strain on compliance resources can be significant and therefore maturing these processes often involves a technology solution, to automate processes and make efficiency gains. Automating the HCP/O engagement and reporting processes is advantageous for several reasons as it reduces inefficiencies by eliminating manual processes, addresses quality and consistency concerns, creates transparency across the organization, and adds a layer of checks across the enterprise.

Build in control and validation points

Depending on the level of maturity of the HCP engagement process, the ease in which pro-active controls can be leveraged differs significantly. Nonetheless, controls should be considered and present in each phase. These include:

  • Annual planning and needs assessments
  • Activity planning and business rationale
  • HCP selection
  • Fair Market Value (FMV) assessments
  • Contracting
  • Activity and spend validation.

These control mechanisms will ensure that questions such as those below are answered in the affirmative and will reduce the risk of bribery and corruption:

  • Is there a clear business or program objective at the program inception? Does it meet the organization’s annual plan objective and guidelines?
  • Does the selected HCP meet the selection criteria for this activity?
  • Does the remuneration for the HCP reflect Fair Market Value?
  • Has the HCP received all required approvals?
  • Is there a contract in place before the HCP provides the service? Has the contract been stored in a central repository?
  • Have the outcomes and key activity results been captured and stored in a central repository?
  • Has there been proper validation that the services were in fact provided prior to payment?

Data analytics and report generation to support on-going monitoring

In addition to the efficiencies gained by automation, building proactive controls on top of the technology can mature the organization’s compliance practices even further. Data can be used to perform monitoring and auditing activities more efficiently for compliance as well as commercial. On the other hand, companies can leverage the data to provide business insights and improve decision making.

As illustrated above, HCP/HCO engagements can be complex, hard to manage and present a significant degree of risk. The proliferation of third-party vendors as well as ever evolving and increasing global legislation add to the challenges facing Life Sciences companies.

Creating and implementing a robust HCP management process helps organizations access and manage risk, while enabling them to focus limited resources on high risk areas. Life Sciences companies can increase efficiencies and proactively mitigate risk further by implementing a technology solution such as Polaris’ Healthcare Provider Interaction Portal (HIP).

To learn more about Polaris’ consulting and technology solutions, visit our website or contact us.