Asia-Pacific Spotlight: Tackling Sham Events to Reduce Anti-Bribery and Anti-Corruption Risks

11.03.17 | By Dana Liu

Sham events that are hosted by Life Sciences companies can take many forms: lavish dinners, sports outings or various forms of other entertainment as well as “educational” events. Prosecutors, however, look at them as kickbacks, providing a form of payment to HCPs in return for a specific action, such as writing more prescriptions for a specific medication.

Common characteristics of sham events include:

  • The service/restaurant offerings outweigh the value of the presentation
  • The venue is not conducive to an educational presentation
  • The educational presentation is omitted or marginalized, and the event is really a social gathering
  • Because of the event experience, the physician attendees produce high volumes of prescriptions.

Sham events are well-known risks in the U.S. and Europe, and safeguards are typically built into a company’s compliance program, as well as their monitoring and auditing protocols.  In contrast, sham events remain a chief compliance concern for Life Sciences companies in the Asia-Pacific region. Companies are utilizing many different approaches to tackle the problem, including using company-issued credit cards, centralizing event arrangements and central restaurant bookings. Although China has a unique compliance landscape, many of the lessons learned by companies in the US and EU are still applicable in the region.

Broadly speaking, the three strategies that have been effective the U.S. and Europe include: (1) Process, (2) Validation Points, and (3) Technology.

PROCESS: Establish a proper HCP engagement process to reduce anti-bribery and anti-corruption (ABAC) risks

Prior to engaging a healthcare professional (HCP) to provide a service (i.e. Speaker Program, Consultant, etc.):

(1) Clear business needs and program objectives must be defined and assessed.

(2) Only those HCPs that meet the selection criteria (i.e. specialty, experience, reputation, presentation skills, etc.) should be engaged.

(3) Perform due diligence to avoid engaging with high-risk HCPs.

(4) Fee-for-service compensation should reflect Fair Market Value.

(5) A comprehensive review and approval process will ensure that activity planning and HCP nomination align with company policies.

(6) Contracts should be executed before an HCP provides the service.

(7) During and after the event, program data and results should be captured and collected, including attendance, actual event cost, and other metrics if applicable.

(8) Validating that the HCP has performed the service before making payment is crucial. Finally, all spend and expenses should be reviewed and retained in a central repository to ensure that no improper spending has taken place, and that there are no fake or duplicate expense claims.

VALIDATION POINTS: Use validation points and technology to automate and strengthen the compliance process

The diagram below demonstrates the control and validation points for each stage in the process, using a proven technology platform as the backbone. Utilizing the decision points below will enhance the efficiency of the compliance process and controls outlined above, and will also lower the risk of having a sham event.

TECHNOLOGY – CASE STUDY: How the HCP engagement and technology solution apply in a real-world context

The following case study illustrates the use of validation points to manage the end-to-end HCP engagement process, and how it can better mitigate compliance risks.

A Submitter from Company ABC submits a speaker program activity request into their HCP management technology solution. The Submitter logs the business rationale as “Dinner event in China.” Following the Submitter’s business rationale and the HCP selection of Dr. Smith, an internal control alerts the Compliance Reviewer that their approval is required. Unable to confirm Dr. Smith’s relevance to the engagement, the Compliance Reviewer rejects the rationale, and requests additional information.  Submitter receives a notification that his/her activity request has been rejected and then provides a more detailed business rationale: “Educational speaker program for HCPs and Nurses of Children’s Hospital of China on Product XYZ.”  This business rationale is satisfactory to the Compliance Reviewer and they approves the business rationale and Dr. Smith as the speaker.

Following Dr. Smith’s background screening approval, the Submitter mistakenly applies a national travel premium to the activity model, which assumes travel time greater than Dr. Smith’s local territory. The Approver recognizes that Dr. Smith lives nearby the event location, rejects the national travel premium, and requests that the local premium be applied. The Submitter appropriately applies the local travel premium, and the activity is approved.

When negotiating the contract, the HCP requested a higher engagement fee, but the submitter explains that per company policy, they are not able to offer a service fee higher than the FMV range, and added that the contract must be executed before the HCP can perform the service. Dr. Smith and Company ABC sign contract agreements, which are logged into the system for documentation, and now the event has full approval.

After the event takes place, the attendee list, payments, and additional expenses relevant to the program are logged into the system for event validation and expense reconciliation.

To manage historical and ongoing HCP engagements, users can perform comprehensive audits of specific HCPs and the activities Company ABC has logged into the system. Upon review of Dr. Smith’s previous engagements, Company ABC’s compliance department realizes that Dr. Smith had performed an unusually high number of activities, including speaker programs, advisory boards, consulting, etc. The compliance team expands their investigation to further understand the context of Dr. Smith’s engagements, and the Company ABC employees involved in these engagements. To mitigate compliance concerns, users follow a process of rationalizing and documenting HCP engagement activities. The documentation procedure allows backend monitoring and audits of activities and HCP engagements to analyze the scope and implications of these engagements. The compliance department can also set limits in the system for the total number of activities and/or total fee-for-service amounts in a year.

CONCLUSION: Efficiency, transparency and consistency

Controlling compliance risks related to HCP engagements is becoming more challenging as HCP engagements are increasingly more complex and frequent, with engagements occurring across city, regional and national borders. In addition, evolving legislation and reporting requirements burden commercial and compliance teams that have yet to adapt their HCP engagement processes and documentation procedures to current and anticipated regulatory demands. Using an automated platform can greatly increase the efficiency, transparency, and consistency, while helping all stakeholders to lower compliance risk and comply with regulations.

In addition, a technology solution captures and stores data in a centralized location, which can allow for swift creation of data analytics and key risk indicator (KRI) reports.  Moreover, the central location facilitates monitoring and auditing of current activities, recognizing previously identified risk patterns, to predict and detect potential risks in the future.

Since 2001, Polaris has been partnering with Life Sciences companies around the world to create, implement and manage efficient compliance programs and processes. To discover how Polaris can help you effectively manage the entire HCP engagement lifecycle, follow these links for information on Polaris’ Healthcare Provider Interaction Portal (HIP) and Polaris’ Auditing and Monitoring Services, or contact us.