Canada’s Evolving Pharmaceutical Compliance Landscape and Its Effect on Your Business

10.25.17 | By Caroline Franco and Mario Prohasky

The global pharmaceutical industry has been faced with increasing scrutiny of its interactions with the broader community of healthcare professionals (HCPs), healthcare organizations (HCOs), patient advocacy groups, foundations and other organizations.

This worldwide trend is going to sweep through Canada in the very near future. Recognizing this, ten of the largest global manufacturers began voluntary disclosure of HCP aggregate spending in Canada in 2017.

On September 27th, 2017, the provincial government of Ontario introduced a legislative proposal that will require pharmaceutical companies to publicly disclose detailed HCP spend and payment information. The objective of this legislation is to create greater transparency in the industry and shed light on financial ties between pharmaceutical companies and HCPs and HCOs. The goal is to empower patients and provide information that allows them to make more educated decisions about their healthcare.

Over the past several years transparency has been a burgeoning global trend. Canadian manufacturers can learn and benefit from the programs and processes implemented in other markets. An example of this is the ability to recognize and overcome significant operational challenges that were faced in other markets and the best practices that were established to mature those programs.

An effective transparency program requires shared accountability of compliance, as well as business stakeholders sponsoring engagements. A mature and efficient program requires enhanced spend capture processes such as consistent engagement planning, HCP nominations and Fair Market Value (FMV) management processes, that are actively managed by engagement sponsors and controlled by compliance requirements.

In this article, we explore the upcoming challenges and opportunities for pharmaceutical companies in Canada related to this proposed legislation and the need for strengthening overall compliance.

Challenges in Setting Up an Effective Transparency Program

Whether transparency stays voluntary, as it is in Canada today, or becomes a legal or regulatory requirement, numerous operational challenges will arise. As Ontario moves forward with their efforts, it will be important to observe:

  • If other provinces follow suit,
  • If the requirements evolve consistently, or
  • If a national standard evolves.

Regardless of the rate and consistency of changing regulations, it is important to recognize that transparency data often resides in various IT systems (Travel & Expense, ERP, event management, etc.) that are typically not designed for transparency data capture and reporting, and that may differ by department within a company. Consequently, one of the first actions to undertake when being confronted with transparency reporting is to conduct an assessment in order to understand which departments and tools are recording transparency data, and establish a robust and efficient internal process to capture and integrate this data. For example, in order to report all expenditures for Dr. Thomas Tremblay, one needs to ensure Dr. Tremblay can be linked across systems with a unique identifier. Failure to do so will result in inaccuracies and, potentially, in erroneous reporting.

Transparency reporting processes also need to be designed in a way that makes the reporting of data to the authorities easy to manage. In Canada, a typical Compliance team is small and, therefore, organizing this reporting process and leveraging the limited resources available will be a challenge. When redesigning operations to accommodate transparency reporting, this issue can be lessened when companies organize their data collection in a way that gives the appropriate direct responsibilities to the relevant operational and business teams. This strategy will then reinforce accountability from engagement sponsors for effective recording of pertinent engagement details.  The role of Compliance should be to focus on process governance and control, as well as auditing and monitoring. To achieve this balance, it is important to consider process automation to control data capture and support reporting while easing operational burden and ensuring data integrity.

Transparency and the Need for a Robust Compliance Program

Our global transparency reporting experience has shown that the introduction of disclosure requirements increases the need for companies to enhance other aspects of their existing compliance programs, such as FMV or HCP tiering.   We can expect this need to exist in Canada as well, with an increased focus on the HCP engagement process in particular. Increased transparency may expose inconsistent practices across manufacturers, including compensated services and compensation amounts.  Some of the questions that will need to be addressed in a broader compliance context include:

  • How are HCPs selected for a specific engagement?
  • What is FMV?
  • Why are some HCPs paid more than others?
  • When compensating HCPs, what can be considered a legitimate service versus what is considered standard or care?

While companies may have informal processes in place, firms may want to take this opportunity to formalize current practices into policies, guidelines and procedures.

A key challenge for companies in Canada will be to evolve their compliance program in a way that does not impede the business, and is commensurate with the level of compliance risk facing the industry. As such, an assessment of key compliance risks should be followed by prioritizing key risk controls such as FMV, establishing an HCP tiering methodology, and conducting auditing and monitoring of interactions with HCPs or government entities.

Compliance as an Opportunity

Nevertheless, transparency and compliance more broadly are not only challenges to be managed, but should serve as business enablers, allowing companies to gain insights into their own operations and to have a better picture of their relationships with HCPs and HCOs.

Although voluntary disclosure has just started, it is vital for Canadian companies to be proactive and start using disclosed information to understand their investments and risks. By leveraging transparency information, companies have a great opportunity to establish compliance as a business value-add function. For instance, analysis of competitors’ spend disclosure information might lead to optimized compliance, but also greater insights into sales and marketing activities. Furthermore, compliance can help guide internal strategic decisions through the use of transparency data in relation to questions surrounding HCP engagement, such as:

  • Do we need to pay the maximum of FMV for a given activity?
  • What is the optimal distribution of HCPs by tier?
  • Should preparation or travel time be compensated?
  • Should reimbursements for HCP support services be provided?

The dawn of transparency disclosure (and potential regulations) in Canada presents pharmaceutical companies with a host of operational challenges as well as ways in which compliance can be seen as a function that adds business value. Addressing those challenges through effective risk assessment, process design, analytics and automation should be a key objective for the compliance programs of pharmaceutical companies in Canada. In doing so, companies can also position their compliance programs as effective business partners, bringing Canada in line with a similar growing global trend.

Our Compliance Center of Excellence is well-versed in the business practices of the pharmaceutical and medical device industries in Canada.  We have been servicing the global compliance needs of the industry for more than 20 years.  Our global team of experts and local specialists are ready to support Canadian manufacturers in improving their business operations and meeting future compliance needs.  To set up a company-specific discussion with us, please contact Gilbert Merariu at GMerariu@ca.imsbrogan.com or Darren Jones at djones@polarismanagement.com.