Full-Spectrum Sample Accountability for Drug Sample Outsourcing

By John Thorpe

By: John Thorpe, Gil Rodriguera, Darren Jones

Over the past 7 years, the HHS Office of Inspector General (OIG) has shown a clear enforcement priority on alleged practices they believe risk patient health and safety. Recent cases involving GlaxoSmithKline and Johnson & Johnson have focused on practices that implicate the False Claims Act and, generally, place commercial and promotional interests above patient health and safety.

In 2013, Congress passed the Drug Quality and Security Act (DQSA) (H.R. 3204) in response to a deadly meningitis outbreak that killed 64 people. The DQSA gave the Food and Drug Administration (FDA) more authority to regulate compounded drug products. The Act serves as another cautionary tale to all pharmaceutical companies: great care should be exercised in maintaining quality environments throughout the supply chain (e.g., as required by the FDA Pedigree Requirements under 21 CFR Part 203).

The high cost of specialty drugs and biologics, as well as the burgeoning “street market” for opioids and mental health drugs, has created a complex and fast-growing web of illicit black and grey markets. The distribution of promotional samples represents an overlooked area of risk in this arena. Sampling operations are frequently outsourced and oversight over such operations is often managed by third-party vendors. In this climate of increased risk and regulatory oversight, it is important for manufacturers who are outsourcing sampling operations to assess and understand their vendor and management control systems with respect to prescription drug sampling.

Drug Diversion

The illegal diversion of legal drugs, or “drug diversion”, is a rapidly growing problem in the U.S. The Centers for Disease Control and Prevention (CDC) has labeled drug diversion an “epidemic”, particularly prescription drug abuse relating to pain relievers and antipsychotic and mental health drugs. From 2007 to 2009, the percentage of state and local law enforcement agencies that reported that controlled prescription drugs were the “greatest drug threat in their area” increased from 4.6% to 9.8%.

The epidemic is being fueled by highly-profitable illicit black and grey markets. For example, oxycodone traffics at a price of $1,100-2,400 a bottle in Northern California. This is up to 12x more than a legally filled prescription.

Diversion schemes are often multifaceted and complex. The guilty parties in diversion rackets have included: patients and their prescribing doctors; pseudo-pharmacies, pharmacies, and pharmacists; pharmaceutical sales operations; wholesalers and distributors; or some combination of the aforementioned parties.

Drug diversion doesn’t just impact the cost of prescription drugs. According to the Center for Medicare and Medicaid Services (CMS), it also raises costs associated with “doctor’s visits, emergency department (ED) treatment, rehabilitation centers, and other healthcare needs, not to mention the human toll.” Further, drug diversion compromises drug pedigree requirements under 21 CFR Part 203, which require “a statement of origin that identifies each prior sale, purchase, or trade of a drug, including the date of those transactions and the names and addresses of all parties to them.” With the recent proliferation of specialty and biologic pharmaceutical compounds, and their corresponding high market prices, the risk of diversion will only increase, as will the risk of compromised environmental quality controls.

Drug Diversion and Sample Accountability

So, what does this mean for pharmaceutical and biotechnology companies? It means increased scrutiny on business areas associated with a high risk of diversion, including prescription drug sampling. This is especially true for companies sampling high risk or high cost prescription drugs.

In a climate of high risk coupled with increased regulatory scrutiny, pharmaceutical companies must ensure that their prescription drug sampling programs are compliant with Food and Drug Administration (FDA) policies, the Prescription Drug Marketing Act of 1987 (PDMA), Drug Quality and Security Act of 2013, and any relevant state laws. Given that many companies are now contracting some or all of their drug sample management lifecycle to third party vendors (including consulting and auditing functions), verifying and maintaining compliance is no easy task.

Drug sample fulfillment vendors often provide accurate and efficient sampling services, which can help companies save time, money, and labor. Yet, sample fulfillment vendors are not substitutes for astute risk management within sample accountability programs. With drug diversion on the rise, and the increasingly complexity of diversion schemes, companies outsourcing their sampling activities should not rely solely on their vendors for sample accountability, even if they offer federal and state compliance services.

As with other areas of compliance, one thing that pharmaceutical companies cannot outsource is exposure to risk. Legal liability for sampling activities in violation of FDA policies or government regulation lies with the company.

What follows is a brief introduction to one of Polaris’ growing service areas: full-spectrum risk assessment and auditing of sample accountability and drug sample fulfillment outsourcing.

The Prescription Drug Marketing Act (PDMA)

Sample accountability policies and procedures guard against diversion and the unlicensed sale of prescription drugs on grey or black markets. The PDMA provides the legal backbone to the regulatory regime governing sampling activities. In recent years, the Patient Protection and Affordable Care Act (PPACA) has placed increased emphasis on drug sample transparency and, as a consequence, the PDMA.

The PDMA was passed in 1988 with the intention of ensuring the safety and effectiveness of prescription drugs through the creation of strong regulatory controls guarding against the sale of counterfeit, adulterated, misbranded, sub-potent, and expired drugs. The PDMA proscribes both civil and criminal penalties for PDMA violations with some fines reaching into the hundreds of millions of dollars. It requires that pharmaceutical companies implement accounting and auditing/monitoring policies, as well as applicable procedures, protocols, and thresholds to ensure compliance.

To combat diversion, and boost compliance, pharmaceutical companies have begun to create electronic audit trails to capture tracking and sales visit data, ensure physician licensure, and reconcile inventory after distribution. Many are doing this by contracting with vendors that provide electronic sample monitoring solutions, which can flag, for example, instances of under fulfillment or, perhaps counter-intuitively, a lack of expected, sporadic disparities in a sales rep’s fulfillment (e.g., a 100% fulfillment rate would also raise concerns given expected errors in delivery).

These programs are important considering the increasing difficulty of maintaining up-to-date compliance in an atmosphere of ever-more-complex federal regulations and changing, sometimes divergent, state laws (e.g., Vermont state law also requires medical device sampling).

Compliance in the Age of Outsourcing

Despite their benefits, the rise of time- and money-saving sample fulfillment vendors and intelligent, real-time monitoring solutions has not changed the legal liability that pharmaceutical companies hold in relation to the sampling of their products. What has changed is the nature of the sampling process.

Pharmaceutical and biotechnology companies now must monitor and enforce sample accountability across time, space, and corporate boundaries. Their vendors likely conduct sample fulfillment activities in multiple regions and for extended periods of time. To manage compliance across these spatial and temporal gaps, and to ensure that internal corporate policies and procedures are followed, companies will need to do more than just communicate. At a minimum, they will need to: (1) develop clear internal policies and procedures; (2) make sure they are communicated to, and followed by, sample fulfillment vendors (a part of proactive vendor engagement); (3) monitor and audit sampling activities; and (4) run downstream data analytics to identify red flags and worrisome trends. These are all elements of a full-spectrum sample accountability program.

Sample fulfillment vendors and the compliance or data solutions they (or other third parties) offer are components of a robust sample accountability program, but they are not stand-ins for legal liability. As stated above: companies are still responsible for FDA or PDMA violations associated with their products. If a company fully-outsources their sample accountability, or loosely monitors the activities of their sample fulfillment vendor, then they lose a significant amount of management control over the level of risk their sampling activity generates. For example, if a company doesn’t know whether their sample fulfillment vendor is abiding by enumerated standards, or whether the vendor knows if their field employees maintain compliant practices, then the company can’t accurately gauge their exposure to risk in relation to the sampling process.

Charting the Course

Sample accountability requires constant vigilance. Vigilance entails developing sample accountability protocols and communicating them to sample vendors, monitoring and auditing the vendors to ensure subsequent compliance, and running data analytics to identify red flags or trends in sampling data.

These non-exhaustive elements of sample accountability should work together to form a continuous and evolving compliance feedback loop. Full spectrum accountability means compliance diligence upstream, downstream, and right smack in the middle of sample fulfillment vendor relationships.

Given the high cost of non-compliance, a strong understanding of risk is paramount.

One way to think about sample accountability during a period of increased industry outsourcing is to imagine three major compliance domains: (1) upstream management control of sample accountability (internal processes, procedures, and protocols); (2) vendor sample accountability (day-to-day maintenance of corporate standards); and (3) downstream assessment of sample distribution and HCP targeting (data analytics). It’s important to remember that these domains are not silos. Rather, they are inter-connected; one area of weakness can undermine all others.

For example, if time and effort are not spent creating robust internal controls for sample accountability, there is a chance that an important element of corporate sampling policy may not be transferred to and, as a result, not enforced by, contracted vendors while they are conducting sampling activities. In turn, if subsequent analysis of the sampling data generated by the vendors’ activities is not sophisticated enough to recognize the compliance gap created by the unenforced element, then the non-compliant practice will likely continue unabated and grow.

Polaris Management Partners has long recognized that sample accountability is not a one-way road. We specialize in auditing and reviewing sample accountability programs across the entire spectrum of the sampling process and help our clients develop robust feedback loops where regular vendor communication and data analysis inform corporate sample accountability policies and procedures and, if necessary, dictate changes in vendor behavior.

Relevant Articles:

Spotlight On… Drug Diversion, Jennifer Trussell at HHS Office of Inspector General

Drug Diversion in the Medicaid Program: State Strategies for Reducing Prescription Drug Diversion in Medicaid, Centers for Medicare and Medicaid Services

Sample Tracking: Accountability Solutions Give Reps Added Benefits, Julie Williamson at PharmaExec