CBI’s 4th Annual FMV Congress included discussions on familiar topics like exception processing as well as new ones such as determining FMV for an increasing number of services and consultants throughout drug development and commercialization.
Polaris’ presentation explored methods to use market intelligence, from sources like Open Payments databases, to support albeit not replace FMV assessment.
The familiar topics were notable in the sense that, in many areas, practices across industry have yet to align despite the pervasiveness of the issue. This includes, for example, whether to use local rates or a single rate for participants of advisory boards residing in multiple countries. And the appropriateness of lodging and how that may change depending on location.
Questions like these arise perennially because there isn’t an answer that will satisfy all stakeholders and definitive regulatory guidance does not exist. Solutions will continue to require consistent application of company principles and the balancing of relative risk as it may manifest from a compliance, business or medical source. Problematically, balancing risk requires give-and-take, which, in most organizations, means time, headaches and delays in contracting.
The majority of participants in the conference agreed that the role of compliance in situations like these is not to seriously disrupt or delay the business planning process. If possible, it’s important to set company guidelines regarding difficult situations before they arise and with stakeholder buy-in. Then it’s critical to document the rationale for those guidelines. Clear guidance, stakeholder buy-in and documentation help to align corporate communication to partners globally and reduce the potential for recurrent internal or external questioning of contracting processes.
The FMV Congress also included robust discussions on the appropriate use of databases capturing industry payments to physicians (“industry market data”) in the FMV process. The consensus in the room indicated that the use of objective third-party salary data remains the most compliant method for determining FMV. At the same time, while industry market data shouldn’t be a substitute for FMV, it can serve to support FMV assessments.
A number of presentations focused on the fact that the OIG has warned that using market data as a substitute for FMV analysis runs the risk of skewing rates high because of “elevated comparables”. Elevated comparables refers to market data that may be elevated due to historically inappropriate business arrangements (a risk that is particularly acute in developing countries with a history of corruption).
In this context, John Thorpe and Mario Prohasky from Polaris led a discussion on how to effectively use data analytics as a means of complementing a standard FMV analysis. The Polaris team first outlined the three core components of a robust FMV program: FMV rates based on objective salary data; a standard, consistently applied tiering model to recognize differing levels of expertise; and the development of activity fees to ensure payment consistency. Industry physician payment data from sources like Open Payments databases can support FMV programs by providing contextual analytics to support rate assessments and strategic risk metrics, but shouldn’t replace the FMV determination process.
The Polaris team reviewed a real-world use-case of Open Payments data from a complaint like: “We’re getting a lot of exception requests from tier 1 physician speakers in specialty X.”
- Open Payments data can be used in this example as a tool that will provide a rationale for additional analysis focused on the following questions: Could the tier 1 gap be due to “old” FMV data?
- Are supply/demand dynamics for top tier physicians in specialty X causing sharp increases in tier 1 salaries?
- Are new sub-specializations within specialty x commanding higher salaries?
These analyses may or may not lead to an actual increase in FMV rates. But, if they do, the rate increases will be supported by objective data, not just the payments of industry peers. In this way, industry market data can help to inform strategic FMV decisions without undermining the core principles and components FMV determination.
Throughout the conference, many speakers stressed the importance of using data analytics to support strategic FMV decisions. This is a trend that will only reinforce the need for close collaboration between business and compliance stakeholders. FMV will continue to remain an important topic of focus for regulators and thus it is critical for life sciences companies to continue to view it as a risk mitigation tool that can be used to inform business decision-making.
It is important to monitor your FMV and contracting processes for recurring problems that may be good candidates for analytics-driven review. In Polaris’ experience, this can include:
- Persistent exception requests for specific HCP specialties
- Inefficiencies in contracting processes or FMV determination for cross-border engagements like advisory boards
- Persistent requests for rate re-evaluation from regional partners
These and similar types of recurring problems are good candidates for analytics-driven review because data can provide objective support for reviewing and addressing FMV-related business problems.