Life After Transparency Reporting – What’s Next?

10.28.15 | By Andy Bender

Several clients have asked me lately what they should start focusing on after transparency reporting, and my answer is that setting up a process for collecting spend information was just the beginning. The next phase should focus on making sure the processes are accurate and efficient, and how to get the maximum value out of the aggregate spend information. In this article I have identified five areas that companies are focusing on after they have their aggregate spend system up and running.

1. Validation of reporting information

The first step after completing the automation of a spend collection process, is to validate the process to make sure the correct information is being reported. Having validated several processes, I have learned that the process of collecting and entering data can be cumbersome and error prone. Partly because the organization does not have the proper Standard Operating Procedures (SOPs) on what information to collect, partly because actors in the process change, and the business changes over time. The second step is to make sure that the aggregate spend system that collects and aggregates the spend information is properly calibrated to process the incoming information into the spend reports. Data validation and cleaning is a cumbersome and resource intensive process.

2. Automation of spend collection processes

Many companies find it challenging to manage spend caps or thresholds, validate that a contract was in place for each payment they publically report on, or whether the payment is according to the Fair Market Value (FMV) policies. Managing these processes on a global scale, where on average a top 20 pharmaceutical company contracts with more that 100 – 150,000 HCPs annually is a daunting task, resulting in that companies are starting to automate the workflows for contracting with and paying Health Care Professionals and Organizations. Initial automation focusses on cross border contracting of HCPs first. In addition, the workflows automate the needs assessment process, contracting and FMV for services provided and manage business rules for spend thresholds. The workflows also allow for payment and validation of services and collection of outputs. In the EFPIA countries, these processes also include workflows for obtaining consent from the HCP and pre-disclosure, a best practice currently being adopted in the US to foster better relations with Key Opinion Leaders (KOLs).

3. Fair Market Value (FMV), Key Opinion Leader (KOL) scoring, background screening

After the spend system and processes have been validated, clients typically worry about the information they report on to the public. The information includes the fees for services paid to the Health Care Professionals and Organizations (HCP/Os) for the services provided. Pharmaceutical companies don’t want to be seen overpaying for services, so companies are focusing on developing global Fee for Services rate schedules and a FMV methodology to warrant that their payments are based on objective market data, transparent and consistent. Developing a methodology for KOL levels, is typically developed parallel to the FMV methodology, allowing companies to pay different rates for different HCP skills levels. On top of this companies are starting to develop methodologies for third party FMV, like, for example for: discounts and rebate programs, therapy management programs, exhibits and sponsorships, research arrangements and clinical data payments (particularly pertinent in the specialty pharma space), and, relationships with pharmacies.

4. Third party validation and background screening

ProPublica has identified HCPs doing business with pharmaceutical companies who have been banned from government sponsored programs (Medicare and Medicaid) and who have been convicted of fraud. This is embarrassing, and companies are conducting back ground checks on the HCP they contract. Companies are increasingly cautious doing business with TPs in countries that have a high Corruption Perception Index. Companies also see operating in countries solely through TP distributors as a potential source of elevated TP risk. Therefore, as a next priority companies have been developing a risk assessment and mitigation methodology for Third Parties (TPs). Companies are developing processes to score the risk profile of a third party, and subsequently developing mitigation processes to manage these risks. Companies have started collecting information from the TP they do business, and based on the initial risk profile, define a process to collect additional information in the future. Given the number for TPs an average company does business with and the global nature of the process, companies have started to automate this process.

5. Data analysis of reporting information capability

Transparency reporting requires companies to collect information about their own business. Many companies see this as a tax on their business; something that has to be done. However, increasingly more we notice that companies are starting to mine the CMS data to obtain better insight in their own business. Analysis like frequency of and use of HCPs by therapeutic area, geography or level of expertise, can show revealing trends. Also, analyzing HCP specialties by brand and show trends for off label promotion. More challenging, but still within reach are analysis where one analyzes the HCPs attending a program, and the effect on off-label prescribing before and after the program the HCP attended. The CMS data also includes competitor data. The business will get excited when you show what programs your competitors have been funding, and who the top KOLs are that the competition has contracted. The information is out there and should be vetted before your competitors, patients, government agencies or journalists access the information. Analyzing this information can give you a competitive advantage.

Albeit painful and costly to implement, aggregate spend is starting to provide us with more insight into our own and our competitor’s businesses. In addition, this information and insight is allowing us to optimize our processes and business practices. Companies have started to embrace the collection of the data and Sales, Marketing and Medical are starting to ask for the collection of additional information, providing additional insights.

For more information, please contact Andy Bender abender@polarismanagement.com and Mario Prohasky mprohasky@polarismanagement.com