Report reveals that French pharmaceutical companies face transparency challenges related to FMV

By Caroline Franco

A recent report from the Cour des Comptes, the French body charged with auditing the use of public funds, revealed that pharmaceutical companies still face many challenges in fully complying with the requirements of the Loi Bertrand. Specifically, manufacturers have consistently failed to accurately document and disclose payments for hospitality and convention expenses. In addition, many manufacturers have not completed the necessary documentation within the legal timelines. Several have also failed to ensure Fair Market Value (FMV) payments when engaging healthcare practitioners.

The pharmaceutical industry in general is grappling with transparency issues, particularly on payments to physicians. The advent of the French Anti-Kickback law, DMOS, has levied further requirements for manufacturers to ensure compliance with the law’s prohibition of providing direct and indirect benefits. The DMOS requires companies with at least one government-reimbursed drug to report all hospitality, convention and engagement contracts to the appropriate professional associations.

In 2014, nearly 40,000 engagements representing over €100 Million were sent for approval to the CNOM (Physicians Professional Association), according to the report. Out of these engagements, nearly 45% related to hospitality (e.g. bearing of conference costs, expense reimbursement, etc.) for a total amount of €21.4 Million. Nearly 43% of contracts referred to services honorarium (consulting arrangements, ad boards, etc.) and 7% to research conventions (clinical trials, investigator-initiated research, etc.). Together, these services honorarium and research conventions reached €78.9 Million in 2014. Interestingly, while the percentage of approved hospitality engagements by the CNOM kept escalating from 2014 to 2015 (from 91 to 95%), the approval of contracts dropped off from 59% to 29%. The CNOM provides opinions on engagements and contracts to pharmaceutical companies but do not prevent them from executing unapproved contracts.

The CNOM mainly rejected hospitality engagements due to:
• Missing documents in the file received by the CNOM,
• Failures in the legal timeline.

Contracts were mainly rejected due to the following:
• Judged tremendous fees for services,
• The absence of superior authorization for HCPs working in hospitals (although companies are not responsible for this matter, HCPs are).

The Cour des Comptes outlined that most of the data received cannot be analyzed, as 75% of it is in printed form. The Court advises companies to switch to electronic format in order to ensure accuracy and completeness.

Based on this report, it appears that pharmaceutical companies in France are leaving themselves open to risk. The global emphasis on transparency is contributing to regulatory and commercial pressures to ensure that payments are at FMV.

These issues concerns are not limited to France or Europe. Similar difficulties apply to the establishment of a global FMV methodology that is able to meet local challenges; local challenges that include measuring the proportion of public versus private sector compensation, and the value of advanced clinical expertise above and beyond that of a “average” physician.

It is expected that regulations and standards will become broader in scope and give more power to governing authorities. Taking proactive actions to automate data collection and reporting is an urgent challenge for pharmaceutical companies around the world, as is establishing a transparent, objective and consistent methodology for FMV.