The European compliance and transparency landscape has changed rapidly over the last couple of years. With the rise of pan-European as well as a myriad of country-specific regulations, the complexity of the compliance environment is growing. Although there is one common Europe-wide set of guidelines provided by the European Federation of Pharmaceutical Industries Association (EFPIA), there are also a lot of local versions which apply to specific countries. These vary from legislation (such as in France, Portugal, Denmark and Slovakia) to industry codes (such as the Netherlands and the UK). It is expected that local variations will continue to exist going forward.
Unlike in the U.S. however, most of the reporting regulations in Europe have been — with the exception of France and some smaller countries — driven by industry. In fact, in Europe, pharmaceutical companies under EFPIA have been preempting the initiatives that were taken by the U.S. federal and state governments and have been developing their own transparency code. Additionally, the EUCOMED the European Organization of Medical Device Companies (EUCOMED) is following EFPIA and is working on a transparency code for next year. There are several advantages to the pharmaceutical and medical device industries in Europe developing their own codes, one of which is consistency across the continent.
While having some Europe-wide consistency in compliance guidelines and regulations is an advantage for the European pharmaceutical sector, there is much more the sector needs to do from an internal perspective to change the culture of compliance. In order to stay ahead, European life sciences executives must go beyond the mindset that the compliance reporting technology they may have just purchased will be the Holy Grail for compliance sustainability and transparency nirvana. In order to effectively implement the technology across 33 countries, executives need to bring along local management in each of the countries and convince them why compliance and transparency reporting is good for business. To do that, fundamental changes from an organizational, structural and cultural perspective need to take place.
Cultural Change as a Compliance Driver
Over and above the challenging compliance landscape, there is additional complexity impacting transparency relating to the way companies are organized internally in Europe. Unlike in the U.S., where there is usually a central organization making enterprise-wide decisions, life sciences companies in Europe typically have a combination of a regional center with local country organizations. Even though the level of decision-making that occurs centrally vs. locally differs on a company to company basis, it is not uncommon for companies to have strong local decision making authority.
Given these internal organizational realities, the key to success in implementing any compliance program and reporting system in Europe will be the extent to which the compliance business owner can get the buy in of management and staff throughout the company, which will require employee behavioral and cultural change. Getting all of the stakeholders to buy into a new culture and providing the transparency reporting data can be quite a challenge, particularly since they don’t understand the value of this to their local business.
In our experience, European life sciences companies that have been successful with developing a sustainable transparency and compliance program have focused on three key elements:
- Focusing on the soft side of change, viewing compliance not as a technology project to be implemented, but emphasizing change in individual behaviors
- Placing equal – if not more – emphasis on the spend capture side as having a reporting solution is good, but is of little value if the wrong data is being collected
- Keeping track of what is next, shifting focus early on to likely upcoming challenges once initial benchmarks are reached in meeting current reporting deadlines
The Soft Side of Change
Eight lessons learned for executing a soft change program for enhancing compliance effectiveness within European life sciences organizations include:
1. Start with an assessment of current compliance practices, systems and processes, followed by the development of an implementation roadmap
A comprehensive understanding of the types of processes and systems being utilized and what marketing, sales and medical activities take place in each of the different countries should be assessed. A best practice is to perform a gap assessment; outlining gaps between local requirements and current practice, and develop recommended actions and a related implementation roadmap on the basis of that assessment.
2. Ensure senior management support from the beginning
Implementing a change program can take anywhere from 6-18 months, requiring many different countries and departments to work together. Senior management involvement is needed to provide and approve all necessary resources, to enable decisions to be made on a timely basis and to keep the project team on time, on budget, and on scope (OTOBOS).
3. Establish a Steering committee
Many life sciences companies appoint a steering committee to manage the change program. The steering committee should be established early on and the committee should serve as a strong governance and core team representing different sides of the business and include central management in the area as well as local management, who can become the champions after a successful program pilot is executed. In addition, the steering committee provides resources needed, sets priorities for local country management and drives implementation of consistent processes and best practices across countries.
4. Institute a pilot program before pan European implementation
While some smaller-sized companies in Europe may opt to do a full scale, cross-continent compliance program launch, for most European life sciences organizations, particularly larger companies with more complex systems, initially implementing a pilot version before a full roll out of the transparency reporting solution or compliance program is a typical approach. There are numerous reasons for going the pilot route, but a principal one is that it is easier to manage resources to make the implementation successful, given the scope of the project. Also, when first piloted to individual countries, these countries can be used as champions after a successful implementation, convincing the remaining countries to adopt the program.
5. Assign the program to a business owner, not the IT organization
Selling management on the added value of collecting spend and use the information for strategic decision making purposes. The spend capture, collection and reporting process can actually provide new insights into the business and help adjust and guide business strategy and direction.
Additionally, it’s ultimately the business users that will need to change their behavior. Therefore, it’s critically important for the compliance program to be assigned to a business owner and not to the IT function.
6. Appoint a central Project Management Office and Change Management Office to drive execution
- Most companies underestimate the vastness of the program and so never assign any centralized, accountable function for overseeing its implementation. A specific compliance programs PMO needs to be created for taking charge of this responsibility along with the creation of a Change Management Office or function (if not already in existence) for partnering with the PMO in carrying through the needed organizational changes to ensure compliance program robustness, effectiveness and success.
7. Organize the project in distinct workstreams, making sure relevant work packages are addressed
As the compliance implementation plan is developed and internal cultural and structural changes are made to ensure robust execution of the program, by apportioning the program into defined work streams, every functional, topical and issue-related aspect can be addressed, including processes, training, system deployment, master data management and data privacy. It has been our experience that most companies overly focus on the technical aspects of implementing a transparency reporting solution or a compliance program, while forgetting that there are many related processes that need to be changed in each of the participating countries.
8. Establish a clear set of principles that will guide implementation
Companies should establish a defined set of guiding principles for how the compliance program is implemented and stick to them to ensure non-interruption, with the only exceptions being for legal or regulatory developments that emerge. Setting these principles allow for interpretation of the implementation guidelines and decentralized decision making during the execution of the program in the local countries.
9. Don’t Put the Reporting Cart Before the Spend Capture Horse
For many different reasons, companies want to have a consistent pan-European, or better yet, global reporting solution. To accomplish this in an efficient manner, companies need to harmonize spend collection processes and systems first in order to get the right spend into the system. This means that local management might have to adapt some of its local processes and systems to comply with the best practices of a global solution, typically driven by a central or global management team. Having said this, the solution needs to be flexible enough to adapt to local practices and reporting requirements.
The benefits go beyond implementing best practices, but actually make their processes more efficient. For instance, many companies are currently collecting additional information for reporting purposes so they learn more about the current state of their business and help better analyze and inform strategic decision making. Additionally, many companies are using the compliance exercise as an opportunity to upgrade their systems and invest in making their processes more efficient.
Challenges Beyond the Reporting Horizon
After a successful implementation of the reporting solution, it is likely that new questions will arise. Best practice companies are already preparing in advance for these questions, and to the extent possible, are including them in their current implementation plan. From our discussions with life sciences companies in Europe, we see three topics emerging.
Fair Market Value and KOL scoring
Companies will be concerned about how much they are reporting and about whom. Even if national governments might not have the resources to analyze the reported data, competitors and public advocate groups will have an interest in the information reported. Therefore, we see companies focusing on Fair Market Value (FMV) for HCP and HCO services like ad boards, speaker programs, and consulting services as well as services provided for CME, IIS, IIT and all other HCOs. As an extension to developing an FMV methodology and rates, we see companies develop Key Opinion Leader (KOL) scoring methodologies, allowing them to distinguish between different levels of KOLs for FMV payment purposes.
Companies are starting to consider sending reporting data to the HCP before the reports are due to be submitted in order to obtain buy in and sign off. France’s Sunshine Act, as a matter of fact, currently has similar requirements, and other countries are following. Collecting the data in time and reporting this to the HCP will be a challenge. In addition, addressing questions and concerns from HCPs based on the pre-reported data, will require an efficient and timely process.
Due Diligence / Background Checks
Similar to FMV, after they are reporting on HCP/O spend, companies will be concerned about who they are doing business with. Several companies have started a process of vetting HCP/Os through a number of methods including risk analysis, and third party risk assessments, background checks via external background screening services, self-certifications on information provided by the HCP/O and requests for audits, and requesting additional information on the background of the HCO/HCP.