Investment in long-term compliance solutions is on the rise. Three factors are driving that increased spending.
The life sciences industry has faced many challenges in 2016 as global regulations and legislation of both pharmaceuticals and medical devices become more widespread, and more complex. The need is greater than ever for an efficient, reliable process that manages, streamlines and automates healthcare compliance as more and more countries enact legislation and professional associations set stringent conduct guidelines.
In the past several months, Polaris has seen increased demand for its Global Compliance Platform (GCP), an end-to-end tool that allows companies to seamlessly and automatically document and collect data about interactions as well as track and report activities.
Three major trends are emerging as the core reasons leading to this increased investment in long-term compliance solutions: 1) the need for better tracking and reporting on HCP/O engagements; 2) the need to ensure Fair Market Value compensation; and 3) the need to manage Focus Arrangements or “customer-provided” services, where manufacturer relationships with influencers, in addition to prescribers, have been raising concerns.
1) The need for better tracking and reporting on HCP/O engagements
With the ever-increasing requirements arising globally for transparency reporting, manufacturers have sought to mature their processes for managing engagements with individual healthcare professionals and organizations. As many manufacturers have learned, the most difficult component of the transparency reporting process is ensuring complete records for all interactions. For example, a reportable HCP recorded as a business guest during an in-office meal, or incomplete or inaccurate nature of spend definition on an invoice would be problematic. The actual preparations of transparency reports are relatively easy if the data is good. For this reason, greater emphasis must be placed on managing the entire HCP/O workflow from planning through payment and reconciliation.
For many companies, this workflow begins with an annual operating plan that outlines the planned HCP/O engagements. For practical reasons, this planning stage is often aligned with strategic planning and budgeting activities. Where the workflow does not begin with the operating plan, it begins at the next common stage – the business needs assessment. This step is critical to demonstrating the objective identification of HCP/O engagement rationale. In addition, many manufacturers are separating the process for nominating individual HCPs. This separation helps to establish the specific qualifications of each consultant to provide the needed service. A controlled workflow allows the application of Fair Market Value compensation to be controlled in the engagement setup. Finally, to ensure complete and auditable records, the workflow concludes with a reconciliation of services to the needs assessment and/or contract, and documented proof of performance.
The Polaris Global Compliance Platform (GCP) is designed to automate the entire workflow for HCP/O engagement, including all supporting documentation and approval routing. The processes that GCP covers include needs assessment, HCP/O identification & due diligence, approvals, contracting, regulatory notification (such as DMOS), reconciliation and finally transparency reporting (e.g. Sunshine Act, US State Rules, EFPIA, France, etc.). Polaris’ GCP is a robust suite of internal controls to ensure complete and accurate capture of all engagement details to support external reporting requirements.
By automating this workflow, life science companies are much more effective at managing large volumes of transactions, while also streamlining their transparency reporting process. Additionally, compliance teams have been able to simplify their review responsibilities through monitoring. Polaris’ system can be configured with a defined set of “key risk indicators” or business rules that trigger compliance review in a targeted manner and often before the proposed arrangement reaches contracting (i.e., frequent advisory boards topics or attendees). The robust reporting capabilities of the system have also allowed clients to monitor trends and training needs.
2) The need to ensure Fair Market Value compensation
The need for Fair Market Value compensation for HCP/O engagement has been long established. However, in general the process in the United States is much more mature than the rest of the world though the risk is the same. This has been compounded by the lack of clear and objective compensation data in many countries, as well as the complex nature of some healthcare economics. Manufacturers have been focused on establishing pragmatic FMV programs in global markets.
In many countries, there are two distinct healthcare economics: the public-sector or national health system (e.g. Health Canada and National Institute of Health in the UK), and the private sector. The individual physicians being engaged by manufacturers may work in one or both of these sectors, and both can have different compensation levels. If you compensate a private practice HCP as a public-sector HCP, your rates may not be competitive and recruitment will be a challenge. So while the analysis is more complex, the need is clear and Polaris has seen an increase in the number of manufacturers seeking to establish global FMV standards. This is necessary to ensure that excess compensation cannot be perceived as a bribe, but also in ensuring that the company can partner with leading opinion leaders. HCP recruitment is a competitive landscape which necessitates competitive rates.
It should be noted when discussing competiveness and FMV compensation, that a proper Fair Market Value program is defined by three distinct components, with rates being just one of them. Also, manufacturers must demonstrate that they compensate similar fees for similar services, so establishing a labor standard for common activities like product training, speaker programs and advisory boards are essential. Lastly, higher fees must be paid for higher levels of expertise. The level of expertise must be independently evaluated against common objective criteria that can measure expertise.
Much of Polaris’ success over the last 15 years has been the result of the team’s ability to identify best practices and anticipate compliance needs. Polaris has successfully partnered with life science companies to establish FMV compensation rates for HCPs and allied HCPs in over 85 countries. The methodology has taken into account many local healthcare economic dynamics. The company is keenly focused on supporting clients in establishing objective opinion leader tiering processes, while often extending this to performing the tiering activities on an outsourced basis.
3) The need to manage Focus Arrangements
The promotional strategies for biotech and specialty-product manufacturers have continued to substantially shift and differentiate from the primary-care arena. This shift has resulted in increased emphasis on delivering more targeted messages to specific audiences. However, identifying the audience and logistically delivering those messages often necessitates partnering with a “customer”. In this context, “customers” are defined as any individual or organization that prescribes or influences the use of said product. These fee-for-service arrangements are considered Focus Arrangements, and have garnered the attention of the OIG.
The nature of these engagements can be broad, and from a risk point of view they should be treated like any engagement with an HCP, subject to the same internal controls. The procurement of clinical data to support healthcare economic outcomes studies present a direct risk exposure the same as paying an HCP to be a consultant. These engagements should be supported by an objective needs assessment and the fee levels must be fair market value.
Earlier this year, CMS issued the Covered Outpatient Drugs final rule outlining changes to the Medicaid Drug Rebate Program including a focus on service fees paid to customers. In the clarifications to the definition of manufacturer’s “best price” and Average Manufacturer Price, the rule establishes prescriptive guidance on bona fide service fees. The rule makes clear that bona fide service fees must meet a four-prong test to be excluded from the pricing calculation; the first of which is FMV. This ruling exemplifies the importance of having a process in place to effectively manage Focus Arrangements.
Polaris has partnered with manufacturers in developing FMV benchmarks for various categories of Focus Arrangements. This has included statistical analysis on common cost-drivers as well as establishing consistent practices for identifying and measuring them in contracts or proposals. The company’s data-set now includes thousands of arrangements covering many therapeutic areas and services.
The life sciences industry will undoubtedly continue to revolutionize the healthcare industry and help people live healthier, longer lives, through new discoveries and innovations. However, the global scrutiny on the sector will continue to increase with more openness through transparency, regulatory focus on pricing and poor public perception. It is imperative that pharmaceutical, biotech and medical device companies work with an industry-leading partner; one with a reputation for delivering innovative solutions to today’s toughest compliance issues, but who also has a keen eye on solving future challenges.
Over the course of its 15-year history, Polaris has forged a path of innovation that has allowed the company to become the leading compliance solutions provider in the life sciences industry. Polaris’ management consulting team has advised and supported clients in establishing comprehensive risk-based compliance programs. The solutions team has leveraged insights to develop leading technology solutions to manage complex and high compliance risk activities. Polaris’ business process outsourcing team operationally supports and augments clients’ staff in executing high risk activities.
For more information, visit www.polarismanagement.com.