Agency Best Practice in Regulatory Compliance

Feb 02, 2006

The pharmaceutical industry imposes higher standards on advertising, PR, and medical education agencies than any other industry, except perhaps the financial services sector. Agencies need to keep up with constantly changing rules for advertising and promoting drugs or devices.

Pharmaceutical companies are hyper-focused on compliance. They cannot afford the high costs of noncompliance, which can include criminal prosecution, corporate integrity agreements, negative media attention, loss of business, and damage to product reputation—not to mention high legal fees and penalties. In the past five years, pharma paid well over $3 billion in government fines. Yet even as regulatory compliance becomes a greater priority for pharmaceutical companies, communications agencies fail to understand the urgency of the issues.

"Agencies that represent drugs or devices must carefully protect their client's reputation, and that means preventing the likelihood of any regulatory violations," says Lynn O'Connor Vos, president and CEO, Grey Healthcare Group. Vos, named 2005 Woman of the Year by the Healthcare Businesswomen's Association (HBA), focused her acceptance speech on strategies to repair people's trust in the industry. "Compliance know-how is clearly an important step for agencies to take as they help restore the tarnished image of the pharmaceutical industry."

Regulation has always been crucial in pharma. When FDA started to permit product-specific TV ads directed at consumers in 1977, the advertising and PR worlds again had to adjust. Companies that did not take FDA enforcement seriously in the 1990s were quickly left behind. In 1991, a widely misconstrued FDA video news release (VNR) policy led to a cessation in their issuance for specific products. FDA's clamp down on continuing medical education (CME) programs meant lost business for CME suppliers.

Today, FDA is no longer the most important body overseeing pharmaceutical marketing. FDA's worst enforcement actions are only warning letters requiring corrective campaigns. It remains an integral player, though it does not wield the largest stick.

"In today's environment, where the stakes are higher, our clients now expect that we fully understand and closely follow the rules," states Laura Schoen, partner and president of the Weber Shandwick global healthcare practice.

The Office of the Inspector General (OIG) in the Department of Health and Human Services (HHS) and the Department of Justice (DOJ) are, arguably, more important overseers, since they can impose monstrous fines on companies for their promotional practices. Medicare Part D was implemented as of January 1, so the marketplace will not only become more competitive on a price basis, but the government will become by far the biggest source of revenue—further increasing scrutiny. In addition, most companies choose to comply with new guidelines from PhRMA, and the Accreditation Council for Continuing Medical Education (ACCME).

Given the high visibility of violations and the potential costs, agencies that provide advertising, PR, medical education, or other services to the pharmaceutical industry must be aware of all these initiatives and understand the rulebook.

It is not sufficient for agencies to simply rely on their client's internal legal and regulatory clearances when honing their regulatory compliance skills. It's true that every company, without exception, has an internal review process for promotional materials, including technical, legal, and regulatory reviews. But some companies have more internal expertise than others, especially when it comes to staying abreast of regulatory changes. And clearly, many violations get past the internal systems—which is why there are so many investigations and FDA enforcement actions. Last year set an all-time high for warning letters.

There's another reason for agencies to keep up with the latest regulations: In this day and age, regulatory savvy may well be an agency's greatest competitive advantage. Agencies that understand the rules can present concepts that are both effective from a communications standpoint, and compliant, are positioned to earn the respect of current and prospective clients.

In short, advertising, PR, and medical education agencies need to keep their eyes on the moving regulatory target of drug promotion.

Establish Internal Agency Credo

Specifically, agencies should consider establishing an internal agency credo, similar to that which pharmaceutical companies have, to maintain a culture of compliance. This would include procedures for notifying clients when the agency feels a program or message is not in compliance.