50 5 2005 - Pharmaceutical Executive

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50 5 2005
Five things you can do to prepare for compliance in all 50 states—starting today


Pharmaceutical Executive


Pharma companies can take five steps toward formulating a national approach to the varying operational requirements of state-level compliance. In doing so, companies can be proactive in developing their compliance infrastructure, and be better positioned to keep pace with the changing regulatory landscape.

1. Cross-Functional Teams

To comply with states' requirements, pharma companies must obtain data from a variety of internal departments and external providers. This includes capturing data not only from sales and marketing groups, but also from other operating departments, such as managed-market account managers, medical science liaisons, clinical medical groups, federal pricing departments, and vendors, such as advertising agencies and meeting-planning companies. As such, companies must retrieve data from a variety of sources, including call logs, T&E reports, promotional activities, like speaker programs and conventions, and contractual arrangements, such as investigator contracts and consultant agreements.

To most efficiently pull this information, companies should create cross-functional teams that include members from sales and marketing, finance, medical, managed markets, and strategic sourcing. Such teams are more easily able to locate the required types of spend and get sources of data more efficiently than requiring one department to determine this on their own. Companies will find that instituting cross-functional teams greatly enhances the speed of data collection while providing greater assurance that all areas of spending are identified.

2. Track Everything

In order to move from a state-level view to a national approach to compliance, companies must track and itemize all items of spending on healthcare providers to the most granular level of detail. This includes identifying what type of healthcare professional is the recipient of such spend (be they physicians, nurse practitioners, pharmacists, formulary committee members or medical students), and segmenting the items and activities of spending into mutually exclusive categories. It's important to remember that spending on healthcare professionals is not just limited to sales and marketing activities, but should also include other payments or items provided to licensed prescribers, such as investigator compensation or meals at clinical subject-recruitment meetings.

Then, companies must allocate each of these spend categories to an individual healthcare professional, which is usually done by tracking spending against an existing unique identifier for the physician. (Typically, firms opt to use the same ID number to record and track sales call data.) This should be done for all US prescribers and healthcare professionals—no matter what their state of licensure may be.

For instance, let's look at a typical promotional-speaking program where a physician is contracted to speak to a group of other providers. In this case, a pharma company will typically pay the speaker an honorarium at fair market value and reimburse them for travel. During the meeting, the speaker eats a modest meal alongside attendees.

In this scenario, firms should record each of these costs separately, as distinct data fields, such as "speaker honoraria," "speaker travel," and "speaker meal," and associate each of these costs with the speaker's unique ID number in their promotional-speaking program database or IT system. Similarly, the firm needs to record the attendees by their unique ID numbers and attribute the amount of their meals into a data category, such as "program attendee meals."

Companies should conduct this type of detailed tracking for all activities in which they provide value to healthcare professionals. This way, regardless of any state's required permutations of disclosure, companies will be ready to report, track, or disclose any spending that a state may require.

3. Short-Term Policies, Long-Term Strategies

For pharma, the backbone to state-level compliance is robust reporting systems. But building new or enhancing existing infrastructure often requires substantial amounts of time and investment. Companies often must make do with existing technology and rely on developing new policies to safeguard against compliance issues, as they look more long-term to improve their technology capabilities.

For instance, systems may not be in place to trace actual gift spending to a specific physician. As a result, in the short-term, companies may find themselves developing a corporate policy that limits frequency and types of gifts in lieu of recording and tracking all gifts to all physicians. However, over time, that dynamic will switch to a greater reliance on leveraging technology to track actual expenses.


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