For Compliance's Sake

September 1, 2007

Pharmaceutical Executive

Volume 0, Issue 0

Much has been said about the need and imperative for life science companies to comply with the various laws and regulations that govern our industry. More recently, state-level marketing laws have proliferated, adding new rules of the road and resulting in thousands of hours and millions of dollars for training, tracking, reporting, consulting, analysis, and support systems.

Much has been said about the need and imperative for life science companies to comply with the various laws and regulations that govern our industry. More recently, state-level marketing laws have proliferated, adding new rules of the road and resulting in thousands of hours and millions of dollars for training, tracking, reporting, consulting, analysis, and support systems.

David Davidovic

If you work anywhere close to the industry, you are undoubtedly exposed to lots of compliance training, presentations, reminders, audits, reports, disciplinary actions, and more. As a leader, you probably worry not only about your organization doing business the right way, but also about the burden and the direct and opportunity costs that all this effort represents.

There have been several attempts to quantify the financial benefits of compliance, but aside from those tied to the downside costs of investigations, fines, and settlements, little research has been completed on the overall business or bottom-line value. There are cross-industry efforts underway, such as a study looking to link a company's stock price to its reputation, but this research is complex and definitive answers may be some time away. In the meantime, here's a list of 10 benefits companies can gain from their compliance efforts.

RISK REDUCTION

1 Avoiding legal troubles and fines—which can cost a company hundreds of millions of dollars—is a good thing. (That doesn't even take into account the business disruption that comes from investigations, subpoenas, and other corrective actions.) These dollars are better spent on research, patient education, or in showing a return to shareholders. Strong compliance efforts can also reduce reputational risk by allowing companies to focus on the positive aspects of their missions and increasing investor confidence and shareholder value.

CONFIDENCE OVER HESITANCE

2 Essentially, a good compliance program prevents paralysis. Imagine a city intersection with no traffic lights or stop signs. People driving through that intersection would come to a standstill because they wouldn't have the confidence to know how to act. In the same way, marketers who know the rules of the road can be more confident about doing their jobs. They can execute programs more rapidly and, as a result, more effectively.

FEWER—BUT BETTER—CHOICES

3 Effective marketing is all about making the best strategic choices. When there are fewer choices, executives can spend less time guessing and more time analyzing the possible options and choosing the right one. For example, years ago, companies tended to lump promotional speaker programs and independent grant-based CME under "medical education." This blended bucket made it very difficult to make business decisions because the med ed and CME tactics were intended to reach different goals. These days, clearer definitions put limits on what tactics managers can execute and how they execute them, thus narrowing the breadth of options.

CREATIVITY THAT COUNTS

4 Of course, creativity and innovation are critical for every business. But executives are better served when they direct their creativity where it makes the most impact. For example, without guidelines, every product and marketing team is likely to come up with its own unique ways of addressing the logistics and mechanics of things like sampling or speaker programs. But these methods are probably more alike than different. More recently, pharmaceutical companies have established more standardized platforms to address the common systematic needs, like planning, scheduling, and tracking, while shifting their innovative efforts to design more effective education and promotion programs.

BETTER DATA, BETTER ANALYSIS

5 It may seem like just extra paperwork, but the additional documentation required by compliance measures can help companies with their business analytics. (Just think how difficult it is to calculate an activity's return-on-investment when the data is incomplete, inaccurate, intermingled, or nonexistent.) Compliance requirements call for data to be collected in a more complete, accurate, and timely fashion. In turn, these enhanced data sets can be used to make better business decisions regarding asset allocations, operational efficiencies, and resource investments.

PRODUCTS THAT SHINE THROUGH

6 When it comes to pharmaceutical sales and marketing, industry-wide rules like the PhRMA Code have tended to somewhat level the proverbial playing field. For example, companies have a more difficult time affecting physicians' prescribing based on how much—or how little—they spend on meals and gifts. Instead, the quality of the products and the science behind them, the quality of the people, and the quality of the company itself are the key differentiators to brand success.

A MORAL COMPASS

7 Most pharmaceutical companies state in their missions or their PR campaigns—or both—the importance of bringing benefits to patients. Compliance programs help people in a company navigate to the stated mission or message. That's because policies and guidelines tend, by design, to address not only external laws and regulations but also a company's mission and values, providing a very effective standard for making business decisions. Likely, pharmaceutical companies frequently refer back to their mission or compliance-program documents when faced with moral or ethical dilemmas.

ENHANCED RELATIONSHIPS WITH REGULATORS

8 When it comes to FDA and other regulators, companies' standards matter. Regulators have stated publicly in industry conferences that their jobs are a lot easier when they deal with a pharmaceutical company that they perceive knows what it is doing, has a clarity of purpose, and has clear policies and guidelines. Although it may not court any favors or privileges, this perception of high ethics and transparency enables a richer discussion about things that really matter, such as clinical evidence, and it likely allows faster, cleaner decisions that are based on a higher level of trust.

IMPROVED ACCESS AND BETTER BRAND POSITION

9 In my career, I've always noticed how much physicians appreciate being told the full story in an open and honest manner. Compliance has made that balancing information—the warnings and precautions that some in industry may feel a bit afraid to give—part of the product's central messages. When these messages are delivered confidently, they can result in a more productive and credible visit and improve reps' access the next time they knock on the doctor's door. These days, when there truly are so many reps and so little time, this access based on openness and trust is worth a lot.

TOP TALENT THAT STAYS THE COURSE

10 So much time, effort, and money are spent to recruit talent. However, companies can best position themselves as employers of choice by offering a culture built on strong ethics and integrity. Increasingly, job seekers look for companies that have a solid reputation in the industry and communities in which they operate. The same is true for current employees, who are more likely to stay with an employer if their workplace is fueled by strong values.

Many of us have dedicated most of our careers to this industry. We do it because we truly believe in the value that we bring to patients. Sleeping well at night, knowing that we are bringing that value in an appropriate way, is important and gives us clarity of mind and purpose to tackle another day.

This ideal fits neatly into the requirements and burdens of compliance, which are a necessary part of our lives and will never go away. So why not embrace them—not as a cost of doing business—but for the multiple business benefits that they bring.

David Davidovic is the senior director of business practices for Genentech. He can be reached at daviddav@gene.com