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Europe - Take Heed of the US Transparency Storm!


The spiralling nature of disclosure in the US provides a cautionary tale for European pharma executives. Jacky Law reports.

Transparency is a dynamic concept. If there is public demand for information and an underlying rationale for making it known, then, as recent experience in the US shows, calls for disclosure mount. Jonathon Kellerman, a partner in PricewaterhouseCoopers' US pharma division, goes so far as to say: "The industry is moving from a culture of compliance to a culture of transparency."

Speaking in a new report,1 Kellerman goes on to list what he describes as a "perfect storm of drivers pushing companies towards the need to have better insight into, and openness about, their business activities." Those drivers include public demand, increasing regulatory scrutiny and emerging legislation at both state and federal level.

What this report makes abundantly clear is that these prompts for disclosure are inter-related, creating a spiral effect that, so far, shows no signs of abating. For example, evidence from legislation in various states mandating that companies reveal how much they pay physicians was part of the reason Senators Charles Grassley and Herb Kohl introduced the Physicians Payments Sunshine Act. This, if it becomes law, will insist all pharma payments of more than $100 to named physicians are made public. Some were hopeful that since this act is tied to the healthcare reform bill, it may fail, but the determination for transparency is such there is now talk of decoupling it from that bill and getting it passed via another legisative vehicle.

There is also de facto legislation in the form of the Corporate Integrity Agreements (CIAs) issued by the Office of Inspector General in settlement for past misdemeanours. Recently, these have become more aggressive and those entered into with Eli Lilly, Pfizer, Cephalon, and Biovail, for example, all have clauses insisting that payments to named physicians are displayed on easily accessible websites.

Meanwhile, medical schools throughout the US have been rewriting their conflict-of-interest policies with the result that several now either reveal what their faculties receive from pharma companies or ban activities such as speaking engagements entirely. The Cleveland Clinic led the way in such disclosure, closely followed by Stanford University and Northwestern medical schools. John Hopkins University has banned its doctors giving talks on behalf of industry and, most recently, Partners HealthCare, a non-profit health system that includes research hospitals such as Harvard Medical School, Massachusetts General and the Brigham and Women's Hospital in Boston, has set a new standard by restricting what senior officials can earn from sitting on the boards of pharma companies.

Doctors value their reputations, particularly at local level, and don't like their pharma payments being made public. It doesn't matter if they are paid for legitimate work, or that the payments reflect their market value. Where reputation is concerned, the only things that matters is perception. And the effect of disclosure over time will be to curtail the pool of doctors available to work on industry's behalf.

European executives may think all this doesn't affect them because, so far, pharma-physician transactions are still able to be conducted in a relatively opaque environment. But, as PWC's Kellerman, insists, the dynamic for transparency has taken root and it is only a matter of time before it spreads beyond the US. He points out the Netherlands has its own version of a Sunshine Act working its way throught the legislative process and the underlying rationale for the public knowing how much doctors are paid by pharma companies is the same throughout the world.

What European executives have is breathing space to get their marketing departments in order. They may be working with tighter industry codes of conduct but this is not the same as full disclosure. And, as those in the UK know well from the MPs' expenses furore, full transparency can be a debilitating experience if it is not properly prepared for. Be warned.

1. Engaging with physicians in an era of transparency, FirstWord, March 2010. Price (single user): £435/E495/US$595.