10. Charity contribution
The reelection of Pres. Barack Obama assured that the Patient Protection and Affordable Care Act (PPACA or ACA), signed into law on March 23, 2010, will move forward, and with it, the Physician Payment Sunshine Act provisions.
It goes by lots of names. Officially named the Transparency Reports and Reporting of Physician Ownership or Investment Interests section, it also goes by the “Sunshine Act,” aggregate spend law or simply “agg spend.” By any name, it will require pharma, device and medical supply manufacturers to submit reports of spending on physicians and teaching hospitals to a database maintained by the Centers for Medicare and Medicaid Services (CMS). Reports must include “payment or other transfers of value” (POTVs) exceeding $10 for everything from small meals to consulting fees, to speaking and research fees, to stock ownership.
Manufacturers can’t begin collecting data for strict compliance until the final rule is published. The latest news at presstime is that CMS completed the final rule, and on Nov. 27, sent it to the White House Office of Management and Budget for review. Expectations are that within 90 days of OMB’s receipt, CMS rule will be issued as final. If so, manufacturers could be required to begin data gathering on Monday, Feb. 25, 2013, for their 2014 agg spend report submissions.
Will you be ready when(ever) the law comes? Penalties as proposed range from $1,000 for an unreported item to a maximum $1,000,000 for knowingly failing to submit an annual report. Considering that the price of instituting compliance processes and IT solutions can reach into the hundreds of millions, might some companies find deliberate noncompliance an option? “It sure as heck would be cheaper,” one Big Pharma manager told Pharmaceutical Commerce, “but that’s not the approach we believe in.”
Most manufacturers already have some program in place to meet the reporting requirements of several US states—Minnesota, Colorado and several New England states, among others. Comparable reporting requirements are coming into force in the European Union, and some companies are attempting to build a global reporting database to meet current or future requirements worldwide.
Fear and uncertainty
Not knowing exactly how CMS will incorporate industry comments into the final rule, companies remain fearful over the many yet-unknowns, from dates to data points.
One big issue: “context.” Under the proposed law, when a manufacturer reports a research grant to a teaching hospital, it includes total dollar amount and other identifiers, including the identity of the principal investigator. Of course, the investigator doesn’t get the money, the institution does, “and that institution has to pay 50 people, run a laboratory, do patient testing, and all kinds of other things with that money to conduct that clinical trial,” says Marjorie Powell, senior assistant and general counsel with the Pharmaceutical Research and Manufacturers of America (PhRMA), which has lobbied to add clear, nontechnical explanations to public spend reports.
Asked whether they favor a public, searchable database of all physician-industry relationships, a 2012 survey of 110 US-based physicians and 223 executives from life sciences companies, conducted for Deloitte by Forbes Insights, found that 68% were, most of them agreeing “as long as patients understand how to interpret the data” (Fig. 1). The last point speaks directly to the issue of context.
State regulations add further complexity. The federal law will set the baseline, but states are free to enact further restrictions. Massachusetts and Vermont ban spending on gifts; Vermont bans meals and requires reporting on clinical transactions and disclosure of all free product samples that do not apply under Section 6004 of the ACA. Minnesota maintains spending limits, which the federal proposal does not.
Massachusetts, Washington, D.C., West Virginia and Colorado also have state agg spend laws. There are signs that some of these and perhaps the rest of the states are looking forward to letting Uncle Sam do the bulk of the heavy lifting. Maine had a law, but repealed it on June 29. Massachusetts eased restrictions a month later and partially repealed its 2008 Pharmaceutical and Medical Device Manufacturer Code of Conduct, then in September, issued an “emergency regulation” to address a legislative change “to allow companies to provide ‘modest meals’ to physicians outside of their offices as part of an educational event, such as a speaker program or conference seminar,” says PhRMA’s Powell.
Other states, though, backed off on laws that would exceed the proposed federal law, which will preempt state laws only to the extent of “setting the floor,” says Natasha Thoren, attorney with Epstein Becker Green (New York). “States may choose to enact statutes or regulations that require reporting and disclosure of additional information and/or information from individuals or institutions not covered under the federal law,” she adds. “It will be interesting to see what states will do after the ACA regulations are finalized.”
Another area of ambiguity is the very fundamental identification of physicians. CMS expects healthcare providers (HCPs) to be identified by their National Provider Identification (NPI) number, but not all doctors have one because it’s limited to physicians serving federally funded insurance programs. “So, a plastic surgeon doing cosmetic surgery, for instance, wouldn’t be in the Medicare or Medicaid system,” says Bill Buzzeo, GM of global compliance solutions at Cegedim Relationship Management (Bedminster, NJ).
Speculative solutions include expanding the NPI to all physicians, or perhaps expanding the DEA ID, which authorizes the prescribing and dispensing of controlled drugs, but the agency has in the past nixed the idea. “Am I 100% confident that there still won’t be gray areas in the final rule? No,” says Buzzeo. But he says regulators have been in contact with industry stakeholders, and that “CMS is listening.”
It’s about process, not technology
For Bristol-Myers Squibb (BMS), the key to a successful compliance solution is “thinking of the project as a business problem in terms of process and not necessarily as an IT or system solution first,” Antionette Brock, director of business projects & planning, told attendees at a June user conference held by IT vendor Pegasystems (Cambridge, MA). The company’s system establishes a single set of processes, common roles/rights workflows and procedures that will ultimately roll out across global operations.
The company shared its challenges: underestimation of time and cost; the need to navigate competing priorities; team member “swapping”; training and the sheer number of integration points. These included 11 internal systems (e.g., master database of item costs, global product master data, geographic data), as well as five, which were external vendor systems (e.g., the logistics, T&E and other vendors).
The transparency preparedness efforts to date for Sanoti US have focused on a combination of existing state requirements, as well as the statute and federal proposed rule and PhRMA comments. “Every organization will have its own strategy,” says Gus Papandrikos, director, transparency operations, US medical affairs (Bridgewater, NJ), “but we all have a common theme: We all use multiple source systems that host data, such as enterprise resource planning, financial, sales, procurement, research and others.”
Regardless of the IT architecture, “all companies will need to capture data out of these systems and ultimately aggregate it into one reporting solution,” he adds. For its system, Sanofi chose a major vendor to remotely host and maintain data and the application. Users access it through secure Internet connections.
There are many paths to compliance. The most common method, IT-wise, is to minimize the investment with a manual spreadsheet-based system, followed by in-house applications, third-party solutions, and then sheet avoidance or noncompliance, Cegedim research indicates (Fig. 2). Many companies often start with HCP lists from one or more vendors (e.g., Cegedim, MedPro, Health Market Science) to complete their existing databases; 47% of company data come from third parties per Cegedim research. Many such vendors also partner with other firms to offer full compliance reporting, validation and software solutions. For instance, MedPro has partnered with Porzio Life Sciences Services and an allied law firm to offer a full software-and-regulatory solution. In terms of third-party offerings, these can be based in-house or outsourced via SaaS to a provider who will keep data and systems up-to-date as regulations evolve. R-Squared (Princeton, NJ) is an example of a vendor that offers systems both in-house and remote.
AdvantageMS (Fort Washington, PA) combines its verified HCP databases with a partnership with Concur Technologies (Redmond, WA), whose travel and expense-management solutions are widely used by sales organizations. Compliance Implementation Services (Media, PA) provides consulting on setting up and administering agg spend systems.
No matter the IT strategy, companies need to follow the same fundamentals—collect, standardize, cleanse and validate data to ensure accurate reporting of the following: physician name, address, specialty, NPI, or perhaps an improved identification scheme, as well as the value, form, date, and name of the drug. “Form” refers to the correct entry of the transaction across 18 categories:
According to Acquis Consulting Group (New York), roughly 80% of HCP transactions are recorded in the expense system, but these comprise only 20% of the total HCP spend. This underscores the need to integrate many systems from many departments, including finance, compliance, legal, IT, sales and marketing meetings and events, and travel departments. Not only do systems from these departments need to be integrated into a single reporting database, companies need to have a clear road map for doing so, from the top down. A steering committee must identify a project leader, who must assemble a cross-functional team, which must develop clear departmental business processes, all the while working with IT to ensure that standard terminology, codes and other details are used. The right data from the right systems in the right departments must be mapped into a unified whole.
Companies, department by department, may need to budget more time and resources than initially expected for data cleansing, augmentation and validation processes. “Because the more they start getting into data cleansing, as they ‘overturn more stones,’ companies often find that not all of the data is being collected, or being collected properly,” says David Kaufman, managing partner at Acquis. “In some cases, they’ve been aware that there were some inconsistencies, but now that they will be reporting under a federal law, the effort takes on a new urgency.”
Once a system is in place, a system should let users link a transaction directly to one or more physician records by selecting the appropriate attendees when planning an event, for instance, as well as inputting details needed to list expenses and exporting the relevant data to a unified agg spend data warehouse.
Besides giving manufacturers a better view of their own spending limits, public reporting of data will allow them to track others’ spend data. In fact, they should do this, “because that’s exactly what journalists are going to be doing, and the government’s going to be doing,” says Mandy Klosterman, COO for Regulatory Clinical Research Inc. (Minneapolis), a clinical research organization (CRO) that also provides agg-spend consulting for medical device development.
If, for example, Big Pharma Company A is spending $5,000 a year per physician, Company B is spending $50,000, and Company C is spending $500,000—and you’re with Company C—you can expect to get some attention in the media and by the government, and not the kind you want.
Such benchmarking will take time to become entrenched. In the Deloitte-Forbes Insights survey, 49% of respondents said they were considering or planning to use public data from other companies for strategic purposes, while only 13% had developed significant plans to do so, and 25% “didn’t know.”
Aside from sizing up the competition, there are additional areas where the cost of compliance can be at least partially mitigated, however, there are limits to expense-targeting.
“In general, people have thought about ways to use their information in addition to reporting,” says Sanofi’s Papandrikos, himself having started in sales and marketing. “But in terms of making allocation decisions based on their business impact? That’s something we steer very, very clear of, as does every other pharmaceutical company.” Rather, agg spend compliance systems are for compliance and “to limit overspending on any one individual based on a set of rules that you establish within your organization, sometimes based on limitations set by statute or state regulation, such as in Minnesota.”
Still, the data can be used elsewhere for predictive analytics, promotional analysis, marketing analysis, strategic planning—and to provide “great ROI down the road,” says Eric Newmark, program director of IDC Health Insights’ Life Sciences practice. So far, discovery and due diligence efforts have “led to many companies uncovering huge inefficiencies in their organizations that they didn’t even know about.” He cites one that uncovered nearly 40 different third-party speakers bureaus across divisions, “then consolidated to roughly five and instantly saved millions.”
“Physicians need to know what’s coming at them…like a freight train,” says Klosterman of RCRI. Without the chance to review spend data before it goes public, she adds, “You can imagine what kind of impact that’s going to have on the manufacturer’s relationship with physicians, if you don’t prepare them for the public reporting.”
Physician Ford Vox, MD, called the agg spend proposal “good legislation overall,” in a recent column for The Atlantic (“The Devil’s in the Details used for Doctor Transparency”), but still admits he backed out of tentative plans to attend a manufacturer’s educational event, “when I realized my attendance would be reported as a gift from the company.” His prescription to docs and hospitals is to create their own websites to “proactively tell the world…before ProPublica starts calling you.”
The American Medical Assn. voiced concerns at and since a Sept. 12, 2012, Senate roundtable discussion, chiefly that the public will mistake the agg spend law for a regulation on ethical conduct rather than simply an accounting of industry practices, and also that the proposed rule “would deny physicians due process to review, dispute and correct inaccurate reporting,” wrote James Madara, AMA CEO, to CMS Administrator Marilyn Tavenner on Oct. 10.
As it stands, manufacturers have a 45-day window to make corrections after submitting reports. CMS suggests—but doesn’t require—that they allow physicians access during this period or perhaps earlier in a “pre-submission review.” But how? The options generally focus on some type of secure Web portal that lets physicians log in to verify what goes into reports. A single portal would be ideal for the manufacturer.
BMS designed such a portal into its system as early as 2010, when one source at a company presentation noted how the effort “takes a lot of manpower,” including setting up a call center, a mechanism for sending letters inviting the doctor to come online and review reports, and hiring a staff of case managers.
If companies face challenges with single-country databases and systems, that’s not stopping leading companies planning regional solutions for the Americas, EMEA (Europe, Middle East and Africa) and Asia-Pacific. A “few true, groundbreaking leaders,” Cegedim’s Buzzeo says, have committed to global transparency projects. Cegedim’s 2012 industry survey on agg spend found that 87% consider global capabilities when choosing an aggregate spend solution. Success will hinge on a single global, corporate instance for systems, such as enterprise resource planning, travel and entertainment, customer master, and disclosure.
Beyond corporate global standards, some hope for globalization of transparency standards. In turn, the European Federation of Pharmaceutical Industries and Associations has begun a multinational initiative that targets spend reporting as early as 2016. If it succeeds, it could pave the way for global standards harmonization, which “may prove more elusive than the lost city of Atlantis,” says IDC’s Newmark.
Such utopian standards are worthy of support; however, for the time being, the US industry is still preoccupied with investing in systems to comply with a law that has yet to be published.
- Cold Chain Focus
- Meeting the challenges of rapid Covid-19 vaccine cold chain deployment
- Today’s pharma cold chain is going cryogenic
- Drone deliveries of cold chain medicines begin in rural North Carolina
- RFID tagging is back for pharma traceability—for real
- Pfizer to coordinate its own coronavirus vaccine distribution
- Fresh perspectives on pandemic response