IDC Health Insights sounds an alarm on the progress of compliance with aggregate-spend laws

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Pharmaceutical CommercePharmaceutical Commerce - March/April 2011

National law won’t stop states from devising their own rules, complicating the IT and compliance task for pharma companies

Aggregate spend” laws, an offshoot of the Prescription Drug Marketing Act (PDMA) rules, are a growing worry for marketing operations managers and compliance officers, with more states imposing their own regulations, and with the “Physicians Sunshine Act” being incorporated into the healthcare reform law passed by Congress in 2009. (The federal law has a 2013 compliance date, with tracking beginning in 2012.) A new report from IDC Health Insights (Framingham, MA), “Aggregate Spend Compliance—the Next Frontier of Pharmaceutical Sales and Marketing,” is something of a wakeup call that industry needs to be moving faster on preparing for these regulations. “Aggregate spend compliance is the most disruptive force affecting pharmaceutical sales and marketing today,” says Eric Newmark, research manager at the firm.

Agg spend compliance requires pharma companies to track all financial and promotional activities with healthcare providers—including interactions ranging from clinical trial sponsorship to speaker bureaus to the occasional dinner. Some states have imposed dollar limits on some of these activities. According to a recently-completed IDC survey, 63% of pharma companies are in planning and integration stages of their agg spend projects. About 4% have not started; the remainder are already implementing their systems and optimizing its functions.

Initially, some pharma companies approached agg spend as a simple spreadsheet exercise, focused on Vermont, New Hampshire and a handful of other states that began the programs early. But Newmark says that the current situation demands a corporation-wide IT and business-process changes. “Becoming compliant will require a tremendous amount of effort . . . including new IT systems, major integration efforts, numerous business process changes, and significant training.” Basic compliance requires matching individual HCPs with expenditures, aggregating the spend data, and reporting it “in a transparent fashion to multiple regulatory bodies.”

IDC’s report summarizes product and service offerings from a variety of providers, including sales force automation (Cegedim Relationship Management, Oracle/Siebel), enterprise IT (IBM, SAP) and IT providers (OpenQ, R-Squared, Health Market Science), and consultants (Cognizant, PwC, Polaris Management, Prozio). But regardless of how the project is initiated, agg spend needs to be integrated to existing CRM and SFA systems—which can be a significant undertaking of its own. And although much of the focus of agg spend implementation is on regulatory compliance, the smart companies will be looking to optimize operations to analyze the ROI of specific promotional or marketing initiatives.

The full report (#HI226907) is available from IDC Health Insights (idc-hi.com).

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