As pharma aims for complete transparency to comply with new regulations, Guillaume Roussel explains how the right global approach to aggregating spend and customer data can give companies a significant advantage.
Pharmaceutical companies are keen to improve the industry’s image; but many are struggling with the implications, not to mention costs, associated with the emerging global compliance burden. The industry is keen to sign up to international demands to prevent corruption and bribery across the healthcare market. But with diverse regulatory requirements across every international market, achieving compliance is a complex challenge.
In the UK, the new Anti Bribery Act comes into force in April 2011 and adds even more complexity to the existing Foreign Corrupt Practices Act (FCPA), the OECD Convention or the Sunshine Act due to come into force in the US in 2013. Not only does this UK regulation apply to both public and private sector healthcare providers, but it has far tougher sanctions than other legislation: an individual convicted for failing to implement adequate measures now faces up to 10-years in prison and unlimited fines.
This is a clear message from the UK Government that bribery and corruption activity will not be tolerated. But what does this mean in practice for pharmaceutical companies?
Many organisations have already made significant changes in practice. Key Account Managers for example, are unlikely to ‘wine and dine’ clinicians or health officials. Nor is the giving of gifts acceptable. Indeed, under the new UK regulations items offered to healthcare providers are limited to £6, and must be relevant to the medical practice, rather than offered for the personal benefit of the healthcare provider.
Even the use of samples is significantly reduced, with organisations now complying with the four times two standards – no more than four samples per physician for two-years after the product’s launch – laid down by the European Federation of Pharmaceutical Industries and Associations (EFPIA).
But the new regulatory implications extend far beyond traditional detailing activity and embrace every part of the organisation that has any kind of customer interaction, from engaging with customers in clinical trials, to providing grants to physicians or simply inviting a Key Opinion Leader to a progress meeting.
Essentially, pharmaceutical companies now need to track every interaction and financial transaction, monitor both direct and indirect payments undertaken on behalf of the organisation, and then reconcile the expenses to each physician or official. This process becomes even more complex when considering the multi-national nature of most pharmaceutical company operations: organisations have to put in place global guidelines and consistent standards to monitor closely all interactions with healthcare professionals. They have to be able to reflect the different regulations in each country – such as the €30 gift allowance in Spain or 100 zloty in Poland. And they need to achieve this without incurring an unmanageable, expensive overhead.
The key consideration, however, is how to streamline this process and minimise the financial overhead. At the moment, far too many pharmaceutical companies are reliant upon manual processes for capturing and analysing information. Indeed, according to research conducted on behalf of Cegedim Relationship Management, some 40% of US pharmaceutical companies are still tracking and reporting manually or with spreadsheets, although over half of these expect to move to an automated solution.
But the way in which information is captured is just half the problem. Only 37% of respondents indicate that their company enforces corporate standards for spend data capture which applies to all suppliers and staff. The remaining respondents either do not have standards or have standards which are not used universally. This is simply not a sustainable approach. If organisations are to achieve a consistent, global model for compliance, it’s essential to create a standard data capture model that also supports local rules to ensure every market is managed consistently and effectively. Critically, organisations need to consider not only spend aggregation but also robust and thorough customer data management.
One option is to put in place an aggregated spend solution that builds on existing Key Account Management (KAM) information to automate and streamline compliance monitoring and reporting. It is by leveraging this strong, accurate data source and integrating a wide range of enterprise applications for Sales Force Automation, ERP, Finance and HR, that organisations can streamline and automate the process of highlighting suspicious transactions.
Using Business Intelligence pharmaceutical companies can not only conduct the required in depth historic analysis but also put in place proactive alerts both for individuals identified as highly influential and also if payments to specific practitioners are about to hit the threshold – Fair Market Value – preventing both intentional and accidental compliance breaches.
There is a further component to compliance activity, namely transparency. In this global operating environment organisations are increasingly looking at opportunities to drive best practice, create global policies with local implementation and improve processes, and key to this is to improve transparency.
This compliance drive is now enabling organisations to collect and share information not only with government and regulators but also internally. Indeed, the wealth of financial information collected to achieve compliance provides valuable insight into cross-organisational spend with specific healthcare providers.
Adding customer data management to the process provides a depth of information that can be analysed to assess value, understand how much is being spent at an individual level and improve resource allocation.
This improved insight also has implications for Key Account Managers. The aggregated spend information can be analysed to provide a KAM with insight into spend at a local level, such as investment in training or continuous medical communication to a physician. With a complete picture of the investment by organisation, a KAM embarking upon negotiation for a new bid or new customer is in a far stronger position to demonstrate the value being provided by the pharmaceutical company. This is a powerful tool that, if used correctly, should have a direct, bottom line impact on business.
Transforming the image of the pharmaceutical industry will take time. But the commitment being demonstrated today is positive. And whilst organisations are obviously keen to avoid the negative publicity, fines and possible court cases associated with bribery and corruption there is no doubt that organisations are also looking to derive benefits from improved transparency.
With a real opportunity for an organisation to establish a good image to the healthcare market, the industry is increasingly considering transparency as a huge competitive advantage and benefit, rather than simply an expensive and resource intensive overhead. But, while the commitment is not in doubt, organisations are still struggling to actually deliver transparency, both from a technology and business model perspective. This is a multi-disciplinary project that is not just about exploiting technology but also about driving new behaviour change and imposing compliance as a change in ethical behaviour to the customer.
Critically, global compliance and transparency demands an automated and streamlined solution: not only are the costs of a manual or spreadsheet approach too high but without some kind of automation and built in alerts that reflects different country interpretations organisations will be exposed to a high risk of compliance breach.
Now is the time to work with other organisations in the field to develop best practice, to assess how best to leverage existing CRM and information resources and put in place procedures and practices that will mitigate both the risk and cost associated with global compliance.
Guillaume Roussel is Vice President of Compliance Solutions EMEA for Cegedim Relationship Management.