As engagements between life sciences companies and healthcare professionals (HCPs) become more frequent and complex, the financial ties associated with those engagements continue to create significant compliance risk for many life sciences organizations. While there are many benefits to increased HCP engagements, such as helping to design clinical trials, conducting continuing medical education, developing clinical practice guidelines, advising on marketing tactics and/or educating patients on the use of a company’s products, these engagements impose significant compliance risks for these companies, which is why they need to incorporate a purpose-built ‘system of controls’ within their company to mitigate this risk.
Recently, the Centers for Medicare & Medicaid Services (CMS) published their 2019 Open Payments data that revealed applicable manufacturers reported $10.03 billion in publishable payments, ownerships and investment interests to HCPs. That amount is approximately $680 million more than 2018 as many of our clients have noted when the data became available within MediSpend Insights last month. Although the 2020 amount will likely be less than 2019 due to the COVID-19 pandemic, it will likely increase in 2021 once restrictions are lifted.
The U.S. Department of Justice (DOJ) has also noticed that the number of engagements between life sciences companies and HCPs also continues to increase and therefore on June 1, 2020, the DOJ updated its guidance on the evaluation of corporate compliance programs, which included specific guidance on HCP engagements. As an example, the DOJ advised that a prosecutor should analyze whether the company has ensured that contract terms with third parties specifically describes the services to be performed, that the third party is actually performing the work and that its compensation is commensurate with the work being provided. The new DOJ guidance reinforces the need for a rigorous and well controlled HCP engagement and management process, and one that ensures that there is a legitimate business need for the engagement, and the engagement is with a qualified HCP and that the Fair Market Value (FMV) rate associated with the engagement type matches the contract.
With all this said, life sciences companies still continue to face many challenges with implementing a rigorous and well controlled HCP engagement and management system. The majority of life sciences companies are either using manual processes, a home-grown system created by integrating disparate systems together, and/or have hired an expensive consulting firm to build a custom solution that continues to be difficult to scale, manage and support. The problem with the above mentioned so-called “solutions” is the following:
- Home-grown solutions are rigid, and they lack the flexibility required to meet compliance and business needs
- The workflow in a home-grown system is not flexible and makes it difficult for end-users to review and approve requests
- Many home-grown or custom-built systems lead to duplicative effort and double entry of data because there are many constraints with the functionality
- Since home-grown systems lack the much-needed compliance controls, there is more room for error, which means an increase in compliance risk
- Home-grown systems are expensive to maintain
Life sciences companies are now realizing that there are mature and purpose-built solutions on the market that are more effective than their current system, which is why they are beginning to move towards these solutions. This is very similar to what the industry experienced in the early 2000’s when life sciences companies realized that they needed to move away from their home-grown custom-built electronic territory management system (ETMS) to an enterprise customer relationship management (CRM) solution.
The longer these companies continue with status quo, the more risk they face with continuing to enter into consulting agreements with HCPs. Just two years ago (2018), the DOJ recovered more than $28 million from False Claims cases. Almost 90% of those cases involved the healthcare and life sciences industry. Furthermore, at the Pharmaceutical Compliance Forum’s 20th Annual Pharmaceutical and Medical Device Compliance Congress in November 2019, Mary Riordan, General Attorney at the OIG, stated that 2019 had seen an “unusually large” number of settlements involving a variety of issues including “traditional kickbacks.” And, it continues in 2020 with recent news about Alexion and Novartis.
The time is now to incorporate an effective, purpose-built and unified solution for managing HCP engagements into your company that should:
- Create a centralized process for needs assessment/event justification review and approval that empowers the business to manage their HCP engagement risks
- Capture evidence of the HCP qualification and screening approval process
- Ensure approved compensation/FMV rates are applied consistently throughout the organization
- Provide a unified platform that easily integrates with your company’s contract management system
- Incorporate payment controls to avoid exceeding hours, rates and/or FMV limits
- Include aggregate spend and transparency reporting to avoid integrating two disparate systems together while ensuring you meet your global transparency reporting obligations accurately
- Provide a system to proactively monitor and audit HCP engagement data to detect potential compliance issues
- And, act as a repository for HCP engagement document retention
If you are interested in learning more about how the unified MediSpend Global Compliance Platform can help your company mitigate risk with global HCP engagements, call me at (215) 779-2415 or contact me via email at shouston@medispend.com.
Seth Houston
Chief Commercial Officer
August 6, 2020