managing sales & marketing compliance with technology the seventh annual pharmaceutical...

Managing Sales & Marketing Compliance With Technology

The Seventh Annual Pharmaceutical Regulatory and

Compliance Congress

November 9th 2006

Bill Van NostrandWilliam F. Hills

The MMS Sales and Marketing Compliance ConsortiumThe MMS Sales and Marketing Compliance Consortium

About the Consortium

The Consortium is a group of companies collectively specializing in Regulatory Compliance programs as they pertain to Federal (OIG) and State legislation targeted at the Pharmaceutical industry.

The Mission of the Consortium

To assist the biopharmaceutical companies in assessing and managing the legal business risks associated with biopharmaceutical sales and marketing activities

To assist companies in designing and implementing processes, procedures and technologies to reduce the business risks associated sales and marketing activities

MMS Leads the Sales & Marketing Compliance Consortium

Sales & Marketing Regulation Escalating Rapidly at National Level…

Sales & Marketing Regulation Escalating Rapidly at National Level…

Public, political and healthcare industry group scrutiny of pharma sales & marketing increasingly contentious

• Frequent articles in the media• American College of Physicians (Opt Out Program)

Industry Groups Responding to Public Pressure• PhRMA Guidelines (2002)• AMA Guidelines

Federal and State regulation governing/impacting all pharma sales & marketing activity increasing dramatically

• Sarbanes-Oxley• Prescription Drug Marketing Act• Medicare Part D• OIG 2003: Compliance Program Guidance for Pharmaceutical

Manufacturers• SEC False Claims Act• Whistle Blower Law (Qui Tam)• FDA (DDMAC)• Individual and independent state regulations (50 state 50

separate regulations)

Exposure for Pharma Companies IncreasingExposure for Pharma Companies Increasing

Phama companies spend more than $19 billion on sales & marketing promotional expenses annually

Number of sales reps in US topped 100,000 in 2006 – triple the number of reps 10 years ago

There’s nearly 1 pharma sales rep for every 7 practicing US physicians

Increasing use of outsourced sales resources diluting impacts of training and hampering control efforts

Unprecedented market pressures to increase sales increasing pressure to sell at all costs.

Whistle Blower Law increased number of people

looking for impropriety

source: eyeforpharma & InPharm

In excess of $6billion in fines

A new mandate for Pharma CompaniesA new mandate for Pharma Companies Given a climate of increasing and contentious

public scrutiny along with increasingly restrictive, aggressive and complex regulation leading companies must:

• Demonstrate good faith efforts to be fully and proactively compliant with all relevant and applicable legislation and regulation governing sales and marketing activities at all levels of the company.

• Work toward achieving a fully integrated sales and marketing compliance management capability (processes, procedures and systems) that adequately safe guards them and their stockholders from the aberrant behavior of a few individuals, groups or departments.

Sales & Marketing Compliance Management Maturity CurveSales & Marketing Compliance Management Maturity Curve

Proactive Management

Reactive Response

Passive Training &

Policy Response

Level 1• Fragmented organizational governance for sales & marketing risk mgt• Key Policies & mgt Procedures in Place• Limited Business Rules Defined• Primary mechanism of enforcement is training• Reactive investigation of reported problems

LEVEL OF RISK MITIGATION

Level 2• Department/function dedicated to

Sales & Mkt compliance management• Well defined set of business rules• Limited, largely manual monitoring of

key indicators• Certification of key compliance steps • Mix of reactive & proactive

investigation of suspected problems

Source: VantagePoint Research & Industry Survey

Level 3• Integrated, enterprise strategy for

managing sales and marketing compliance and risk

• Autonomous department/function responsible for compliance monitoring, forensic investigation and reporting

• Dynamic business rules development process that keeps pace with regulatory changes

• Ongoing/near real-time monitoring of multiple signal detection sources

• Established credibility with OIG, other regulatory authorities & insurance underwriter for proactive compliance mgt

• Dominantly proactive identification and investigation of suspected problems

Early Findings : Organizational & OperationalEarly Findings : Organizational & Operational


Reactive Response

Passive Training &

Policy Response

Source: VantagePoint Research & Industry Assessment

Enormous reluctance to discuss compliance strategies, operations or technology usage (CIA)

All companies have policies in place but few companies have well articulated and comprehensive strategy for holistic management of Sales & Marketing Compliance Risk

Most recent activity (beyond training) in response to some formal or informal regulatory finding or actions

Nearly all companies have a compliance officer at some level with responsibility for sales and marketing compliance

Most compliance activity buried in myriad of functional groups within Sales and Marketing and/or legal

Limited number of companies with dedicated sales and marketing compliance functions Most organizations heavily reliant to self policing & reporting by

sales and marketing organization


Early Findings: Technology ApplicationEarly Findings: Technology Application


Reactive Response

Passive Training &

Policy Response

Source: VantagePoint Research & Industry Assessment

Few well defined commercial technology solutions

There is little industry consensus on approach

Many companies have multiple, not necessarily well coordinated technology initiatives to address sales and marketing

compliance

Technology solutions dominated by custom built applications

A few companies and vendors have begun adapting other compliance tools for sales and marketing

Most organizations using a mix of “one-off,” point technology solutions heavily supplemented with manual intervention


Business Rules Management, Process Execution, Reporting,

Tracking and Certification

Signal Detection & Activity Monitoring

Forensic Investigation

Training & Training Support

Sales & Marketing Compliance Technology LandscapeSales & Marketing Compliance Technology Landscape





Eduneering

Midi

Zenosis



Mature solutions exist for training

Business Rules Development Process Execution, Reporting,






Keane SCORE

Polaris Mgt Partners (audit)

Dendrite/BuzzeoPorzio

Numerous emergent tools Exists


• Emergent Solutions on the ‘drawing boards’






• Custom built, narrowly focused warehouse-based technologies being deployed





• Few comprehensive solutions even on the ‘drawing board’

• Potential platforms include: Documentum, Opentext, SDMS…



Automation:Automation:

Based upon our research and assessment of industry and regulatory trends we believe a comprehensive signal detection and forensic investigation tool is critical to costly State and Federal Fines

Allows Pharma to gain visibility into daily risks for management

Allows Pharma to search and respond to agency questions in real time

Allows Pharma to take remedial action sooner rather then later

“Near Real-Time” Intelligence“Near Real-Time” Intelligence

Macro Measures, System(Aggregation Theme)

Macro Measures, System(Aggregation Theme)

Executive Dashboard

Executive Dashboard

ForensicInvestigation

ForensicInvestigation

Market Risks and Indicators

Market Risks and Indicators

Internal Signals of Risk

Internal Signals of Risk Text, Image, Voice Fax,

Oracle (and other databases), Word, SAS, PowerPoint, Call Center, Prescription data, backup images, documents (e.g., Documentum)

Up to date intelligence ( Arnold & Porter, Buzzeo)Up to date intelligence ( Arnold & Porter, Buzzeo)

RisksSignalsImportance

The only way to get ahead of the game is to receive near real-time intelligence on potential risks and indicators (signals) of those risks

Remediation SWAT Team

Remediation SWAT Team

Typical Typical Sales and MarketingSales and Marketing

Touch pointsTouch points

Typical Typical Sales and MarketingSales and Marketing

Touch pointsTouch points

Risk “Signal Detection” SystemRisk “Signal Detection” System

AcademiaGrantsStudies

AcademiaGrantsStudies

PharmacyContractingRebatesIn store promotions

PharmacyContractingRebatesIn store promotions

Medical AffairsPhase 4 trialsMedical Info Center

Medical AffairsPhase 4 trialsMedical Info Center

MarketingPromotional ProgramsDirect MailOff Label PromotionsOutbound Call CentersDTCInternet Portals

MarketingPromotional ProgramsDirect MailOff Label PromotionsOutbound Call CentersDTCInternet Portals

Medical Education3rd partyAcademicSymposia

Medical Education3rd partyAcademicSymposia

Special EventsDoctor DinnersConventionsKOL Portals

Special EventsDoctor DinnersConventionsKOL Portals

MedicarePart DRx CardState Programs

MedicarePart DRx CardState Programs

Field OperationsDoctor callsPromotionsCo-PromotionsSample ManagementeDetailingDirect sales to Physicians

Field OperationsDoctor callsPromotionsCo-PromotionsSample ManagementeDetailingDirect sales to Physicians

Compliance OfficeFederal (OIG)StateAMAPharmaceutical Manufacturers Assn.Post Marketing Surveillance

Compliance OfficeFederal (OIG)StateAMAPharmaceutical Manufacturers Assn.Post Marketing Surveillance

BUYING GROUPSPBMsInsuranceHospitals/retailersWholesalersGovernment contractsPhysicians-direct shipmentSpecialty Buying Groups

BUYING GROUPSPBMsInsuranceHospitals/retailersWholesalersGovernment contractsPhysicians-direct shipmentSpecialty Buying Groups

TrainingManagementField ForceCSOs

TrainingManagementField ForceCSOs

CertificationContracts

CertificationContracts

We believe it is possible to build a robust risk management“signal detection” system — Showing Best Effort Compliance

Typical Typical Sales & Sales &

MarketingMarketingTouch pointsTouch points

Typical Typical Sales & Sales &

MarketingMarketingTouch pointsTouch points

Risk “Signal Detection” SystemRisk “Signal Detection” System

Sig

nal

Det

ecti

on

En

gin

e

Federal & StateFederal & StateComplianceComplianceRegulationsRegulations

Federal & StateFederal & StateComplianceComplianceRegulationsRegulations

Out of Compliance

Out of Compliance

CautionCaution

InCompliance

InCompliance

Signal SourcesSignal SourcesINTERNAL• E-mails & Faxes• Voice mails• Print jobs (Promotional materials in the field)• Trend reports (sales)• Adverse event monitoring• Fiduciary systems (e.g., sample mgmt)• Compliance systems• Call systems• SFA call notes• Speakers Programs Dinner/lunch and

learn meetings - contracts, expenses• CME-speakers contracts• Pharmacy, Wholesaler, GPOs, PBMs, Formulary and

Hospital programs• T&E Financial Systems• MSL - Academic Sales Representative

Notes and Programs (studies)• Training - Senior Mgmt & Field Sales Force• Representative Contracts (CSOs)

EXTERNAL• Market share• Physician/pharmacist surveys• Independent assessments• Focus groups• Databases (IMS, NDC, Verispan,

Dendrite)• Independent calls through

call centers• 800# to report fraud• Government-Federal (OIG) and

State• U.S. Attorney’s office

Signals can come from internal and external sources

Guidelines for Moving ForwardGuidelines for Moving Forward

Forget ROI think Risk/compliance spend

Move from a fixing the dike mentality to a comprehensive strategy for compliance monitoring and investigation

Design holistic, integrated system architecture designed to support all layers compliance technology support

Purchase external State Regulatory updates

Take a proactive Forensic approach

Our vision….Our vision….

Architectural Map

Thank You!!Bill Van Nostrand

President/CEOMedical Marketing Solutions

[email protected]

William F. HillsPartner

VantagePoint Consulting Group908-788-7350

[email protected]

mailto:[email protected]

DELETED SLIDES PLACED AFTER THISDELETED SLIDES PLACED AFTER THIS

Sales and Marketing Compliance Challenges:…….Fraud and AbuseSales and Marketing Compliance Challenges:…….Fraud and Abuse

Training

Anti-Kick legislation

Off-Label Promotion

Channel Management

Physician Spending

Training: (Key is Certification)Training: (Key is Certification) Types of training:

• Traditional:– Face to face– Text – Paper Tests

• Web Based:

– Content Driven– LMS backend– On-line testing– Some Certification

• Simulation:– Yellow Brick Road– Choices and Options– Review and Correct– Certification

Anti-Kickback Legislation:Anti-Kickback Legislation: Buying/influencing the business:

• Wholesellers:– Charge Back/Rebate programs

• Retailers:– Chain and independent promotional programs

Robinson Patman Act (Price and Service discrimination)• Hospitals:

– Clinical studies and education grants• Third Party Formulary Plans:

– Paid Outcome studies• Physicians:

– Paying for Nurse/staff symposia attendance• Medicare Part D:

– Paying for programs reimbursed by Medicare in States that prohibit such

Channel Management:Channel Management:

Distribution to Wholeseller:

• All products/distribution sites/quantities by NDC code

Ability to track the distribution flow to and from the retail stores:

• Downstream tracking, line item invoice, B2B

Ability to track the distribution to and from direct sale to Physician practices/hospital chains and mail order distributors:

• Now can see Charge Backs because of reports vs. 1-2% stuffing fees

Physician Spending: ($100 per Physician/month/year/rep?)Physician Spending: ($100 per Physician/month/year/rep?)

Office and staff gifts…..food:• Example: Dunkin donuts/coffee/pizza

KOLs…..fee equals level of effort:• Example: $25,000 for 1 speaking engagement

One on One dinners:• Example: Le Cirque for 2 but expense it as 5 people

Lunch and Learn:• Example: Reps providing lunches to residents

Group KOL dinner meetings:• Example: Exaggerate the number of people in attendance vs.

cost of dinners State Reporting:

• Example: 50 sets of expense reports…………….????????

Off-Label Promotion:Off-Label Promotion: New Studies:

• Unapproved indications being discussed….not through medical director

KOL speakers:

• Speaking on unapproved indications under the guise of medical education

MSL influence:

• Allowing one-off studies of unapproved indications with large grants to influence academic centers or KOLs

Specialty Drugs (Cancer/HIV):

• Under the guise of cocktail mixes and critical use

Pharma Response to Sales & Marketing Compliance Management is Emergent Pharma Response to Sales & Marketing Compliance Management is Emergent

Corporate Compliance focused on Sales & Marketing in transition

• Most compliance activity buried in myriad of functional groups within Sales and Marketing and/or Legal

• Limited number of companies with dedicated sales and marketing compliance functions

• Most embedded in corporate legal departments

Rapidly evolving regulatory environment a continual challenge• Costs of keeping up for a small firm > 2.5 percent of its annual budget (source:

Mass Chamber of Commerce Study on Biotech and Life Sciences Companies)• Staff sizes are growing rapidly

Technology Solutions are predominately inadequate or incomplete

• Training Centric• Heavy reliance on self reporting at the departmental level• Manual monitoring and investigation practices• Limited number of emerging point technical solutions

Industry Survey Underw

ay

Early FindingsEarly Findings


Reactive Response

Passive Training &

Policy Response

LEVEL OF RISK MITIGATIONSource: VantagePoint Research & Industry Assessment

Compliance Spend EffectivenessCompliance Spend Effectiveness

Approach - 3 Month Compliance Spend Review

Compliance Compliance Risks/SignalsRisks/SignalsCurrent andCurrent and

PotentialPotential

Compliance Compliance Risks/SignalsRisks/SignalsCurrent andCurrent and

PotentialPotential

Financial ReviewFinancial Review

Compliance AuditCompliance AuditRisk per Risk per

Compliance $ Compliance $ SpendSpend

Risk per Risk per Compliance $ Compliance $

SpendSpend

Systems and Infrastructure

Systems and Infrastructure

Together, the compliance spend analysis and the compliance effectiveness audit provide a scorecard of compliance spend effectiveness — the basis for moving forward

managing sales & marketing compliance with technology the seventh annual pharmaceutical...

Documents

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mms sales

biopharmaceutical sales

integrated sales

pharma sales rep

number of sales reps

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pharma companies