The Seventh Annual
Pharmaceutical Regulatory and
Compliance Congress
November 9 th 2006
Bill Van Nostrand
William F. Hills

The MMS Sales and Marketing Compliance
Consortium
MMS Leads the Sales & 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

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)


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
In excess of $6billion in fines source: eyeforpharma & InPharm


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 Curve
Proactive
Management
Reactive
Response
Passive
Training &
Policy
Response
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
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
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
Source: VantagePoint Research & Industry
Survey

Proactive
Management
Reactive
Response
Passive
Training &
Policy
Response

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

Limited number of companies with dedicated sales and marketing compliance functions

Most organizations heavily reliant to self policing & reporting by sales and marketing organization

Most compliance activity buried in myriad of functional groups within Sales and Marketing and/or legal
LEVEL OF RISK MITIGATION
Source: VantagePoint Research & Industry
Assessment

Proactive
Management

There is little industry consensus on approach
 Few well defined commercial technology solutions
 Most organizations using a mix of “one-off,” point technology solutions heavily supplemented with manual intervention
 Technology solutions dominated by custom built applications
Reactive
Response
Passive
Training &
Policy
Response

Many companies have multiple, not necessarily well coordinated technology initiatives to address sales and marketing compliance

A few companies and vendors have begun adapting other compliance tools for sales and marketing
LEVEL OF RISK MITIGATION
Source: VantagePoint Research & Industry
Assessment

Forensic
Investigation
Signal Detection & Activity
Monitoring
Business Rules Management,
Process Execution, Reporting,
Tracking and Certification
Training & Training Support

Mature solutions exist for training
Forensic
Investigation
Signal Detection & Activity
Monitoring
Business Rules Management,
Process Execution, Reporting,
Tracking and Certification
Training & Training Support

Numerous emergent tools Exists
Forensic
Investigation
Signal Detection & Activity
Monitoring
Business Rules Development
Process Execution, Reporting,
Tracking and Certification
Training & Training Support
Keane SCORE
Polaris Mgt Partners (audit)
Dendrite/Buzzeo
Porzio

Forensic
Investigation
Signal Detection & Activity
Monitoring
Business Rules Management,
Process Execution, Reporting,
Tracking and Certification
Training & Training Support
• Emergent Solutions on the ‘drawing boards’
• Custom built, narrowly focused warehouse-based technologies being deployed

Forensic
Investigation
Signal Detection & Activity
Monitoring
Business Rules Management,
Process Execution, Reporting,
Tracking and Certification
Training & Training Support
• Few comprehensive solutions even on the ‘drawing board’
• Potential platforms include:
Documentum, Opentext, SDMS…


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

Up to date intelligence ( Arnold & Porter, Buzzeo)
Market Risks and Indicators
Internal Signals of Risk
Risks
Signals
Importance
Macro Measures, System
(Aggregation Theme)
Text, Image, Voice Fax,
Oracle (and other databases),
Word, SAS, PowerPoint, Call
Center, Prescription data, backup images, documents
(e.g., Documentum)
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
Executive
Dashboard
Forensic
Investigation
Remediation
SWAT Team

We believe it is possible to build a robust risk management
“signal detection” system — Showing Best Effort Compliance
Field Operations
Doctor calls
Promotions
Co-Promotions
Sample Management eDetailing
Direct sales to Physicians
Special Events
Doctor Dinners
Conventions
KOL Portals
Medical Education
3rd party
Academic
Symposia
Medical Affairs
Phase 4 trials
Medical Info Center
Academia
Grants
Studies
Training
Management
Field Force
CSOs
Certification
Contracts
Pharmacy
Contracting
Rebates
In store promotions
Medicare
Part D
Rx Card
State Programs
Marketing
Promotional Programs
Direct Mail
Off Label Promotions
Outbound Call Centers
DTC
Internet Portals
Compliance Office
Federal (OIG)
State
AMA
Pharmaceutical
Manufacturers Assn.
Post Marketing
Surveillance
BUYING GROUPS
PBMs
Insurance
Hospitals/retailers
Wholesalers
Government contracts
Physicians-direct shipment
Specialty Buying Groups

Typical
Sales &
Marketing
Touch points
Federal & State
Compliance
Regulations
Out of
Compliance
Caution
In
Compliance

INTERNAL
• 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


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


Architectural Map

Bill Van Nostrand
President/CEO
Medical Marketing Solutions
908-229-5220 bvannostrand@medmarksolutions.com
William F. Hills
Partner
VantagePoint Consulting Group
908-788-7350 wfhills@vantageptconsult.com

Sales and Marketing Compliance Challenges:
…….Fraud and Abuse

Training

Anti-Kick legislation

Off-Label Promotion

Channel Management

Physician Spending


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


Buying/influencing the business:
• Wholesellers:
•
•
•
•
•
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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


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?)
 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…………….????????


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

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

Proactive
Management
Reactive
Response
Passive
Training &
Policy
Response
Source: VantagePoint Research & Industry
Assessment
LEVEL OF RISK MITIGATION

Approach - 3 Month Compliance Spend Review
Financial Review
Compliance
Risks/Signals
Current and
Potential
Compliance Audit
Systems and
Infrastructure
Risk per
Compliance $
Spend
Together, the compliance spend analysis and the compliance effectiveness audit provide a scorecard of compliance spend effectiveness
— the basis for moving forward