Authorized Generics: A New Challenge - By Clarissa Crain, CIS Compliance Specialist

I hope everyone had a great 4th of July holiday!

This post is a re-print of an article written by CIS Compliance Specialist Clarissa Crain for the Pharma Compliance Exchange (www.cis-pcx.com) Newsletter. I happened to like it enough to expose it to a much larger audience. - Steve.

"Politics, war, and now Government Programs make for strange bedfellows. It seems that with time the GP area is becoming more and more illustrious in its relations with Commercial Operations. While data reliance has always existed, in recent years the reliance and the stakes have increased significantly.

In the first article of this series we addressed some of the more traditional and ‘mundane’ relationships that exist with Commercial Operations. Sales, returns, and credits/debits have always been a necessary provision, yet many manufacturers still lack sufficient controls to ensure that data is accurate and complete. Anomalies in distribution pose the biggest struggle, and thus pose the biggest risk.

The second article of the series followed suit with the first and addressed the traditional Class of Trade (COT) designation dependency. While COT designation by Customer Service Representatives and Chargeback Processors has long been in place, this is an area that many companies struggle with. The individuals responsible for assigning COT are often not properly trained to understand the importance of COT designation or the impact that the designations have on government pricing.

While both areas pose unique relationship requirements more recent developments like Inventory Management Agreements (IMAs) and Authorized Generics take the relationship to new levels. With IMAs Government Programs staff should be involved in ensuring that agreements are drawn up in such a way that they support the new definition of “bona fide fee for service.” While most manufacturers have successfully made the necessary adjustments to agreements to reflect true fee for service (FFS) relations, it is important the Government Programs Staff remain involved in future revisions or addendums to agreements. More recently “upstream” data provided to manufacturers as part of FFS agreements have become an area of interest for GP teams. Auditors now look for GP groups to be using this data, when available, to validate transactions affecting GP calculations. This is seen most clearly in the new level of due diligence being seen around the assessment of chargeback information.

Finally, and most timely, are the new complexities of authorized generics. With the Deficit Reduction Act of 2005 (DRA), the definitions of AMP and BP were revised to include authorized generics. With this revision a whole new world of relations has opened. Branded manufacturers are now stepping into uncharted waters as they attempt to piece together the necessary information to complete mandatory calculations. Lack of knowledge and ability to personally certify data integrity, branded manufacturers are working to determine the best way to ensure the accuracy of data they receive from authorized generic partners. As branded manufacturers feel their way through options, and authorized generic manufacturers get taken along for the ride, many across the industry are struggling with this issue today.

While authorized generics remain on the front of the mind when thoughts take you to the relationship between GP and Commercial Operations, do not forget the other areas in which the two departments cross. Much as in personal life, whether working across departments, or across companies, a relationship built on understanding and openness will be most successful. Fostering a strong relationship between GP and Commercial Operations will yield a greater ability to achieve ‘total’ compliance."