Clarissa Crain, CIS Compliance and GP Specialist
clarissacrain@cis-partners.com
Appropriate Class of Trade (COT) designation has long been a challenging aspect of statutory pricing compliance. COT designation is one of the key variables in determining the inclusion and/or exclusion of transactions for the purposes of government pricing. In the March 30, 2007 PCX Newsletter article, Class of Trade Methodology: Education and Adherence on the "Front Lines," we looked at the challenges of providing appropriate training to parties responsible for the designation of COT. In many cases COT designations are being made by Customer Service Representatives and/or Chargeback Administrators. These individuals often do not have exposure to Government Pricing or an understanding of the importance of COT designation from a compliance perspective. While appropriate compliance training is key to ensuring appropriate designation, it is equally important for GP staff to understand why COT designation is a challenge and how to develop an appropriate COT assignation methodology.
Dependent on the nature of your products and your distribution model, assignation of a customer’s COT can be very challenging. Customers from a variety of different market segments will do business with your company, and your company must ensure that it is categorizing these customers appropriately. Some COTs are easier to discern than others. For example, wholesalers can be verified against listings maintained by HDMA, IFPW or other industry groups. On the contrary, distinguishing COT for entities such as inpatient and/or outpatient hospital pharmacies can be nearly impossible.
One of the most common assignation methodologies, which yields COT issues, is the use of the Customer Name in determining COT. For example, a manufacturer may have ‘St. Joseph’s Pharmacy’ entered in the customer field. Knowing nothing more about the customer, the individual assigning the COT automatically assumes that St. Joseph’s is a Pharmacy. Further, the individual assumes based on the name that it is not a Chain Pharmacy and therefore assigns St. Joseph’s Pharmacy to the Independent Pharmacy COT. Unfortunately, the name in this case (and countless others) does not paint the full picture. Further research shows that St. Joseph’s Pharmacy is actually an inpatient hospital pharmacy, meaning therefore that transactions associated with St. Joseph’s are Non-Retail as opposed to Retail.
In order to try to avoid these situations, some manufacturers utilize HIN and DEA numbers to aid in their COT determination; however it is important to note that neither the HIN nor DEA designation is based on compliance with statutory pricing guidance. If we again use St. Joseph’s Pharmacy as an example, we enter its DEA number into our DEA database and learn that the DEA has assigned St. Joseph’s with a Business Activity Code (BAC) of ‘A,’ which is representative of a Pharmacy. However, the DEA’s BAC categorization of Pharmacy does not necessarily make it a retail pharmacy. Therefore, the BAC code does little to help with assignation in this example. A similar finding could occur with the HIN number. While HIBCC, the organization which administers the HIN number, has more granular segments, they again may not represent a solid methodology for determining COT if used alone. Therefore, manufacturers must not rely solely on the designation of either organization.
Another common way of assigning COT is to utilize the COT provided in GPO lists. As customers from the GPO lists are entered into the system, the COT assigned to them by the GPO is often assumed to be correct and therefore assigned. Unfortunately, this assignation methodology has its flaws. For one, each GPO has its own COTs, and therefore a manufacturer must understand the various COT designations utilized by the various GPO organizations. Secondly, many GPOs may utilize the same COT naming convention, but the definitions could be vastly different, and therefore they would need to be fully understood by the manufacturer to ensure proper designation. Further, some GPOs are known to change their COT designation for a given customer from one reporting period to another, and therefore manufacturers need to verify their assignation every period.
While this article highlights only a few of the most common issues with assigning COT, the general sentiment across the industry is that accurate and appropriate COT assignment is a difficult task. The CMS Final Rule for Medicaid has redirected a great deal of interest to this topic. Many manufacturers are looking to update their COTs reflective of the additional definition provided by CMS and finding that they may have larger COT issues at hand. In the end, whether a company decides to clean its COT itself or involve a third party firm, the need to have COT appropriately assigned can not be disputed. Developing a COT assignation methodology that blends multiple sources of information will help ensure that a company reasonably assigns the most appropriate COT to a given customer.
Friday, November 30, 2007
Wednesday, November 28, 2007
Methodology Changes or Data Related Restatements After October
What if you have methodology changes after November?
By Chris Cobourn, CIS VP of Regulatory with support from Chrissy Spicer and Joe Birdsall, CIS GP Compliance Specialists
As we talk about "restatements" post Final Rule, keep in mind that we are
speaking 2 two different topics, a restatement based upon "errors," such
missing or incorrect data, and restatements or recalculations based upon
identified issues or errors in Methodology. In this blog entry, I try to
offer some thoughts on both, and to clarify the potential differences moving
forward.
CMS has made it clear that they expect manufacturers to have their Final
Rule methodology correct for the October calculations, and to report on
time, yet as recent as IIR in September is was clear that there were
numerous open Methodology questions that seemed too broad still to make
general assumptions. When asked what a manufacturer should do if there were
not answers to all of these methodology issues, CMS restated that
manufacturers are expected to get it right and on time.
Practically speaking, we will be left with the fact that we will have to do
the best we can, including making some methodology assumptions that may need
to be updated as we move forward, or to put procedures and systems in place
to get data at the right level of detail. So where does it leave us if,
lets say, we make some corrections to methodology, systems, data in January?
It would appear that the manufacturer should, under section 447.510 of the
Final Rule, section b, report revised quarterly AMPs, except when the
revision would be as a result of data pertaining to lagged concession data
(as in my opening paragraph, corrections based on data errors).
Release 78 adds another element, stating that:
a manufacturer with a new recalculation request regarding AMP and/or best
price (submitted to CMS after the date of this release) may proceed with
implementing the revised pricing methodology on a prospective basis without
further review by CMS. We continue to request that manufacturers notify CMS
and receive authorization in advance of any retroactive change in the method
used to calculate their AMP and/or best price, along with revised AMP
and/or best price data for the drugs affected, the relevant 11-digit NDC
numbers, the fiscal magnitude of the change, and a statement as to the
reason for the change in methodology.
Those elements together would suggest that a manufacturer should:
1) Proceed with the October calculations with the best methodology
assumptions and data you can, and document everything well so that you have
good support for your certifications
2) If you identify later that there are methodology corrections that you
have to make, you can (according to release 78) begin using the new
methodology on a prospective basis, but that you would have to notify CMS
and receive authorization before making any retroactive changes and
conducting any recalculations.
3) If moving forward you identify errors in your AMP calculation, where the
errors are not related solely to lagged price concessions, you are required
to resubmit monthly and quarterly AMPs (see 447.510(b), and comments on page
39210)
By Chris Cobourn, CIS VP of Regulatory with support from Chrissy Spicer and Joe Birdsall, CIS GP Compliance Specialists
As we talk about "restatements" post Final Rule, keep in mind that we are
speaking 2 two different topics, a restatement based upon "errors," such
missing or incorrect data, and restatements or recalculations based upon
identified issues or errors in Methodology. In this blog entry, I try to
offer some thoughts on both, and to clarify the potential differences moving
forward.
CMS has made it clear that they expect manufacturers to have their Final
Rule methodology correct for the October calculations, and to report on
time, yet as recent as IIR in September is was clear that there were
numerous open Methodology questions that seemed too broad still to make
general assumptions. When asked what a manufacturer should do if there were
not answers to all of these methodology issues, CMS restated that
manufacturers are expected to get it right and on time.
Practically speaking, we will be left with the fact that we will have to do
the best we can, including making some methodology assumptions that may need
to be updated as we move forward, or to put procedures and systems in place
to get data at the right level of detail. So where does it leave us if,
lets say, we make some corrections to methodology, systems, data in January?
It would appear that the manufacturer should, under section 447.510 of the
Final Rule, section b, report revised quarterly AMPs, except when the
revision would be as a result of data pertaining to lagged concession data
(as in my opening paragraph, corrections based on data errors).
Release 78 adds another element, stating that:
a manufacturer with a new recalculation request regarding AMP and/or best
price (submitted to CMS after the date of this release) may proceed with
implementing the revised pricing methodology on a prospective basis without
further review by CMS. We continue to request that manufacturers notify CMS
and receive authorization in advance of any retroactive change in the method
used to calculate their AMP and/or best price, along with revised AMP
and/or best price data for the drugs affected, the relevant 11-digit NDC
numbers, the fiscal magnitude of the change, and a statement as to the
reason for the change in methodology.
Those elements together would suggest that a manufacturer should:
1) Proceed with the October calculations with the best methodology
assumptions and data you can, and document everything well so that you have
good support for your certifications
2) If you identify later that there are methodology corrections that you
have to make, you can (according to release 78) begin using the new
methodology on a prospective basis, but that you would have to notify CMS
and receive authorization before making any retroactive changes and
conducting any recalculations.
3) If moving forward you identify errors in your AMP calculation, where the
errors are not related solely to lagged price concessions, you are required
to resubmit monthly and quarterly AMPs (see 447.510(b), and comments on page
39210)
The Ten Commandments of Sample Accountability: Commandment #7
This is the 7th installment of the "Ten Commandments of Sample Accountability". For the next 4 Wednesdays, we will go through each of the commandments. I encourage all of you who deal in any area of compliance to check back each week as the 'compliance principles' behind Sample Accountability are very similar to those in other areas. Also, you can be sure that, much like GP is such a hot button right now, Sample Accountability is not that far behind...
By Judy Fox
Commandment #7 – Thou Shalt Have Vendor Contacts
The PDMA states, “Any manufacturer or authorized distributor of record that uses a fulfillment house, shipping or mailing service or other third party…to meet any of the requirements of the PDMA…remains responsible for creating and maintaining all requests, receipts, forms, reports, and records required under PDMA…”
If a manufacturer or authorized distributor uses a third party vendor to maintain their records, the manufacturer remains responsible for the records. Therefore, a clear communication channel must be established from the start of the relationship and continue so that a good vendor can provide the best service to the pharmaceutical company and an inadequate vendor can be monitored and/or replaced.
Vendor Relations are often best when a pharmaceutical company provides a detailed set of expectations and establishes business rules for how the sampling program will be handled by the vendor. The vendor can only do their part if there is an established liaison within the pharmaceutical company that the vendor can report any non-compliance or sampling issues.
Often, a vendor’s hands are tied by the fact that there is information that the pharmaceutical company should have, but there is not a specific person or team to receive reports. As a result, non-compliance issues accumulate and corrective action is not taken in a timely manner. Vendors often will try to communicate issues directly to the offenders, but without a corporate person involved in the matter, the communication is not taken as seriously.
Vendor communications with field sales representatives and managers must also be clearly detailed in the business agreement with the pharmaceutical company. Often, the pharmaceutical company relies on the vendor to communicate practitioner validation, documentation errors and reconciliation issues directly to the employees. On an issue such as practitioner validation, the procedure must be clearly defined with the vendor as well as the pharmaceutical employees fully trained so that only validated practitioners are sampled. This is only one example where a clear channel of communication is vital to keeping compliance risks at a minimum.
Certain aspects of a sampling program should not be handled by a vendor and those items should be a part of the pharmaceutical company’s responsibilities. Some of the aspects that are best managed by the pharmaceutical company are:
• SOP and document control, including updates and changes
• Determining Significant Loss and Corporate Warning Thresholds
• Corrective and Disciplinary Actions
• FDA Reporting
Assessments, inspections and audits of vendors are required and serve as an excellent way to monitor the efficiency and adequacy of a sampling program. An assessment, inspection or audit of a vendor will include observations of the adherence to the particular pharmaceutical company’s requirements. The business rules, SOPs, written policies and documents are all reviewed and any document handling procedures and protection, mitigation procedures and data processing are all observed. The goal of any assessment, inspection or audit is to ensure that the pharmaceutical company’s compliance requirements and interests are protected at all times.
A vendor assessment, inspection and/or audit plan or schedule should be a part of any sample accountability program. It should include a list of vendors, the audit schedule and the date that any issues were presented to the vendor as well as the date the issue was closed or resolved.
By Judy Fox
Commandment #7 – Thou Shalt Have Vendor Contacts
The PDMA states, “Any manufacturer or authorized distributor of record that uses a fulfillment house, shipping or mailing service or other third party…to meet any of the requirements of the PDMA…remains responsible for creating and maintaining all requests, receipts, forms, reports, and records required under PDMA…”
If a manufacturer or authorized distributor uses a third party vendor to maintain their records, the manufacturer remains responsible for the records. Therefore, a clear communication channel must be established from the start of the relationship and continue so that a good vendor can provide the best service to the pharmaceutical company and an inadequate vendor can be monitored and/or replaced.
Vendor Relations are often best when a pharmaceutical company provides a detailed set of expectations and establishes business rules for how the sampling program will be handled by the vendor. The vendor can only do their part if there is an established liaison within the pharmaceutical company that the vendor can report any non-compliance or sampling issues.
Often, a vendor’s hands are tied by the fact that there is information that the pharmaceutical company should have, but there is not a specific person or team to receive reports. As a result, non-compliance issues accumulate and corrective action is not taken in a timely manner. Vendors often will try to communicate issues directly to the offenders, but without a corporate person involved in the matter, the communication is not taken as seriously.
Vendor communications with field sales representatives and managers must also be clearly detailed in the business agreement with the pharmaceutical company. Often, the pharmaceutical company relies on the vendor to communicate practitioner validation, documentation errors and reconciliation issues directly to the employees. On an issue such as practitioner validation, the procedure must be clearly defined with the vendor as well as the pharmaceutical employees fully trained so that only validated practitioners are sampled. This is only one example where a clear channel of communication is vital to keeping compliance risks at a minimum.
Certain aspects of a sampling program should not be handled by a vendor and those items should be a part of the pharmaceutical company’s responsibilities. Some of the aspects that are best managed by the pharmaceutical company are:
• SOP and document control, including updates and changes
• Determining Significant Loss and Corporate Warning Thresholds
• Corrective and Disciplinary Actions
• FDA Reporting
Assessments, inspections and audits of vendors are required and serve as an excellent way to monitor the efficiency and adequacy of a sampling program. An assessment, inspection or audit of a vendor will include observations of the adherence to the particular pharmaceutical company’s requirements. The business rules, SOPs, written policies and documents are all reviewed and any document handling procedures and protection, mitigation procedures and data processing are all observed. The goal of any assessment, inspection or audit is to ensure that the pharmaceutical company’s compliance requirements and interests are protected at all times.
A vendor assessment, inspection and/or audit plan or schedule should be a part of any sample accountability program. It should include a list of vendors, the audit schedule and the date that any issues were presented to the vendor as well as the date the issue was closed or resolved.
Tuesday, November 27, 2007
The Final Rule & SPAPs
A GP Community Member writes:
"Here's a question that may be worth a blog topic because the impact to Manufacturer's could be high. The DRA Final Rule pretty specifically states that sales to qualified SPAPs are excludable from BP, while sales to non-qualified SPAPs are includable in BP (which would decrease BP). One question is this: who is responsible for maintaining a list of qual/non-qual SPAPs - I would assume the manufacturer, but what about in the case of First Health or Provider Synergies who administer multi-state programs? I've gone back through our contracts, but at the time they were written, we did not specifically state these factors. So, if it is indeed true that we are to include non-qual SPAP sales in BP, we increase our liability. This could lead to cancellation of some SPAP contracts by a large number of manufacturers. And a lot of work re-writing and re-signing contracts to include the qual/non-qual clause!
Are you aware of any responses or FAQs from CMS on this specific topic? I wonder how other manufacturers are handling this..."
CIS's VP of Regulatory, Chris Cobourn Responds:
Historically (pre-MMA and Part D Plans), CMS published guidance on what would constitute a qualified SPAP program (meaning exempt from BP). An SPAP was not a CMS administered program, so they did not see it as their responsibility to review and approve programs, so their guidance was related to bullets of what constituted an exempt program. It was the due diligence of the manufacturer to review the programs to determine if it met the criteria. A state saying that a program was exempt was not sufficient. Manufacturers were supposed to have some documentation of their review.
- Release 29 establishes that SPAP’s are exempt from BP
- Release 57 and 59 were designed to provide guidelines for programs in order to be CMS approved and exempt from AMP/BP
- Release 57 was meant to provide clarification on existing criteria
- Release 59 meant to establish new criteria as of June 03
- Release 68 (April 05) revises the criteria to account for MMA of 2003
(note: not to be confused with State Medicaid Supplemental Programs, which must be approved by CMS)
When the Part D plans for the elderly came out, they overlapped with the State SPAP’s that were designed for the elderly. The elderly SPAPs were changed to provide “wrap around” benefits with the SPAPs. CMS began reviewing these plans to see if they met criteria under this definition and does provide a list of these.
http://www.cms.hhs.gov/MedicaidDrugRebateProgram/Downloads/SPAPBestPriceList.pdf
"Here's a question that may be worth a blog topic because the impact to Manufacturer's could be high. The DRA Final Rule pretty specifically states that sales to qualified SPAPs are excludable from BP, while sales to non-qualified SPAPs are includable in BP (which would decrease BP). One question is this: who is responsible for maintaining a list of qual/non-qual SPAPs - I would assume the manufacturer, but what about in the case of First Health or Provider Synergies who administer multi-state programs? I've gone back through our contracts, but at the time they were written, we did not specifically state these factors. So, if it is indeed true that we are to include non-qual SPAP sales in BP, we increase our liability. This could lead to cancellation of some SPAP contracts by a large number of manufacturers. And a lot of work re-writing and re-signing contracts to include the qual/non-qual clause!
Are you aware of any responses or FAQs from CMS on this specific topic? I wonder how other manufacturers are handling this..."
CIS's VP of Regulatory, Chris Cobourn Responds:
Historically (pre-MMA and Part D Plans), CMS published guidance on what would constitute a qualified SPAP program (meaning exempt from BP). An SPAP was not a CMS administered program, so they did not see it as their responsibility to review and approve programs, so their guidance was related to bullets of what constituted an exempt program. It was the due diligence of the manufacturer to review the programs to determine if it met the criteria. A state saying that a program was exempt was not sufficient. Manufacturers were supposed to have some documentation of their review.
- Release 29 establishes that SPAP’s are exempt from BP
- Release 57 and 59 were designed to provide guidelines for programs in order to be CMS approved and exempt from AMP/BP
- Release 57 was meant to provide clarification on existing criteria
- Release 59 meant to establish new criteria as of June 03
- Release 68 (April 05) revises the criteria to account for MMA of 2003
(note: not to be confused with State Medicaid Supplemental Programs, which must be approved by CMS)
When the Part D plans for the elderly came out, they overlapped with the State SPAP’s that were designed for the elderly. The elderly SPAPs were changed to provide “wrap around” benefits with the SPAPs. CMS began reviewing these plans to see if they met criteria under this definition and does provide a list of these.
http://www.cms.hhs.gov/MedicaidDrugRebateProgram/Downloads/SPAPBestPriceList.pdf
Sunday, November 25, 2007
The Compliance Continuum Part 3 of 3: “The Road to Compliance.”
Due to the low traffic last Wednesday (a lot of vacationers for the Thanksgiving holiday), I wanted to re-post for those who may have missed it. Have a great week!
By Steven Moore, CIS Marketing Director & Compliance Specialist
At Compliance Implementation Services (CIS) we work with Pharmaceutical companies of all shapes and sizes. In Part 1 (11/8) I discussed ‘Small Pharma’ and the common stigma that any spend against compliance is not fiscally necessary or appropriate. I attempted to disassemble this notion and stress the importance of compliance for companies of all sizes and highlight the distinct advantage that Small Pharma has in the early stages of compliance program development. In Part 2 (11/15) I discussed companies with Corporate Integrity Agreements (CIA) and how their compliance departments need to both ‘speak loudly’ and ‘carry a big stick’.
This week, we are going to focus on the middle of the continuum. This would include companies who are seeking to establish a compliance program that will follow all written statues, guidance and regulations. They are companies that are committed to protecting the growth of their company by instilling and building a culture of compliance with their organization.
The first step on the road to compliance is building alignment. When starting to think about a Compliance program, there are important steps that need to be addressed. The first thing necessary is to look at the business by analyzing those risks that are specific to the industry in which your business plays in. Once these are identified, alignment is sought through building awareness of these risks.
We look at alignment as the collective, ‘top down’ understanding & interpretation of risks that results in a subsequent strategic action plan communicated to all employees. In short, it is the point at which agreement and cooperation to achieve a common cause among all teams involved is achieved. One of the key phrases worth emphasizing is ‘top down’. Compliance needs to start at the highest levels of the organization and filter down and throughout all employees and departments. This is critical to any successful compliance program.
Once alignment is achieved, it is time to form a Compliance Strategy based on the aforementioned defined risks. This strategy should be built out over time and should be both ‘practical’ and ‘meaningful’. The many elements of a Compliance Strategy include, but are not limited to, the following. Keep in mind that while you may have some of these in place, each is critical in its own way to a strong compliance program:
Appointment of a Corporate Compliance Officer (CCO)
A Corporate Compliance Charter
A Corporate Code of Conduct
The formation of a Corporate Compliance Committee (CCOM)
The drafting and implementation of Corporate Compliance Policies (CCPs)
The drafting and implementation of Operational Policies and Procedures
Document and Record Management
Monitoring
Auditing
Training
Again, you can not merely wave a magic wand and have a compliance program in place. This is not feasible and, thankfully, the OIG understands this. What they are looking for is the establishment of a program that will mitigate, identify and address compliance breaches. They understand that issues will occur, but the swift and timely communication of any issues is their clear evidence of a fully functional compliance program.
The “Road to Compliance” will not always be 100% paved. There will be snags and issues along the way. However, the companies that stick with it over time will protect their company’s growth and have a pride-filled culture that fosters moral and ethical behavior for new and existing employees.
Our world needs more of this.
I wish you and yours the most wonderful Thanksgiving! Please pass the mashed potatoes!!!
For Your Space,
Steven.
By Steven Moore, CIS Marketing Director & Compliance Specialist
At Compliance Implementation Services (CIS) we work with Pharmaceutical companies of all shapes and sizes. In Part 1 (11/8) I discussed ‘Small Pharma’ and the common stigma that any spend against compliance is not fiscally necessary or appropriate. I attempted to disassemble this notion and stress the importance of compliance for companies of all sizes and highlight the distinct advantage that Small Pharma has in the early stages of compliance program development. In Part 2 (11/15) I discussed companies with Corporate Integrity Agreements (CIA) and how their compliance departments need to both ‘speak loudly’ and ‘carry a big stick’.
This week, we are going to focus on the middle of the continuum. This would include companies who are seeking to establish a compliance program that will follow all written statues, guidance and regulations. They are companies that are committed to protecting the growth of their company by instilling and building a culture of compliance with their organization.
The first step on the road to compliance is building alignment. When starting to think about a Compliance program, there are important steps that need to be addressed. The first thing necessary is to look at the business by analyzing those risks that are specific to the industry in which your business plays in. Once these are identified, alignment is sought through building awareness of these risks.
We look at alignment as the collective, ‘top down’ understanding & interpretation of risks that results in a subsequent strategic action plan communicated to all employees. In short, it is the point at which agreement and cooperation to achieve a common cause among all teams involved is achieved. One of the key phrases worth emphasizing is ‘top down’. Compliance needs to start at the highest levels of the organization and filter down and throughout all employees and departments. This is critical to any successful compliance program.
Once alignment is achieved, it is time to form a Compliance Strategy based on the aforementioned defined risks. This strategy should be built out over time and should be both ‘practical’ and ‘meaningful’. The many elements of a Compliance Strategy include, but are not limited to, the following. Keep in mind that while you may have some of these in place, each is critical in its own way to a strong compliance program:
Appointment of a Corporate Compliance Officer (CCO)
A Corporate Compliance Charter
A Corporate Code of Conduct
The formation of a Corporate Compliance Committee (CCOM)
The drafting and implementation of Corporate Compliance Policies (CCPs)
The drafting and implementation of Operational Policies and Procedures
Document and Record Management
Monitoring
Auditing
Training
Again, you can not merely wave a magic wand and have a compliance program in place. This is not feasible and, thankfully, the OIG understands this. What they are looking for is the establishment of a program that will mitigate, identify and address compliance breaches. They understand that issues will occur, but the swift and timely communication of any issues is their clear evidence of a fully functional compliance program.
The “Road to Compliance” will not always be 100% paved. There will be snags and issues along the way. However, the companies that stick with it over time will protect their company’s growth and have a pride-filled culture that fosters moral and ethical behavior for new and existing employees.
Our world needs more of this.
I wish you and yours the most wonderful Thanksgiving! Please pass the mashed potatoes!!!
For Your Space,
Steven.
Thursday, November 22, 2007
Tuesday, November 20, 2007
New Mexico Reporting Delayed & Revised
If you have any difficulty reading this please feel free to email me at stevenmoore@cis-partners.com for a pdf version.
For Your Space,
Steven.
CLICK ON IMAGE TO ENLARGE:
For Your Space,
Steven.
CLICK ON IMAGE TO ENLARGE:
Monday, November 19, 2007
Do you know how broadly the FDAAA 2007 reaches?
Alaina Confer, Procedural Compliance Specialist
alainaconfer@cis-partners.com
The FDA Amendments Act of 2007 (FDAAA 2007) is riddled with information that you may be accountable for. This legislation does not outline one change to the FDA requirements. The document actually outlines the purpose as ‘to revise and extend user-fee programs for prescription drugs and medical devices, enhance post-market authorities, and other purposes’. There is a lot of other in this legislation. A number of summaries or articles on this document touch on the Prescription Drug User Fee Act (PDUFA) and the Medical Devices User Fee Act (MDUFA). But beyond those first two sections of the FDAAA 2007 are (this is not a complete list):
• The expansion of the Clinical Trials Databases
• The pre-review of television advertisements
• Incentives for development of drugs and medical devices for
• Paediatric use
• Treatment of tropical diseases
• Orphan antibiotics
• Pharmaceutical security
• Guidance for antibiotics
There are so many items detailed in this legislation that executive summaries and memos on the topic are sometimes 41 pages or more long. Each of these topics in the FDAAA 2007 comes with assigned deadlines, both for the FDA or NIH and for industry. The deadlines vary from days to months to years, so the effects of this legislation will be spread out over some time. But it is, no doubt, in our interest to know what parts of our business will be impacted and start planning accordingly. I’d suggest starting with the deadlines measured in days.
alainaconfer@cis-partners.com
The FDA Amendments Act of 2007 (FDAAA 2007) is riddled with information that you may be accountable for. This legislation does not outline one change to the FDA requirements. The document actually outlines the purpose as ‘to revise and extend user-fee programs for prescription drugs and medical devices, enhance post-market authorities, and other purposes’. There is a lot of other in this legislation. A number of summaries or articles on this document touch on the Prescription Drug User Fee Act (PDUFA) and the Medical Devices User Fee Act (MDUFA). But beyond those first two sections of the FDAAA 2007 are (this is not a complete list):
• The expansion of the Clinical Trials Databases
• The pre-review of television advertisements
• Incentives for development of drugs and medical devices for
• Paediatric use
• Treatment of tropical diseases
• Orphan antibiotics
• Pharmaceutical security
• Guidance for antibiotics
There are so many items detailed in this legislation that executive summaries and memos on the topic are sometimes 41 pages or more long. Each of these topics in the FDAAA 2007 comes with assigned deadlines, both for the FDA or NIH and for industry. The deadlines vary from days to months to years, so the effects of this legislation will be spread out over some time. But it is, no doubt, in our interest to know what parts of our business will be impacted and start planning accordingly. I’d suggest starting with the deadlines measured in days.
Friday, November 16, 2007
We Need Solutions
By Katie Lapins, CIS Senior Compliance Specialist
katielapins@cis-partners.com
I admit, I probably pay more attention to articles and other media pieces related to the overall healthcare and pharmaceutical industries. As an avid reader, I am thrilled to read anything remotely related to a job, industry and topic which I love. So, imagine my delight when I pulled out the October 29, 2007 edition of Newsweek and there were six, count them, SIX articles related to healthcare and pharmaceuticals. The articles covered a wide range of topics:
• Healthcare (or lack thereof) for veterans of the Iraq war;
• Patient access to their own medical charts (what a concept);
• Drugs used to treat children but not ever clinically tested on them (a blog topic from just a few weeks ago – thanks, Steve);
• How some doctors have chosen to no longer allow pharmaceutical representatives in their offices for sales calls;
• The ongoing battle surrounding the State Children’s Health Insurance Program (SCHIP); and
• Geraldine Ferraro’s battle with multiple myeloma and the differences between her treatment and others with the same disease without health insurance.
All of these topics are important and ones that I could discuss and debate for hours. But what I find interesting and powerful is that these types of issues are becoming more prevalent in main-stream media. Healthcare is becoming an increasingly important topic for all of us as costs soar; coverage seems to be worsening and overall satisfaction is decreasing.
From my own personal experiences and from what I hear from my friends and my family, the most common problems for those who are insured seem to be:
• The increasing cost of insurance;
• The increasing cost of co-pays;
• The administrative requirements to see a doctor such as referrals and pre-approvals; and
• The increase in the amount of time to get an accurate diagnosis and treatment.
It sometimes takes weeks to see a specialist and if tests are involved, it can take months for a diagnosis. I once heard a nurse recommend that the best way to get the most efficient, top-of-the-line care, was to go to the best emergency room in the area, list all of your complaints and then, as an afterthought, add in chest pain. She said the chest pain would guarantee you every test humanly possible because that’s the way medical professionals in emergency rooms are trained. And if it’s an emergency room and you’re complaining of chest pain, there’s little chance of the hospital turning you away so, “What kind of insurance do you have?” is not always the first question asked.
The American healthcare system is better than many other countries’ but there are still major problems, even for those with insurance. And without insurance, the system is pretty poor. Therefore, I find the increasingly amount of media coverage of the healthcare industry refreshing. It’s one of the primary topics being asked of presidential candidates, many states are addressing the topic through supplemental healthcare plans and it seems like a new study comes out every month that confirms that healthcare costs are rising at a faster rate of inflation.
I don’t know how we “fix” our healthcare system but I do know that changes must be made. In the greatest country in the world, it is shocking, sad and appalling that people are denied basic healthcare because they can’t afford it. Since when did health become a right of only the employed, insured middle- and upper-classes? As an anonymous response stated on the Pharma Compliance Blog on September 18, “We need a solution; at least Hillary [Clinton] is searching for one.” I still have no idea who I will vote for next year; it’s a year away. But what I do hope is that all of the candidates will adequately address this topic and propose viable solutions that will provide for this basic right for all Americans.
katielapins@cis-partners.com
I admit, I probably pay more attention to articles and other media pieces related to the overall healthcare and pharmaceutical industries. As an avid reader, I am thrilled to read anything remotely related to a job, industry and topic which I love. So, imagine my delight when I pulled out the October 29, 2007 edition of Newsweek and there were six, count them, SIX articles related to healthcare and pharmaceuticals. The articles covered a wide range of topics:
• Healthcare (or lack thereof) for veterans of the Iraq war;
• Patient access to their own medical charts (what a concept);
• Drugs used to treat children but not ever clinically tested on them (a blog topic from just a few weeks ago – thanks, Steve);
• How some doctors have chosen to no longer allow pharmaceutical representatives in their offices for sales calls;
• The ongoing battle surrounding the State Children’s Health Insurance Program (SCHIP); and
• Geraldine Ferraro’s battle with multiple myeloma and the differences between her treatment and others with the same disease without health insurance.
All of these topics are important and ones that I could discuss and debate for hours. But what I find interesting and powerful is that these types of issues are becoming more prevalent in main-stream media. Healthcare is becoming an increasingly important topic for all of us as costs soar; coverage seems to be worsening and overall satisfaction is decreasing.
From my own personal experiences and from what I hear from my friends and my family, the most common problems for those who are insured seem to be:
• The increasing cost of insurance;
• The increasing cost of co-pays;
• The administrative requirements to see a doctor such as referrals and pre-approvals; and
• The increase in the amount of time to get an accurate diagnosis and treatment.
It sometimes takes weeks to see a specialist and if tests are involved, it can take months for a diagnosis. I once heard a nurse recommend that the best way to get the most efficient, top-of-the-line care, was to go to the best emergency room in the area, list all of your complaints and then, as an afterthought, add in chest pain. She said the chest pain would guarantee you every test humanly possible because that’s the way medical professionals in emergency rooms are trained. And if it’s an emergency room and you’re complaining of chest pain, there’s little chance of the hospital turning you away so, “What kind of insurance do you have?” is not always the first question asked.
The American healthcare system is better than many other countries’ but there are still major problems, even for those with insurance. And without insurance, the system is pretty poor. Therefore, I find the increasingly amount of media coverage of the healthcare industry refreshing. It’s one of the primary topics being asked of presidential candidates, many states are addressing the topic through supplemental healthcare plans and it seems like a new study comes out every month that confirms that healthcare costs are rising at a faster rate of inflation.
I don’t know how we “fix” our healthcare system but I do know that changes must be made. In the greatest country in the world, it is shocking, sad and appalling that people are denied basic healthcare because they can’t afford it. Since when did health become a right of only the employed, insured middle- and upper-classes? As an anonymous response stated on the Pharma Compliance Blog on September 18, “We need a solution; at least Hillary [Clinton] is searching for one.” I still have no idea who I will vote for next year; it’s a year away. But what I do hope is that all of the candidates will adequately address this topic and propose viable solutions that will provide for this basic right for all Americans.
Thursday, November 15, 2007
The Compliance Continuum Part 2 of 3: “Speak loudly and carry a big stick.”
By Steven Moore, CIS Marketing Director & Compliance Specialist
stevenmoore@cis-partners.com
At Compliance Implementation Services (CIS) we work with Pharmaceutical companies of all shapes and sizes. Last week (11/8) I discussed ‘Small Pharma’ and the common stigma that any spend against compliance is not fiscally necessary or appropriate. I attempted to disassemble this notion and stress the importance of compliance for companies of all sizes and highlight the distinct advantage that Small Pharma has in the early stages of compliance program development.
This week, we are going to focus on the right hand side of the continuum. This includes the companies that are under a Corporate Integrity Agreement or CIA. Currently, hundreds of companies and individuals are under a CIA. It is also worth noting that CIAs are not at all limited to large companies. While large companies certainly pay the largest fines and receive the most press, pharma companies of all sizes are on the HHS-OIG's list of companies with a CIA. It only takes one whistleblower to potentially incriminate an organization and with recent legal changes, whistleblowers get paid a handsome portion of any settlement. Perhaps a little background is necessary here:
From the HHS Officer of Inspector General web page:
“The Office of Inspector General (OIG) often negotiates compliance obligations with health care providers and other entities as part of the settlement of Federal health care program investigations arising under a variety of civil false claims statutes. A provider or entity consents to these obligations as part of the civil settlement and in exchange for the OIG's agreement not to seek an exclusion of that health care provider or entity from participation in Medicare, Medicaid and other Federal health care programs. False claims submitted in violation of the False Claims Act or Civil Monetary Penalties Law give rise to the OIG’s permissive exclusion authority under 42 U.S.C.1320a-7(b)(7). Providers who settle these cases often deny that they were liable or that they committed the alleged conduct.
The typical term of a comprehensive corporate integrity agreement (CIA) is five years (three years for national project cases). These compliance measures seek to ensure the integrity of Federal health care program claims submitted by the provider. The more comprehensive integrity agreements include requirements to:
(1) Hire a compliance officer/appoint a compliance committee;
(2) Develop written standards and policies;
(3) Implement a comprehensive employee training program;
(4) Review claims submitted to Federal health care programs;
(5) Establish a confidential disclosure program;
(6) Restrict employment of ineligible persons; and
(7) Submit a variety of reports to the OIG.
While many CIAs have common elements, each agreement addresses, in part, the specific facts of the conduct at issue, and is tailored to comport with the existing capabilities of the provider. The integrity agreements often attempt to accommodate and recognize many of the elements of pre-existing voluntary compliance programs.”
Items 1 through 7 cost money for a company whether or not they have ‘gotten in trouble’ and were forced to settle. In fact, I would strongly argue that these items cost MORE for companies who do get in trouble rather than those who establish these 7 items + on their own. Allow me to explain…
Teddy Roosevelt is famous for a lot of things, including the quote: “Speak softly but carry a big stick.” This is a unique way to describe ‘passive aggressiveness’. In other words do not go about life in a loud or obnoxious way but, if trouble finds you, never back down. Oddly, this would seem the appropriate way for a company with an established compliance office to act. Compliance does not have to be loud or annoying. It need not be obnoxious or a constant pain or retarder to daily operations. It need not be intrusive and a hinderance to company productivity. However, should a compliance breach occur --- especially one that is ‘knowingly’ committed --- the compliance organization should carry a big stick. Non-compliance should always be met with non-tolerance.
However, in the case of a CIA the quote immediately gets changed to “Speak loudly and carry a big stick.” In other words, those in charge of compliance immediately have a much greater presence within the organization. There are forced to constantly upgrade compliance and monitor all activity. The company’s front desk sign-in book that was once the occasional industry consultant might quickly fill up with consultants dealing in all areas that touch compliance. Constant reports to and updates for the OIG will slow business. So while there is an expense involved in getting a compliance program in place, it is dwarfed when compared with the cost of non-compliance. In short, business becomes slower and more costly in many, many ways.
This can all be avoided with the proper compliance program in place. Ironically enough, the items listed by the OIG can really help your organization now! A company must gain alignment throughout the organization, design a practical and meaningful plan and strategy and then implement it. This is exactly what I will focus on in next week’s installment:
The Compliance Continuum Part 3 of 3: “The Road to Compliance.”
(Be sure to check out tomorrow's post by Senior Compliance Specialist Katie Lapins who is asking for solutions!)
stevenmoore@cis-partners.com
At Compliance Implementation Services (CIS) we work with Pharmaceutical companies of all shapes and sizes. Last week (11/8) I discussed ‘Small Pharma’ and the common stigma that any spend against compliance is not fiscally necessary or appropriate. I attempted to disassemble this notion and stress the importance of compliance for companies of all sizes and highlight the distinct advantage that Small Pharma has in the early stages of compliance program development.
This week, we are going to focus on the right hand side of the continuum. This includes the companies that are under a Corporate Integrity Agreement or CIA. Currently, hundreds of companies and individuals are under a CIA. It is also worth noting that CIAs are not at all limited to large companies. While large companies certainly pay the largest fines and receive the most press, pharma companies of all sizes are on the HHS-OIG's list of companies with a CIA. It only takes one whistleblower to potentially incriminate an organization and with recent legal changes, whistleblowers get paid a handsome portion of any settlement. Perhaps a little background is necessary here:
From the HHS Officer of Inspector General web page:
“The Office of Inspector General (OIG) often negotiates compliance obligations with health care providers and other entities as part of the settlement of Federal health care program investigations arising under a variety of civil false claims statutes. A provider or entity consents to these obligations as part of the civil settlement and in exchange for the OIG's agreement not to seek an exclusion of that health care provider or entity from participation in Medicare, Medicaid and other Federal health care programs. False claims submitted in violation of the False Claims Act or Civil Monetary Penalties Law give rise to the OIG’s permissive exclusion authority under 42 U.S.C.1320a-7(b)(7). Providers who settle these cases often deny that they were liable or that they committed the alleged conduct.
The typical term of a comprehensive corporate integrity agreement (CIA) is five years (three years for national project cases). These compliance measures seek to ensure the integrity of Federal health care program claims submitted by the provider. The more comprehensive integrity agreements include requirements to:
(1) Hire a compliance officer/appoint a compliance committee;
(2) Develop written standards and policies;
(3) Implement a comprehensive employee training program;
(4) Review claims submitted to Federal health care programs;
(5) Establish a confidential disclosure program;
(6) Restrict employment of ineligible persons; and
(7) Submit a variety of reports to the OIG.
While many CIAs have common elements, each agreement addresses, in part, the specific facts of the conduct at issue, and is tailored to comport with the existing capabilities of the provider. The integrity agreements often attempt to accommodate and recognize many of the elements of pre-existing voluntary compliance programs.”
Items 1 through 7 cost money for a company whether or not they have ‘gotten in trouble’ and were forced to settle. In fact, I would strongly argue that these items cost MORE for companies who do get in trouble rather than those who establish these 7 items + on their own. Allow me to explain…
Teddy Roosevelt is famous for a lot of things, including the quote: “Speak softly but carry a big stick.” This is a unique way to describe ‘passive aggressiveness’. In other words do not go about life in a loud or obnoxious way but, if trouble finds you, never back down. Oddly, this would seem the appropriate way for a company with an established compliance office to act. Compliance does not have to be loud or annoying. It need not be obnoxious or a constant pain or retarder to daily operations. It need not be intrusive and a hinderance to company productivity. However, should a compliance breach occur --- especially one that is ‘knowingly’ committed --- the compliance organization should carry a big stick. Non-compliance should always be met with non-tolerance.
However, in the case of a CIA the quote immediately gets changed to “Speak loudly and carry a big stick.” In other words, those in charge of compliance immediately have a much greater presence within the organization. There are forced to constantly upgrade compliance and monitor all activity. The company’s front desk sign-in book that was once the occasional industry consultant might quickly fill up with consultants dealing in all areas that touch compliance. Constant reports to and updates for the OIG will slow business. So while there is an expense involved in getting a compliance program in place, it is dwarfed when compared with the cost of non-compliance. In short, business becomes slower and more costly in many, many ways.
This can all be avoided with the proper compliance program in place. Ironically enough, the items listed by the OIG can really help your organization now! A company must gain alignment throughout the organization, design a practical and meaningful plan and strategy and then implement it. This is exactly what I will focus on in next week’s installment:
The Compliance Continuum Part 3 of 3: “The Road to Compliance.”
(Be sure to check out tomorrow's post by Senior Compliance Specialist Katie Lapins who is asking for solutions!)
Wednesday, November 14, 2007
The Ten Commandments of Sample Accountability: Commandment #6
This is the 6th installment of the "Ten Commandments of Sample Accountability". For the next 5 Wednesdays, we will go through each of the commandments. I encourage all of you who deal in any area of compliance to check back each week as the 'compliance principles' behind Sample Accountability are very similar to those in other areas. Also, you can be sure that, much like GP is such a hot button right now, Sample Accountability is not that far behind...
By Judy Fox
Commandment #6 – Thou Shalt Require Accountability
The PDMA states, “any person required to create or maintain reports, lists or other records under PDMA…shall retain them…for at least 3 years”
If there are not any consequences for employee non-compliance, the key stakeholders in a sample accountability program will consistently be challenged in enforcing adherence.
Accountability often starts at the top of a pharmaceutical organization and then spreads to the employees. Corporations need to stand behind compliance policies with strict enforcement of the rules and consequences attached to negligence. This is often best achieved with a strict policy on corrective actions for non-compliance.
Accountability can take on many forms, have various definitions, and affect many employees, which is why written policies and training are so crucial to a solid sampling program. Corporate employees must be held accountable for the effect their actions have on sampling records, managers must be held accountable for the actions of their team and sales representatives must be fully aware of the enormous responsibilities attached to handling prescription drug samples, coupons, vouchers and even reprints from medical journals.
The key stakeholders in the sample accountability program must have the power to take action against non-compliant employees. This usually involves making recommendations on the disciplinary actions to management or human resources. Recommendations can include remedial training, warning letters, and other measures up to and including termination.
If a third party vendor is responsible for monitoring accountability, a detailed policy on communications for such activities must be established and followed so that all employees are held accountable for any non-compliant activities.
By Judy Fox
Commandment #6 – Thou Shalt Require Accountability
The PDMA states, “any person required to create or maintain reports, lists or other records under PDMA…shall retain them…for at least 3 years”
If there are not any consequences for employee non-compliance, the key stakeholders in a sample accountability program will consistently be challenged in enforcing adherence.
Accountability often starts at the top of a pharmaceutical organization and then spreads to the employees. Corporations need to stand behind compliance policies with strict enforcement of the rules and consequences attached to negligence. This is often best achieved with a strict policy on corrective actions for non-compliance.
Accountability can take on many forms, have various definitions, and affect many employees, which is why written policies and training are so crucial to a solid sampling program. Corporate employees must be held accountable for the effect their actions have on sampling records, managers must be held accountable for the actions of their team and sales representatives must be fully aware of the enormous responsibilities attached to handling prescription drug samples, coupons, vouchers and even reprints from medical journals.
The key stakeholders in the sample accountability program must have the power to take action against non-compliant employees. This usually involves making recommendations on the disciplinary actions to management or human resources. Recommendations can include remedial training, warning letters, and other measures up to and including termination.
If a third party vendor is responsible for monitoring accountability, a detailed policy on communications for such activities must be established and followed so that all employees are held accountable for any non-compliant activities.
Tuesday, November 13, 2007
Government Pricing House-Keeping: Source Data Validation and Documentation
Chrissy Spicer, CIS Compliance and GP Specialist
chrissyspicer@cis-partners.com
When it comes to government pricing, there are many important elements to methodology development, and as such, many manufacturers are extremely vigilant when making decisions as to which data is included and excluded in their calculations. So much so, the Legal and Compliance Departments may be involved every step of the way in the decision-making process to ensure the construction of an appropriate methodology. However, an approved methodology is not the only consideration in protecting the integrity of the data submitted to the government. Another often-overlooked process is the verification of the source data used as inputs into the calculations. With the DRA in effect, the timing could not be better to assess the current data to verify that source data is valid and to ensure employees understand their role in the process and take ownership of the data they provide.
With the smoothing methodology requirement now in effect, this task will be taxing for organizations that either do not have sophisticated systems in place or have more than one source for their data. While the data is being collected, one should verify the information by reconciling it to the General Ledger, review the Class of Trade (COT) schema to ensure the application of the changes as a result of the DRA, and verify that any changes made to the calculation methodology are supported with documentation. Because manufacturers will need to maintain the historical data reflecting the pre-DRA methodology for any necessary restatements, keeping good records is mandatory.
Government Pricing is truly a cross-functional operation requiring input from many areas, such as Managed Markets, National Accounts, Supply Chain, Accounting and Finance. Ownership of the data is key and should reside within the functional areas; however, Government Pricing must exercise due diligence in ensuring that the stakeholders understand their role in and the importance of the overall process of submitting mandatory data to the government. Many times, the data is provided with little to no questions asked and is then included in the calculation without any documentation of how the numbers were calculated. During a time of change, with the DRA now in effect, it is a great time to conduct GP training or a workshop to communicate how the GP landscape has changed as a result of the DRA in addition to the new requirements.
As we have all been struggling to deploy quickly the DRA requirements before the first monthly calculation, we need to incorporate ongoing monitoring procedures to ensure that the data is accurate and the people providing the data understand their role in the overall picture.
chrissyspicer@cis-partners.com
When it comes to government pricing, there are many important elements to methodology development, and as such, many manufacturers are extremely vigilant when making decisions as to which data is included and excluded in their calculations. So much so, the Legal and Compliance Departments may be involved every step of the way in the decision-making process to ensure the construction of an appropriate methodology. However, an approved methodology is not the only consideration in protecting the integrity of the data submitted to the government. Another often-overlooked process is the verification of the source data used as inputs into the calculations. With the DRA in effect, the timing could not be better to assess the current data to verify that source data is valid and to ensure employees understand their role in the process and take ownership of the data they provide.
With the smoothing methodology requirement now in effect, this task will be taxing for organizations that either do not have sophisticated systems in place or have more than one source for their data. While the data is being collected, one should verify the information by reconciling it to the General Ledger, review the Class of Trade (COT) schema to ensure the application of the changes as a result of the DRA, and verify that any changes made to the calculation methodology are supported with documentation. Because manufacturers will need to maintain the historical data reflecting the pre-DRA methodology for any necessary restatements, keeping good records is mandatory.
Government Pricing is truly a cross-functional operation requiring input from many areas, such as Managed Markets, National Accounts, Supply Chain, Accounting and Finance. Ownership of the data is key and should reside within the functional areas; however, Government Pricing must exercise due diligence in ensuring that the stakeholders understand their role in and the importance of the overall process of submitting mandatory data to the government. Many times, the data is provided with little to no questions asked and is then included in the calculation without any documentation of how the numbers were calculated. During a time of change, with the DRA now in effect, it is a great time to conduct GP training or a workshop to communicate how the GP landscape has changed as a result of the DRA in addition to the new requirements.
As we have all been struggling to deploy quickly the DRA requirements before the first monthly calculation, we need to incorporate ongoing monitoring procedures to ensure that the data is accurate and the people providing the data understand their role in the overall picture.
Sunday, November 11, 2007
NEW FEATURE on the Pharma Compliance Blog! (As well as a 'thanks' to my Spanish-speaking readers)
Good Monday Morning Fellow Bloggers! I hope you all had a nice, relaxing weekend.
Some of you may have caught the new feature on the PCB as we've had some user votes thus far, but I wanted to bring attention to our new weekly poll. It is located in the upper left hand portion of the page. Each Thursday, along with the Blog Topic of the Week, we will pose a new question to the readership that pertains to a timely issue. All answers are anonymous. I think this will be a great way for all of you to get a pulse check on how the industry is responding, reacting and feeling about key issues.
Most importantly, we would love to hear your questions. What might you want to know more about? You can call (610-565-8007) or drop me an email at any time stevenmoore@cis-partners.com. As always, we will 100% respect the wishes of anyone who would like to keep their questions or comments anonymous.
Have a great week!
For Your Space,
Steven.
Also, it's worth noting that the Pharma Compliance Blog has been viewed by more than 40 countries and I really have to thank Google for that. We had a comment from Madrid, Spain last week and for all of my Spanish-speaking readers, I used my 7 years of Spanish, my wife's education and year studying in Spain and a little help from some tools, to try and translate the above as a 'thank you' to you! If I've made any errors, I apologize and certainly mean no disrespect.
Buena lunes por la mañana Fellow Bloggers! Espero que todos tenían un agradable y relajante fin de semana.
Algunos de ustedes pueden haber capturado la nueva característica de la PCB como hemos tenido algún usuario votos hasta el momento, pero quería llamar la atención a nuestra nueva encuesta semanal. Se encuentra en la parte superior izquierda de la página. Cada jueves, junto con el Blog Tema de la semana, vamos a plantear una nueva cuestión a los lectores que se refiere a una cuestión puntual. Todas las respuestas son anónimas. Creo que esto será una gran manera para todos ustedes, para llegar a un pulso verifique en la forma en que la industria está respondiendo, reaccionar y sentir acerca de las cuestiones fundamentales.
Lo que es más importante, nos encantaría escuchar sus preguntas. ¿Qué podría usted quiere saber más sobre? Usted puede llamar a (610-565-8007) o mándeme un correo electrónico en cualquier momento stevenmoore@cis-partners.com. Como siempre, vamos a 100% respecto de los deseos de cualquier persona que desea mantener a sus preguntas o comentarios anónimos.
Tienes una gran semana!
Para Su Espacio
Para o Seu Espaço
お使いのスペース
為你的空間
Pour Votre Espace
Per il tuo Spazio,
Steven.
Friday, November 9, 2007
Thank You Fellow Bloggers
Fresh off another record-breaking day of traffic, it's time to say 'thanks'!
April 30th, 2007 marked a historic day in the Pharmaceutical industry as the Pharma Compliance Blog (PCB) was launched…
Okay, that’s entirely too dramatic --- especially considering the dramatic things that your companies do each and every day to help save lives!
However, I wanted to take this opportunity to thank everyone for their participation in the PCB. As of me typing this, autumn is finally settling in the Northeast --- the leaves are turning to beautiful colors and the temperature is dropping to levels that make my non-existent arthritis bother me. It was a knee injury from my football days --- actually, I was never man enough to play football. It was really from golf…
But I digress. The point of this post was to thank all of you. 136 or so posts and just yesterday surpassing 8,000 visitors, the PCB is a ‘real’ web site. It has devoted visitors and plenty of ‘comments’. I’m not a father yet, but I imagine that this is what it feels like. Okay, that’s another exaggeration…
Back in the infancy stages of the PCB, you could type in “Pharma Compliance” in Google and could spend the rest of your day trying to find the link (believe me, I tried --- but don’t tell my bosses). At least I wasn’t Googling Britney Spears. Type in “Pharma Compliance” now and the PCB is hit number 9! We made the top 10!
Type in "Nominal Price" & Final Rule and the Pharma Compliance Blog is hit #1 on Google. And, not to mention, before a CMS page! Sweet. Since Google works on traffic --- you guys clearly rule.
In the world of marketing, the best way to make a product work is to do a few simple things correctly. The two main ones that relate to the PCB are:
1) Find an unfulfilled need: That’s where the PCB’s slogan comes in: Your Space. For Your Space. You guys have such an important job within your respective organizations and, outside of conferences, had no where to talk and learn. I hope that CIS has helped provide this for you.
2) Be ‘fresh’ and consistent to your consumers: I post every day and do NOT allow any advertisements. This site is not, and will never be, that. It is not a money maker for CIS in the purest sense of the word. It is certainly a way for us to communicate directly with you, but not once have we taken a comment and/or question and harassed someone for their business. We answer the question and offer further help if needed. Otherwise, we leave you alone. How novel. Inconsistency is changing your coffee from 1lb. to 10oz. It’s taking some potato chips out of the bag so that it’s even more of an airbag than you imagined it could be. It’s moving your toy production to China. It would be making the PCB a straight selling tool via cluttered advertisements and pop-ups. You have my word that this will not happen.
So I thank you all again and hope that we are helping you. I was recently out at IIR and had several people see my name tag and say, “Hey, you’re the blog guy!” I’ve been called worse --- pretty much every day. In all honesty, that was pretty cool. I was also recently at a client that had printed off the “DRA Q&A” and had it posted in their cubicle, actually in their 'suite' (yes, DS a shout out to DW). That’s the sort of stuff that makes you ‘like what you do’.
So, in return, never hesitate to contact me directly so that I might be able to help you in any and all ways possible.
For Your Space --- we promise,
Steven.
stevenmoore@cis-partners.com
610.565-8007 CIS Office
610.762.2180 Cell
P.S. Check out the new feature on the Pharma Compliance Blog on the upper left hand side of the page. Cast your vote on the "Poll of the Week". More info to come next week...
April 30th, 2007 marked a historic day in the Pharmaceutical industry as the Pharma Compliance Blog (PCB) was launched…
Okay, that’s entirely too dramatic --- especially considering the dramatic things that your companies do each and every day to help save lives!
However, I wanted to take this opportunity to thank everyone for their participation in the PCB. As of me typing this, autumn is finally settling in the Northeast --- the leaves are turning to beautiful colors and the temperature is dropping to levels that make my non-existent arthritis bother me. It was a knee injury from my football days --- actually, I was never man enough to play football. It was really from golf…
But I digress. The point of this post was to thank all of you. 136 or so posts and just yesterday surpassing 8,000 visitors, the PCB is a ‘real’ web site. It has devoted visitors and plenty of ‘comments’. I’m not a father yet, but I imagine that this is what it feels like. Okay, that’s another exaggeration…
Back in the infancy stages of the PCB, you could type in “Pharma Compliance” in Google and could spend the rest of your day trying to find the link (believe me, I tried --- but don’t tell my bosses). At least I wasn’t Googling Britney Spears. Type in “Pharma Compliance” now and the PCB is hit number 9! We made the top 10!
Type in "Nominal Price" & Final Rule and the Pharma Compliance Blog is hit #1 on Google. And, not to mention, before a CMS page! Sweet. Since Google works on traffic --- you guys clearly rule.
In the world of marketing, the best way to make a product work is to do a few simple things correctly. The two main ones that relate to the PCB are:
1) Find an unfulfilled need: That’s where the PCB’s slogan comes in: Your Space. For Your Space. You guys have such an important job within your respective organizations and, outside of conferences, had no where to talk and learn. I hope that CIS has helped provide this for you.
2) Be ‘fresh’ and consistent to your consumers: I post every day and do NOT allow any advertisements. This site is not, and will never be, that. It is not a money maker for CIS in the purest sense of the word. It is certainly a way for us to communicate directly with you, but not once have we taken a comment and/or question and harassed someone for their business. We answer the question and offer further help if needed. Otherwise, we leave you alone. How novel. Inconsistency is changing your coffee from 1lb. to 10oz. It’s taking some potato chips out of the bag so that it’s even more of an airbag than you imagined it could be. It’s moving your toy production to China. It would be making the PCB a straight selling tool via cluttered advertisements and pop-ups. You have my word that this will not happen.
So I thank you all again and hope that we are helping you. I was recently out at IIR and had several people see my name tag and say, “Hey, you’re the blog guy!” I’ve been called worse --- pretty much every day. In all honesty, that was pretty cool. I was also recently at a client that had printed off the “DRA Q&A” and had it posted in their cubicle, actually in their 'suite' (yes, DS a shout out to DW). That’s the sort of stuff that makes you ‘like what you do’.
So, in return, never hesitate to contact me directly so that I might be able to help you in any and all ways possible.
For Your Space --- we promise,
Steven.
stevenmoore@cis-partners.com
610.565-8007 CIS Office
610.762.2180 Cell
P.S. Check out the new feature on the Pharma Compliance Blog on the upper left hand side of the page. Cast your vote on the "Poll of the Week". More info to come next week...
Thursday, November 8, 2007
The Compliance Continuum: Part 1 of 3
By Steven Moore, CIS Marketing Director & Compliance Specialist
At Compliance Implementation Services (CIS) we work with Pharmaceutical companies of all shapes and sizes. When it comes to compliance, we do work with companies with extremely tight budgets and companies who have a bit more to spend in this area. This upcoming series of posts is intended to highlight three highly varied degrees of compliance and what each represents and entails. The best way to show this, however, is my proprietary (just kidding, feel free to use this!) Compliance Continuum. Take a look at this picture and then I will go into a detailed description of each portion in the coming three weeks.
This week, we are going to focus on the left hand side of the continuum. During the subsequent 2 weeks, I will attack the right hand side and close with the middle on the Wednesday before Turkey Day.
“We are a small Pharma company and don’t need compliance.”
We run into this all the time and, quite honestly, it’s a reasonable argument if you’re going strictly on facts. The OIG and DOJ along with organizations like Taxpayers Against Fraud have historically and predominantly focused on Big Pharma. This makes intuitive sense. Any settlement is a big pay day, which is more apt to ensure that all resources needed during the course of an investigation are taken care of.
So given this information, if I am Senior Management, I might challenge you to give me the reasons why Corporate Compliance should be such a high priority. I feel as though the best way to answer this question is to think of our own selves as children. If we are taught values, ethics and morals at a young age, we are far more likely to carry these qualities with us throughout life as we grow. We are also likely to exude these qualities when we interact all newcomers into our lives. The same holds true for small companies, especially in the pharmaceutical industry. In making my argument, I’m assuming that every small pharmaceutical company wants to grow. If a company establishes a compliance program in its infancy stages, a culture of compliance will be established in your growth process and this will permeate throughout the organization. With the proper training of new employees and consistent training of existing employees, coupled with a strong monitoring system, you will be able to protect the growth of your company.
Secondly, it’s not just Big Pharma that is having issues these days. Look at Jazz Pharmaceuticals. While they were acquired by a larger company, they were hit with $20 million in fines just this past year. That’s a lot of coin for a smaller company. Can your company afford this kind of fine? Ancillary to this, the OIG has set aside funds for random audits of companies of all sizes. In fact, at the 7th Annual Pharmaceutical Regulatory and Compliance Congress and Best Practice Forum in 2006, an OIG representative said the following:
“In this sector [Pharmaceuticals], for major providers of Medicaid and Medicare programs, if you do not have a compliance program in place, you are acting recklessly. If you don’t have a compliance program, especially given how long it’s been around, you better have a really good reason.
There is no better indicator of a Compliance Program than when a company has identified the problem, quantified the problem, corrected the problem and came to the government to resolve that program. We encourage that sort of behavior.
You better have a compliance program and you better take it seriously.”
Finally, it’s the right thing to do. When guidance and laws are put into place revolving around compliance, the intentions are good. The intentions are to protect taxpaying health beneficiaries and those in need. While you may not agree with certain requirements, it does not change the fact that it is the law. The speed limit on my street is 25 and I think 35 is just fine. Will the authorities buy my argument when I’m pulled over?
While there may be costs associated with getting a compliance program up and running, the benefits will far outweigh these costs. It is important to note that the OIG understands that pharmaceutical companies are like snowflakes and their compliance programs will subsequently be of all different shapes and sizes.
I’ve been asked by smaller companies, more or less, the following question: What is my return on investment with regards to paying the monies necessary to get a compliance program in place?
My answer usually is: “The continued growth of your company.”
That’s the type of return on investment that will always make fiscal sense.
For Your Space,
Steven.
stevenmoore@cis-partners.com
At Compliance Implementation Services (CIS) we work with Pharmaceutical companies of all shapes and sizes. When it comes to compliance, we do work with companies with extremely tight budgets and companies who have a bit more to spend in this area. This upcoming series of posts is intended to highlight three highly varied degrees of compliance and what each represents and entails. The best way to show this, however, is my proprietary (just kidding, feel free to use this!) Compliance Continuum. Take a look at this picture and then I will go into a detailed description of each portion in the coming three weeks.
This week, we are going to focus on the left hand side of the continuum. During the subsequent 2 weeks, I will attack the right hand side and close with the middle on the Wednesday before Turkey Day.
“We are a small Pharma company and don’t need compliance.”
We run into this all the time and, quite honestly, it’s a reasonable argument if you’re going strictly on facts. The OIG and DOJ along with organizations like Taxpayers Against Fraud have historically and predominantly focused on Big Pharma. This makes intuitive sense. Any settlement is a big pay day, which is more apt to ensure that all resources needed during the course of an investigation are taken care of.
So given this information, if I am Senior Management, I might challenge you to give me the reasons why Corporate Compliance should be such a high priority. I feel as though the best way to answer this question is to think of our own selves as children. If we are taught values, ethics and morals at a young age, we are far more likely to carry these qualities with us throughout life as we grow. We are also likely to exude these qualities when we interact all newcomers into our lives. The same holds true for small companies, especially in the pharmaceutical industry. In making my argument, I’m assuming that every small pharmaceutical company wants to grow. If a company establishes a compliance program in its infancy stages, a culture of compliance will be established in your growth process and this will permeate throughout the organization. With the proper training of new employees and consistent training of existing employees, coupled with a strong monitoring system, you will be able to protect the growth of your company.
Secondly, it’s not just Big Pharma that is having issues these days. Look at Jazz Pharmaceuticals. While they were acquired by a larger company, they were hit with $20 million in fines just this past year. That’s a lot of coin for a smaller company. Can your company afford this kind of fine? Ancillary to this, the OIG has set aside funds for random audits of companies of all sizes. In fact, at the 7th Annual Pharmaceutical Regulatory and Compliance Congress and Best Practice Forum in 2006, an OIG representative said the following:
“In this sector [Pharmaceuticals], for major providers of Medicaid and Medicare programs, if you do not have a compliance program in place, you are acting recklessly. If you don’t have a compliance program, especially given how long it’s been around, you better have a really good reason.
There is no better indicator of a Compliance Program than when a company has identified the problem, quantified the problem, corrected the problem and came to the government to resolve that program. We encourage that sort of behavior.
You better have a compliance program and you better take it seriously.”
Finally, it’s the right thing to do. When guidance and laws are put into place revolving around compliance, the intentions are good. The intentions are to protect taxpaying health beneficiaries and those in need. While you may not agree with certain requirements, it does not change the fact that it is the law. The speed limit on my street is 25 and I think 35 is just fine. Will the authorities buy my argument when I’m pulled over?
While there may be costs associated with getting a compliance program up and running, the benefits will far outweigh these costs. It is important to note that the OIG understands that pharmaceutical companies are like snowflakes and their compliance programs will subsequently be of all different shapes and sizes.
I’ve been asked by smaller companies, more or less, the following question: What is my return on investment with regards to paying the monies necessary to get a compliance program in place?
My answer usually is: “The continued growth of your company.”
That’s the type of return on investment that will always make fiscal sense.
For Your Space,
Steven.
stevenmoore@cis-partners.com
Wednesday, November 7, 2007
The Ten Commandments of Sample Accountability: Commandment #5
This is the 5th installment of the "Ten Commandments of Sample Accountability". For the next 6 Wednesdays, we will go through each of the commandments. I encourage all of you who deal in any area of compliance to check back each week as the 'compliance principles' behind Sample Accountability are very similar to those in other areas. Also, you can be sure that, much like GP is such a hot button right now, Sample Accountability is not that far behind...
By Judy Fox
Commandment #5 – Thou Shalt Provide Training
A sample accountability program is never good if you don’t tell anyone about it. Often, the corporate training on sample accountability only includes a review of the minimal requirements and the consequences for non-compliance. Sample accountability training is often lacking the actual administrative requirements for sample handling.
The excuse for the lack of training is often that there is no time during corporate training when the focus is on the products and sales and marketing, so the new hire is given a manual of SOPs and instructions and the sample accountability program is left to the managers. The problem only starts there, managers don’t have time to train new hires, they need to concentrate on selling and more often than not, the managers themselves have not been trained on the sample accountability program. The issues only widens when the managers turn over the responsibility to a field trainer, or a representative chosen to help a new hire in the field. Unless there is a strong monitoring program for the field trainers, they can be non-compliant on the requirements themselves and/or have never been fully trained. The new hire is now left with confusing instructions and is often overwhelmed with the responsibilities.
A sample accountability training program should not only include the reason and importance of the requirements, but should also include an explanation of the administrative tasks required with examples of the various types of documentation.
The program often has to start with a “train the trainer” program so that the corporate trainer is fully aware of the entire sampling program, how it works and the consequences of non-compliance.
Secondly, the training program must allows for special training sessions for managers, field trainers and home office personnel who are involved in any sampling activities. These various role specific training programs must ensure that these employees not only understand the responsibilities of the representatives, but also their own responsibilities and the importance of their various roles.
Finally, the training program must include the specific training for the sales representatives. There should be various types of training in this category, allowing for new hire, refresher, and enhancement training.
The training program should always include a manual, new-hire testing and an annual qualification exam for existing employees.
In order to fully monitor the information given during a training session, the program must include detailed training records and documentation. This often includes such information as a detailed description of the information and materials presented, the trainer(s), a list of participants, the date, and the reason for the training. (i.e. – Retraining as part of a corrective action, new hire training, management training, etc).
The integrity of the training records should also be considered an important part of the training program and an SOP as well as a training form should be established to protect the process.
By Judy Fox
Commandment #5 – Thou Shalt Provide Training
A sample accountability program is never good if you don’t tell anyone about it. Often, the corporate training on sample accountability only includes a review of the minimal requirements and the consequences for non-compliance. Sample accountability training is often lacking the actual administrative requirements for sample handling.
The excuse for the lack of training is often that there is no time during corporate training when the focus is on the products and sales and marketing, so the new hire is given a manual of SOPs and instructions and the sample accountability program is left to the managers. The problem only starts there, managers don’t have time to train new hires, they need to concentrate on selling and more often than not, the managers themselves have not been trained on the sample accountability program. The issues only widens when the managers turn over the responsibility to a field trainer, or a representative chosen to help a new hire in the field. Unless there is a strong monitoring program for the field trainers, they can be non-compliant on the requirements themselves and/or have never been fully trained. The new hire is now left with confusing instructions and is often overwhelmed with the responsibilities.
A sample accountability training program should not only include the reason and importance of the requirements, but should also include an explanation of the administrative tasks required with examples of the various types of documentation.
The program often has to start with a “train the trainer” program so that the corporate trainer is fully aware of the entire sampling program, how it works and the consequences of non-compliance.
Secondly, the training program must allows for special training sessions for managers, field trainers and home office personnel who are involved in any sampling activities. These various role specific training programs must ensure that these employees not only understand the responsibilities of the representatives, but also their own responsibilities and the importance of their various roles.
Finally, the training program must include the specific training for the sales representatives. There should be various types of training in this category, allowing for new hire, refresher, and enhancement training.
The training program should always include a manual, new-hire testing and an annual qualification exam for existing employees.
In order to fully monitor the information given during a training session, the program must include detailed training records and documentation. This often includes such information as a detailed description of the information and materials presented, the trainer(s), a list of participants, the date, and the reason for the training. (i.e. – Retraining as part of a corrective action, new hire training, management training, etc).
The integrity of the training records should also be considered an important part of the training program and an SOP as well as a training form should be established to protect the process.
Tuesday, November 6, 2007
Removing the Silos: Promoting a Holistic Approach to Compliance
By Brian O'Rourke, Editor and PCX Product Manager
brianorourke@cis-partners.com
While most pharmaceutical manufacturers have accepted the necessity of a Compliance Department within the organization, Compliance Officers and other personnel assigned compliance-related responsibilities still face an uphill battle. Compliance personnel, who are usually legally well-informed and able to offer sound opinions regarding the legitimacy of certain business or administrative practices, find themselves undercut by rejoinders of the classical “materiality argument.” Further, the corporate culture often breeds a world of loosely-connected silos: departments within an organization operating in a compliance vacuum. To be fully-compliant, the manufacturer must remove the silos and approach compliance holistically. A compliance officer or department, with the appropriate authority, can make sure this happens.
While materiality is an important legal concept in the sales and marketing world, it is inapposite in the Government Programs and Statutory Pricing arena. Directors of Price Reporting would likely be laughed out of the courtroom if they were to testify that errors in Average Manufacturer Price, Best Price, or Average Sales Price calculations were “immaterial.” Under the False Claims Act, no such safe harbor is provided to the pharmaceutical manufacturer. Data is either correct or incorrect.
Given recent case law, which has shown that the Government and qui tam plaintiffs are increasingly relying upon the False Claims Act as the premiere theory of liability, a holistic approach to Compliance is essential to the pharmaceutical manufacturer’s success, profitability, and vitality. Considering that the pharmaceutical manufacturer is unable present the argument of materiality under the False Claims Act, this approach only makes sense—data is either correct or incorrect.
It is important to remember that business practices in one area can, and usually do, have a ripple-like effect throughout an organization. Consider the United States ex rel. David Franklin v. Parke-Davis case. Here, Parke-Davis was alleged to have been engaged in a campaign of off-label promotion. The sales force, probably entirely unaware of the price reporting ramifications, was allegedly instructed to promote off-label use. As a result, the Government argued, pharmacists were submitting claims for reimbursement for prescriptions that were or could have been for unauthorized uses, and thus, possibly not reimbursable under the various State plans. As such, the Government argued that off-label promotion was resulting in false data being submitted to the Government.
As it appears that the False Claims Act is quickly becoming the Federal Government’s drink of choice, the pharmaceutical manufacturer must approach compliance holistically. By removing the departmental silos and increasing communication and understanding among departments regarding compliance issues, the pharmaceutical manufacturer can not only protect itself better from liability, it can also make sound business decisions in a uniform, consistent manner. Such an approach bespeaks the importance of centralizing the compliance duties and commensurate authorities within one particular Department or Office. Compliance cannot be done in a vacuum.
brianorourke@cis-partners.com
While most pharmaceutical manufacturers have accepted the necessity of a Compliance Department within the organization, Compliance Officers and other personnel assigned compliance-related responsibilities still face an uphill battle. Compliance personnel, who are usually legally well-informed and able to offer sound opinions regarding the legitimacy of certain business or administrative practices, find themselves undercut by rejoinders of the classical “materiality argument.” Further, the corporate culture often breeds a world of loosely-connected silos: departments within an organization operating in a compliance vacuum. To be fully-compliant, the manufacturer must remove the silos and approach compliance holistically. A compliance officer or department, with the appropriate authority, can make sure this happens.
While materiality is an important legal concept in the sales and marketing world, it is inapposite in the Government Programs and Statutory Pricing arena. Directors of Price Reporting would likely be laughed out of the courtroom if they were to testify that errors in Average Manufacturer Price, Best Price, or Average Sales Price calculations were “immaterial.” Under the False Claims Act, no such safe harbor is provided to the pharmaceutical manufacturer. Data is either correct or incorrect.
Given recent case law, which has shown that the Government and qui tam plaintiffs are increasingly relying upon the False Claims Act as the premiere theory of liability, a holistic approach to Compliance is essential to the pharmaceutical manufacturer’s success, profitability, and vitality. Considering that the pharmaceutical manufacturer is unable present the argument of materiality under the False Claims Act, this approach only makes sense—data is either correct or incorrect.
It is important to remember that business practices in one area can, and usually do, have a ripple-like effect throughout an organization. Consider the United States ex rel. David Franklin v. Parke-Davis case. Here, Parke-Davis was alleged to have been engaged in a campaign of off-label promotion. The sales force, probably entirely unaware of the price reporting ramifications, was allegedly instructed to promote off-label use. As a result, the Government argued, pharmacists were submitting claims for reimbursement for prescriptions that were or could have been for unauthorized uses, and thus, possibly not reimbursable under the various State plans. As such, the Government argued that off-label promotion was resulting in false data being submitted to the Government.
As it appears that the False Claims Act is quickly becoming the Federal Government’s drink of choice, the pharmaceutical manufacturer must approach compliance holistically. By removing the departmental silos and increasing communication and understanding among departments regarding compliance issues, the pharmaceutical manufacturer can not only protect itself better from liability, it can also make sound business decisions in a uniform, consistent manner. Such an approach bespeaks the importance of centralizing the compliance duties and commensurate authorities within one particular Department or Office. Compliance cannot be done in a vacuum.
Sunday, November 4, 2007
Blogucation Tip 11.05.07: How To Post Anonymously
Good Monday Morning!
With more and more folks visiting the Pharma Compliance Blog, I wanted to be sure that everyone knows how to post to the blog as I have received questions of late. Remember, you can post to the blog completely anonymously and, for many, this is the preferred method. Simply follow the instructions below --- we would love to hear your thoughts on the many issues we bring up each day.
Have a great week!
For Your Space,
Steven.
With more and more folks visiting the Pharma Compliance Blog, I wanted to be sure that everyone knows how to post to the blog as I have received questions of late. Remember, you can post to the blog completely anonymously and, for many, this is the preferred method. Simply follow the instructions below --- we would love to hear your thoughts on the many issues we bring up each day.
Have a great week!
For Your Space,
Steven.
Friday, November 2, 2007
Dear Big Pharma: Please don’t forget the people.
I generally begin each work day with a little research session that catches me up on the latest news in Pharma and alerts me to any big news that you should all be aware of. One thing I’ve noticed throughout the lifetime of the Pharma Compliance Blog is the number of acquisitions happening within our industry. In fact, I’m willing to bet that some of you have already been through an acquisition --- as the acquirer, acquired and, I’d venture to guess, some of you have been both!
A recent article in Business Week stated:
“In 2006, 29 venture-backed private biopharmaceutical companies were acquired by either private or public companies for a total of $2.29 billion, according to VentureOne, a research unit of Dow Jones & Co.
But through the third quarter of 2007, there have been only 18 such deals, though the total is already a staggering $4.41 billion.
Aside from Bristol-Myers' deal for Adnexus, other recent deals involving major drug companies include Merck & Co.'s $366.4 million buy of NovaCardia Inc., Amgen Inc.'s acquisition of Ilypsa for $420 million, and Roche Holding AG's buy of NimbleGen for $272.5 million.
"Pipelines are drying up and have been for some time," said analyst Gene Mack from HSBC. "As a result, early biotech companies have a better bargaining position than five or 10 years ago."
I thought about this --- especially the last quotation regarding pipelines. I wondered if the main driver of this is the actual companies they are looking to buy. In other words, is it the proliferation in the number of companies that is drying up the pipelines of the behemoths in our industry? I would be willing to bet that a large portion of the R&D and scientific talent that is both existing and coming out of our nation’s (and the word’s!) best schools, are opting to take a chance with a smaller company with an entrepreneurial spirit, less politics and the opportunity to focus on a specific area of interest.
Looking back 10 to 20 years, there were far less pharmaceutical companies, but an aging population, advances in science and ailment discovery and diagnosis, and a huge inflation of dollars in the pharmaceutical industry have changed the playing field.
In a way I like this, as I think this is capitalism at work. The smaller companies use their drive, talent and resources to develop the drugs that the larger companies, with far greater resources, can acquire in the late clinical stages. It seems a virtual relay race, where the baton is passed on to the ‘fastest guy’. In theory, it seems to be a good system which accelerates new, important drugs into more hands in need. If a small company can only manufacture 100,000 units of Drug X and there are 250,000 patients in need, society is better off with the larger company grabbing said baton.
My lone major concern is what happens to the very people who worked so hard to develop the drug in the first place. Generally, with acquisition comes pain. I only hope that Big Pharma realizes that the reason they are acquiring a company has everything to do with the People and not the drug.
It’s a chicken and egg thing.
No good people. No drugs worth acquiring.
For Your Space,
Steven.
stevenmoore@cis-partners.com
Thursday, November 1, 2007
Bad Medicine? by Katie Lapins, Senior Compliance Specialist
A (relatively) new way to get a prescription filled came to my attention recently. My doctor’s office can dispense some medications directly to me. No, these aren’t samples but are actual medications designed and labeled to be dispensed by a doctor. Since first seeing it, I have wondered:
• Would a doctor prescribe the exact same drug, regardless of how it is being filled, or is this influencing prescribing decisions?
• Why would a doctor take on the additional risk and responsibility of dispensing drugs? Heaven knows, it is almost impossible to get more than 5 minutes with many doctors, leading me to believe they already have too much to do.
• How are these drugs marketed? I would imagine that they are largely generics, given the pricing structure of which I admit I only caught only a glimpse. Are sales representatives of generic drugs marketing these programs? What’s the connection between the generic manufacturer and the company handling the point-of-care dispensing?
• What’s the distribution model look like?
I know, the average patient isn’t too concerned about some of this, or even aware of it, but for someone in the industry, it actually is a little fascinating. So, being a semi-technologically savvy individual in the 21st century, I did what many of us do and I went to the internet. Interestingly, one company, MedX Sales, stood out and appears to be representative of this industry. In a press release from 2006, they point out the benefits of the program:
• Money savings – I think a patient without insurance might find this type of program more affordable but I find it difficult to believe that the contract prices offered to this Class of Trade are lower than those offered to PBMs. The purchasing power is not comparable and so the economics, never mind the politics, just don’t allow for it.
• Time savings – Not having to make a trip to the pharmacy definitely saves the patient time and is most likely the reason it is attractive to patients.
• Compliance by the patient – This model removes part of the patient compliance problem since there is no risk that the prescription won’t be filled, although it doesn’t guarantee that patients will actually take their medication.
• Reduces dispensing errors (drug, dosing and strength) – In general, this is also true but there is still a risk since doctors are most likely dispensing more than one drug.
• Confidentiality – This is another big benefit of this type of program since the patient does not have to go to another medical professional. Also, a doctor’s office is a more confidential environment than a pharmacy with other customers standing in line.
(The full press release is available at: http://www.prweb.com/releases/2006/5/prweb389810.htm)
In general, I can see the benefits of the program but I continue to go back to my questions: Why would a doctor do this? What’s in it for him/her?
So, I went directly to the MedX Sales website (http://www.pointofcaredispensing.net/) which is tailored to potential new doctors. It says, “You [the doctor] could be losing $50,000 or more each year by not dispensing today!”
Wow! I’m all for capitalism and believe doctors have as much right to make a profit as anyone else. However, I wonder if these programs are creating incentives that could result in bad medicine? The doctor has a direct benefit for prescribing specific drugs. This seems counter-intuitive to me for what constitutes compliance and good medicine.
The pharmaceutical industry is one of the most regulated in the U.S. and the compliance and scrutiny seem to be increasing. Some states now require that manufacturers track the value of a sandwich or a pack of pens given to a doctor. Yet that same doctor could be basing prescribing decisions based on financial incentives. Isn’t this what the Federal and State governments have been trying to eliminate?
(Be sure to check out tomorrow's post where I think through Big Pharma and acquisition and, oh yeah, the people. For Your Space, Steven.)
• Would a doctor prescribe the exact same drug, regardless of how it is being filled, or is this influencing prescribing decisions?
• Why would a doctor take on the additional risk and responsibility of dispensing drugs? Heaven knows, it is almost impossible to get more than 5 minutes with many doctors, leading me to believe they already have too much to do.
• How are these drugs marketed? I would imagine that they are largely generics, given the pricing structure of which I admit I only caught only a glimpse. Are sales representatives of generic drugs marketing these programs? What’s the connection between the generic manufacturer and the company handling the point-of-care dispensing?
• What’s the distribution model look like?
I know, the average patient isn’t too concerned about some of this, or even aware of it, but for someone in the industry, it actually is a little fascinating. So, being a semi-technologically savvy individual in the 21st century, I did what many of us do and I went to the internet. Interestingly, one company, MedX Sales, stood out and appears to be representative of this industry. In a press release from 2006, they point out the benefits of the program:
• Money savings – I think a patient without insurance might find this type of program more affordable but I find it difficult to believe that the contract prices offered to this Class of Trade are lower than those offered to PBMs. The purchasing power is not comparable and so the economics, never mind the politics, just don’t allow for it.
• Time savings – Not having to make a trip to the pharmacy definitely saves the patient time and is most likely the reason it is attractive to patients.
• Compliance by the patient – This model removes part of the patient compliance problem since there is no risk that the prescription won’t be filled, although it doesn’t guarantee that patients will actually take their medication.
• Reduces dispensing errors (drug, dosing and strength) – In general, this is also true but there is still a risk since doctors are most likely dispensing more than one drug.
• Confidentiality – This is another big benefit of this type of program since the patient does not have to go to another medical professional. Also, a doctor’s office is a more confidential environment than a pharmacy with other customers standing in line.
(The full press release is available at: http://www.prweb.com/releases/2006/5/prweb389810.htm)
In general, I can see the benefits of the program but I continue to go back to my questions: Why would a doctor do this? What’s in it for him/her?
So, I went directly to the MedX Sales website (http://www.pointofcaredispensing.net/) which is tailored to potential new doctors. It says, “You [the doctor] could be losing $50,000 or more each year by not dispensing today!”
Wow! I’m all for capitalism and believe doctors have as much right to make a profit as anyone else. However, I wonder if these programs are creating incentives that could result in bad medicine? The doctor has a direct benefit for prescribing specific drugs. This seems counter-intuitive to me for what constitutes compliance and good medicine.
The pharmaceutical industry is one of the most regulated in the U.S. and the compliance and scrutiny seem to be increasing. Some states now require that manufacturers track the value of a sandwich or a pack of pens given to a doctor. Yet that same doctor could be basing prescribing decisions based on financial incentives. Isn’t this what the Federal and State governments have been trying to eliminate?
(Be sure to check out tomorrow's post where I think through Big Pharma and acquisition and, oh yeah, the people. For Your Space, Steven.)
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