Friday, October 31, 2008
Courtesy of: Jacqueline O'Connor, CIS Marketing Associate
Half of doctors prescribe placebos, survey shows
FDA warns Bayer on marketing of 2 aspirins
Merck & the Shrinking Drug Industry
Biotech’s Glowing Breakthrough Wins Nobel Prize
States forced to cut health coverage for poor
Thursday, October 30, 2008
Recently, I could not help but notice the many announcements from U.S. Regulators that some major drug makers have participated in off-label promotion in various sales pitches. Specifically, the FDA said some sales aids overstated the effectiveness of a drug and minimized important risks. Other ads also suggested use for patients for whom the drug is not approved. The FDA also noted some convention materials were false and misleading because they overstated the efficacy and omit material facts regarding a drug's use.
Then, in what prosecutors called the largest health-care settlement in federal court here, Cephalon Inc. announced that it will pay $425 million to settle criminal and civil charges that it illegally marketed three of its drugs.
The suits alleged that Cephalon engaged in a scheme to market several brands for unapproved uses in violation of the Food, Drug and Cosmetic Act (FDCA), which requires a company to specify the intended uses of a product in its new drug application to the FDA. Once approved, a drug may not be marketed or promoted for so-called "off label" uses - any use not specified in an application and approved by FDA.
The suits against the company alleged that, as a result of Cephalon’s off-label marketing campaign, false claims for payment were submitted to federal insurance programs, which did not provide coverage for such off-label uses. The company is charged with one count of Distribution of Misbranded Drugs: Inadequate Directions for Use, a misdemeanor offense.
Cephalon undertook its off-label promotional practices via a variety of techniques, such as training its sales force to disregard restrictions of the FDA-approved label, and to promote the drugs for off-label uses.
This settlement is further evidence of the FDA’s willingness to prosecute cases involving violations of the FDCA and to recover taxpayer dollars used to pay for drugs sold as a result of illegal marketing campaigns. The FDA takes off-label marketing of drugs very seriously because of the potential for patient harm arising from promoting drugs for uses not approved by the FDA.
While doctors are free to prescribe medicines for any condition they believe appropriate, drug manufacturers can promote products in the United States only for FDA-approved uses.
In an interesting twist, these lawsuits were brought by former Cephalon employees and filed under the qui tam provisions of the False Claims Act. In January 2003, a former Cephalon sales representative, contacted the FDA about Cephalon's sales practices. The sales representative wore an undercover wire to a company sales conference to help the government gather evidence. In November 2003, another Cephalon sales representative filed the first of four "whistle-blower" lawsuits.
As part of the resolution of these allegations, the HHS Inspector General and Cephalon have entered into a five year Corporate Integrity Agreement, which requires Cephalon to send doctors a letter advising of this resolution, that it post payments to doctors on its web site and that its board and top management regularly certify that the company is in compliance with all applicable requirements.
So you tell me, does off-label promotion really pay? I think not. Especially when we now have proof that U.S. Regulatory officials are watching…
Wednesday, October 29, 2008
In Fiscal Year (FY) 2007, the Federal and State Government spent more than $333 billion on Medicaid. That sounds like a lot of money, until you consider that the projected spending for FY 2017 is $674 billion. 
Earlier this month, the Office of the Actuary at CMS released its first annual report on Medicaid financial trends and projected spending. Along with the projection above, I was fascinated with some of the other highlights from the report:
In the press release announcing the annual report, HHS Secretary Mike Leavitt said:
· Medicaid is projected to grow at more than twice the rate of general inflation over the next 10 years.
· The Federal Government’s portion of 2007 Medicaid spending accounted for approximately 7.0% of the Federal budget in 2007. By 2013, Medicaid is projected to consume at least 8.4% of the Federal budget.
· About 1 out of 5 persons were enrolled in Medicaid at some point during the year.
“This report should serve as an urgent reminder that the current path of Medicaid spending is unsustainable for both federal and state governments. We must act quickly to keep state Medicaid programs fiscally sound. If nothing is done to rein in these costs, access to health care for the nation’s most vulnerable citizens could be threatened.”
In light of the results presented in the report, the current downward spiral of the economy and the Deficit Reduction Act’s mandate that CMS reduce spending, what changes can we expect to the Medicaid program over the upcoming years? Although the report does not address the manufacturer’s role in Medicaid reimbursement, it seems likely to me that CMS will consider increasing manufacturer rebates to the States. One potential area for increased rebates is the Basic Rebate, which has been 15.1% of AMP (or AMP – BP, whichever is greater) for about 12 years. Some industry experts have speculated that the Basic percentage could increase to 20%.
 CMS website: Press Releases – October 17, 2008 (http://www.cms.hhs.gov/apps/media/press_releases.asp)
Another, more aggressive, means for States to get money from manufacturers is through lawsuits, like the ongoing AWP cases between many States and manufacturers. Can we expect to see more of these cases in the future?
In addition to wondering what changes will be made to the Medicaid program, and how they could affect manufacturers, I also wonder about the impact they will have on consumers. Will Medicaid enrollees suffer from changes to Government program funding? How will changes to the Medicaid program impact private health insurance, and the rest of the health care industry? We’ll have to wait and see.
 CMS website: Actuarial Report on the Financial Outlook for Medicaid (http://www.cms.hhs.gov/actuarialstudies/03_medicaidreport.asp?)
 CMS website: Press Releases – October 17, 2008 (http://www.cms.hhs.gov/apps/media/press_releases.asp)
Tuesday, October 28, 2008
Pharmaceutical Sales used to be the kind of job dreams are made of. Perks and benefits at every turn. A normal week on the job consisted of long, brutal days on the golf course with a handful of pediatricians; extravagant, expensive gourmet meals, at five-star restaurants with a bunch of surgeons; and taking a stroll around the local mall to pick out the perfect gifts for your favorite dermatologists. This dream week, however, is a thing of the past. With the federal government looking for more and more transparency in the pharmaceutical industry, and new additions to the PhRMA Code for interactions with health care professionals to take effect in 2009, this dream profession may turn into just another J-O-B.
As the public’s trust in the pharmaceutical industry dwindled, the federal government’s interest in the industry rose. Now, pharma companies are responsible for being more compliant and transparent than ever, and facing severe penalties if they are not. The government is investigating matters of interest, probing to see why doctors are receiving gifts from biotech/medical and pharmaceutical companies. In attempt to avoid such suspicious behavior, the new PhRMA Code, set to take effect in 2009, has now prohibited many of the interactions that dominated the pharma sales business in the past. The new rules include: no more meals in restaurants, stricter rules for speaking engagements, and even a ban on “chotzke’s”, including pens and notepads.
At the heart of this update is desire to regain the public’s trust in the pharmaceutical industry. Patients want to know that doctors have their best interests in mind, and that a doctor is prescribing them a drug solely for its health benefits, rather than for the perks provided by pharmaceutical sales reps. Training has also been highlighted in the PhRMA Code, which requires that sales reps are knowledgeable of their products and giving the best information to their doctors.
The world of pharmaceutical sales is in the process of getting a whole new feel. So if you were thinking about getting into this profession for the perks, you may want to reconsider.
1. Grassley, Kohl Seek Information About Money Going From Medical Device Makers To Doctors, USA ; http://www.medicalnewstoday.com/articles/126016.php
2. Facility Codes of Conduct for Pharmaceutical Sales Reps: How to Comply With Different Rules in Each Medical Center ; http://www.fdanews.com/conference/detail?eventId=2447
3. PhRMA Code’s revised guidelines take effect January 2009 ; http://abhishekkatiyar.wordpress.com/2008/07/16/phrma-codes-revised-guidelines-take-effect-january-2009/
Monday, October 27, 2008
As the US dollar lowered in value through the course of the year, many pharmaceutical companies expected to report greater earnings. In July, according to Val Brickates Kennedy from MarketWatch, “Major pharmaceutical companies are expected to roll out higher second-quarter earnings reports next week, helped partly by strong overseas sales stoked by a weak U.S. dollar.” We also saw many overseas companies showing their strengths by buying up US companies. Anglo-Swedish drug manufacturer AstraZeneca bought biotechnology company MedImmune Inc for $15.6 billion. Switzerland's Roche Holding acquired Ventana Medical Systems Inc VMSI.O for $3.4 billion; GlaxoSmithKline of Britain bought Reliant Pharmaceuticals for $1.65 billion.
I saw this when I visited Spain and witnessed firsthand just how much more I was spending buying simple things, such as, food and souvenirs. The same concept goes in reverse with International sales, and those over in Europe would in fact see our prices and think about how much less expensive they were.
This can go in the opposite direction, however. And as the dollar strengthens in the weak world economy, many major pharma companies are expecting drops in reported earnings. An example, reported by Ed Silverman states, “Johnson & Johnson, which reported third-quarter earnings yesterday, predicted that fourth-quarter company sales will be crimped 1.5 percentage points by the resurgent dollar. That stands in contrast with J&J’s earlier prediction that a weak dollar would add 3.5 percentage points to sales in the period.” Seamus Fernandez, an analyst with Leerink Swann, also adds that the negative impact of the stronger dollar could be “substantial” to US drug makers in the first through third quarters of 2009.
Even with our economy as volatile as it has been these last couple of weeks, we have seen slight increases to the strength of the dollar. With this increase, many companies are predicting overseas sales to drop. Though for many things the increased strength of the dollar is a good sign, pharma companies might be thinking otherwise. As Mike Krensavage, principal of Krensavage Asset Management, tells Rueters, “Currency has been a great benefit to the US drug makers, but what the dollar giveth, the dollar can take away.”
Friday, October 24, 2008
Determination of 340B eligibility is crucial for pharmaceutical manufacturers, and it can be difficult. At CIS, we have fielded countless questions from pharmaceutical manufacturers regarding Public Health Service (PHS) pricing and 340B eligibility. This blog has frequently tackled these vital, complex, and sometimes confusing topics: in the last two months alone, Karen Agama has written about 340B eligibility in her post on Class of Trade (COT), Debbe Saez has written about 340B abuses in her post about double dipping, and Chris Cobourn has written about PHS pricing implications in his post on BP restatements.
I have worked with databases provided by the Health Resources and Services Administration’s (HRSA) Office of Pharmacy Affairs (OPA) while working on a few different projects at CIS. More than once, I ran across something that I didn’t understand. Each time, I contacted the OPA. Most of the time, I ended up trading emails or speaking with Jae Choi, and most of the time I ended up with a much better understanding of the data and its possible uses. I thought I would ask Jae a few basic questions so he could explain exactly what the OPA does and what resources the OPA makes available for our readers.
The Pharma Compliance Blog (TPCB): For starters, what is your official title?
Jae Choi (JC): My official title is Program Management Officer.
TPCB: And what do you do?
JC: In my job, I play three active roles. I act as the database administrator, manage the OPA website content, and provide technical and operational assistance to our staff in managing the 340B Drug Pricing Program.
TPCB: You and I have spoken on several occasions regarding the structure and contents of OPA’s databases. What data is available on the OPA website?
JC: The OPA database is a live public database that provides up-to-date information for all of our 340B customers and external stakeholders. The main feature of the OPA database is that under the individual tabs found at our main menu, people can query for all participating 340B Covered Entities, Contract Pharmacies, and Manufacturers. This information is very important for manufacturers and wholesalers because they can identify the eligibility of 340B participants who are participating in the 340B Drug Pricing Program. It is the official federal repository of the participating Covered Entities to the 340B Program.
In addition, OPA database maintains the Medicaid Exclusion File to assist our stakeholders and to prevent duplicate discounting for the manufacturers. This Medicaid Exclusion File assists the state Medicaid agencies in identifying the 340B Covered Entities who are billing Medicaid so additional rebates are not billed to the manufacturers.
We also provide charts and figures of the 340B Program on a quarterly basis to give a historical perspective in the growth of the 340B Program.
TPCB: What sorts of non-data resources are available on OPA’s site?
JC: We post 340B legislation such as federal register notices, reports and guidelines from the Office of Pharmacy Affairs, Office of Inspector General (OIG), Centers for Medicare and Medicaid Services (CMS), and other Federal entities, as well as registration forms for participating in the 340B Program. We also capture program information for many of the covered entities as well as the program information for Contract Pharmacy and Alternative Methods Demonstration Projects (AMDP). The AMDP was established by OPA as a formal process for testing alternative methods of participating in the drug discount program and incorporating the methods which prove to be successful into the 340B program’s published guidelines.
In addition, the OPA website provides supporting information for our partners Apexus, who serves as the prime vendor for the PHS 340B program, and Pharmacy Services Support Center (PSSC), who provides technical assistance on OPA’s behalf. The OPA website keeps our stakeholders informed with current 340B issues, archived issues, frequently asked questions, and a glossary of 340B related terms. Lastly, OPA has taken an active role in HRSA’s Patient Safety and Clinical Pharmacy Services Collaborative to achieve optimal health outcomes and eliminate adverse drug events through increased clinical pharmacy services for the patients we serve.
TPCB: What kinds of resources are available through the OPA that would be of special interest to pharmaceutical manufacturers?
JC: As I have stated earlier, I believe both the OPA database and OPA website are very important to the pharmaceutical manufacturers. The OPA database allows the manufacturers to identify the 340B Covered Entities who are eligible and participating in the 340B Drug Discount Program. It also gives the state Medicaid Agencies and manufacturers access to the same Medicaid Exclusion File to assist in prevention of duplicate discounting. The OPA website will also help the manufacturers stay more engaged with the 340B program, relevant legislation, and issues that affect not only our 340B covered entities, but all of our stakeholders.
In addition, I strongly recommend the websites of our partners, PSSC and Apexus, the 340B Prime Vendor, to complement the resources that are available from the OPA and help manufacturers with the 340B program.
TPCB: Have there been any changes or improvements to the OPA’s databases over the last few years? If so, could you describe those changes or improvements (at a non-technical level)?
JC: We have very limited resources and a small staff of 12 dedicated people managing over 13,000 covered entities, 2,000 contract pharmacies, and 800 labeler codes for manufacturers. Nonetheless, we have made significant improvements over the last few years. Following the OIG’s recommendations in 2005, HRSA made a strong commitment to making significant improvements to the OPA database. This effort was spearheaded by my team leader Sharley Chen, who will be retiring at the end of this year.
Some of the major improvements include moving from a static quarterly upload to a live online database, the creation of parent/child relationships for covered entities, and the introduction of online registration forms for FP, STD, and TB. Other improvements include the addition of new views, enhanced flexibility with regards to selecting fields and information for downloading based on user needs, and the ability to view entities scheduled to be added and terminated in the upcoming quarter.
Additionally, the Medicaid Exclusion File was enhanced so users can query based on key information such as the Medicaid Number, etc. Lastly, another important improvement includes online recertification for the STD, TB, and Ryan White programs to increase the integrity of the information in the OPA database. The OPA is continuing to make significant improvements with the assistance of customer feedback and with the full support of HRSA.
TPCB: I sent you an email a few weeks ago about the data in the OPA’s Covered Entity database. You were unable to reply for several days because you were down in the Gulf area, helping with relief efforts following hurricanes Gustav and Ike. How long were you down there, and what sort of support were you providing?
JC: I serve in the Commissioned Corps of the U.S. Public Health Service (USPHS). The USPHS Commissioned Corps is a group of more than 6,000 public health professionals dedicated to delivering the Nation's public health promotion and disease prevention programs and advancing public health science. We normally work as health care professionals in one of the Department of Health and Human Services Agencies.
During national disasters, the Commissioned Corps is deployed to assist and provide relief support to the affected states along with other federal agencies. I am a pharmacist by training, and I am part of the Rapid Deployment Force (RDF-2) team. As a result of Hurricane Gustav, the RDF-2 Team was deployed to Alexandria, LA to provide medical support for 19 days. We set up and supported a 250 bed medical facility shelter at the Alexandria Riverfront Center for the special needs patients who were displaced from their parishes due to Hurricane Gustav.
TPCB: That makes the question I had at the time sound pretty trivial. I’m sure our readers appreciate your efforts to provide aid for the victims of this natural disaster.
I’d like to thank Jae for conducting this interview with me, and I’d also like to thank him for the time he has spent helping me understand the data offered by the OPA and its uses. If you would like to contact the OPA, you can call the PSSC line (1-800-628-6297) or write to the OPA’s general email address (firstname.lastname@example.org). Of course, you can also access the OPA’s homepage and their databases online.
Thursday, October 23, 2008
In an article published on September 24 in USA Today, the concept of ethics was raised. (Remember, this is when the Dow Jones was at 10,854, before the $700 billion bailout and subsequent AIG $400,000 getaway.) Interviewed for the article was Michael Lissack, a former stockbroker who participated in a fraud scheme in the mid-1990s and now speaks to business school students about ethics. He is quoted as saying, “ethical education in business school is a joke… In finance and accounting, you’re basically taught how to look for loopholes you can drive a truck through.” Wow! Really? Tell me it’s not so…
The article further substantiates its case by pointing to a report in 2004 by the Association to Advance Collegiate Schools of Business (the group that grants accreditation to MBA programs). “The report addressed the concern that schools are ‘teaching students to bend the rules to make the numbers’ and ‘glossing over ethical conduct in examining business transactions and … [that they] encourage students to bypass policies, procedures and even the law to ensure favorable results.’”
In a post-Enron world, I must admit that as someone who educates others about compliance, I’m still shocked when I read about people, especially students, being encouraged to bypass policies, procedures and laws. I was raised by parents who taught me to do the right thing, one of whom made a very difficult ethical decision that, for all intents and purposes, ended a career. Right and wrong are not always crystal clear, but let’s be honest, we usually know when we’ve moved out of the proverbial gray area and into something that is just plain wrong.
So now you’re asking yourself, “What’s the connection of the financial crisis to pharma,” since this blog is supposed to be about pharma? I think the pharmaceutical industry may be indicative of the direction we can expect for other industries (ie, mortgage companies and financial services). A pharmaceutical company is not allowed to claim whatever it wants in a direct-to-consumer marketing piece. Maybe a mortgage company will have to fully disclose all terms of a loan in an advertising piece. In the District of Columbia, sales representatives must now be licensed and have proof of adequate education and/or experience. Imagine if all states required the same of mortgage brokers.
Is more regulation the answer? Maybe in a few key areas it is warranted, but I don’t think it is the entire answer. When looking at the connections between the two, the Pharma Marketing Blog (http://pharmamkting.blogspot.com/) advocates, “It's not that we need more regulations from the FDA (or from the SEC). What we need is proactive enforcement of regulations already on the books.” I would agree with this statement (for many industries) but would add that more self-regulation and industry standards are also warranted.
Members of PhRMA must abide by “the PhRMA Code,” which sets rules for the marketing and promotion of prescription drugs. However, many non-member manufacturers choose to follow the PhRMA Code because it has become an industry standard. It creates a level playing field for all competitors in the marketplace, set by people who understand the nuances of the industry. Of course, there have been times when the government has added laws and regulations because lawmakers believed pharmaceutical manufacturers were acting improperly. But imagine how much more regulated the industry would be without the PhRMA Code…
I would never suggest that I know where to begin to fix the financial problems that have arisen over the last 4 – 6 weeks. However, I think that if the financial industries involved want to restore their public image and maintain a small amount of control over their short- and mid-term futures, taking a proactive approach may be a good first step. If an industry that requires this much assistance from taxpayers cannot set, impose and abide by its own standards of ethics, I think it is inevitable that the government will legislate ethical activity for them.
1. “Main Street’s blind faith,” USA Today, September 24, 2008, Page 11A
2. “Ethics Education in Business Schools,” Association to Advance Collegiate Schools of Business, 2004
Wednesday, October 22, 2008
By now, most manufacturers have filled out the necessary questionnaire to retrieve their utilization data and calculate TRICARE refunds. So, I assume that most manufacturers are in a very similar situation to those I have talked to…..frustrated beyond belief.
If you’ve been diligently checking in to www.tricare.mil/pharm_mfg/default.cfm to keep up with the TRICARE soap opera over the past few months, or if you’ve been reading the CIS updates, you are well aware of the following chain of events:
- TRICARE was historically a voluntary rebate program for those agents who were placed on the Department of Defense (DoD) Uniform Formulary.
- The National Defense Authorization Act 2008 (the Act) was passed on January 28, 2008.
- Section 703 of the Act states that the TRICARE retail pharmacy program is to be treated as an element of the DoD, for purposes of the procurement of drugs by Federal agencies who will be subject to Federal Ceiling Prices (FCP)
- The Act required the DoD to “modify the requirements under” the TRICARE Pharmacy Benefits Program “to implement the requirements” of the new Act.
- The DoD Proposed Rule was eventually promulgated on July 25, 2008 in the Federal Register.
- While the Rule is still proposed and not yet final, the Pharmaceutical Operations Directorate of TRICARE Management Activity has provided manufacturers the opportunity to accrue refunds, even though they are not yet required to do so, by releasing their utilization data.
- In order to procure the utilization data, manufacturers whose products appear on the Federal Supply Schedule (FSS) began receiving questionnaires as early as April 2008.
- In August 2008, the utilization data became available for manufactures to retrieve, assuming they filled out the questionnaire that was sent to them.
This brings us to present day, and the frustrations manufacturers are facing. The most common struggles are as follows:
Data is difficult to retrieve. Once the questionnaire is completed and returned, the manufacturer receives instructions to retrieve data through an Internet website. Once the manufacturer gets to this data, there is no refund amount; in fact, the data is divided into a number of different files that need to be pieced together. But that’s not the only problem, to make matters worse, the units are in metrics, so the manufacturer is forced to perform conversion calculations before the refund calculations can even be performed.
Reconciliation of State Invoices (ROSIs) are a Medicaid instrument and are not set up to report TRICARE rebates. Once the data is navigated, and the refund calculations are complete (difference between annual Non-FAMP and Federal Ceiling Price) the refunds need to be entered in to a Medicaid ROSI. No, not a TRICARE ROSI, the same Medicaid ROSI the manufacturer uses to submit rebates to state Medicaid agencies. This ROSI does not have the proper fields or headings for TRICARE data. This was highlighted as an anticipated problem by many manufacturers back in April (see my April 16, 2008 blog posting) and has now turned into a practical problem. Manufacturers must only submit one ROSI to the federal government, not the state, and use Medicaid dispute codes for TRICARE data. Some manufactures are attempting to tailor the Medicaid ROSI to TRICARE which adds one more step to this arduous process.
All products, branded and generic are included in the utilization data. An unexpected problem that many manufacturers encounter is that all of their products offered on the FSS are being returned in the utilization data. TRICARE refunds are only supposed to be calculated for branded products, yet the utilization data is for both branded and generic products, assuming the manufacturer chooses to offer generics on the FSS. This causes a problem because all of the data must be accounted for on the ROSI or it will not tie out. Therefore, the manufacturer must account for both branded and generic products, then enter an exemption code for the generic products. Yet another unnecessary step.
Unfortunately, these problems are common for both small and large manufacturers, and we can only hope they are just growing pains. We at CIS will continue to talk to manufacturers and share their problems and solutions. Please feel free to contact me to discuss this, or any TRICARE update, or if you just want to vent!
Good luck, and be on the lookout for the DoD Final Rule. The comment period was up on September 23, 2008, so a Final Rule could be around the corner. In the meantime, even if you aren’t calculating rebates because it’s not yet required, you should really be accruing for the refunds…
Tuesday, October 21, 2008
Before I begin, let’s review the economy as of late. To put it bluntly, it’s not good. As of October 16th, the DOW has dropped 32.9% year to date, housing foreclosures are at an all time high, and the latest unemployment rate is 6.1% with 760,000 jobs lost year-to-date2. This has impacted the retail sector, leading to declining retail sales three months in a row for the first time since 1992, according to government data. So what does this mean to the healthcare industry?
One big impact is being felt directly by patients and their families. The loss of jobs obviously lowers a family’s income and spending ability, it also brings with it a loss of healthcare insurance. So how are patients and families affected by the economy battling rising healthcare costs? One way patients cope is by not following their recommended dosing of prescription medicines, in an attempt to stretch their current supply. This is especially true with cholesterol and blood pressure medicine. “In July, a poll by the National Association of Insurance Commissioners found that 11 percent of Americans had cut back on their dosages to make meds last longer”. While this strategy may help a family get through tough times, the impact of missed doses on the patient’s overall health, especially in regards to health issues like high cholesterol and blood pressure, is unknown and may prove to be far more costly to the patient’s family in the long run.
But patients and families are not the only ones affected. If the consumer, a phrase I don’t feel comfortable using in place of “patient,” has less spending power, it follows that pharmaceutical companies will have to adapt their sales and marketing practices as well. Among the hardest hit are direct-to-consumer advertising and sales forces. According to research performed by BrandWeek, pharmaceutical advertising spending is down compared to the previous year for the first time ever. Specifically hit are image and education ads, designed to market a company or educate the public on a specific health care issue. Spending on these ads has fallen from $660 million in 2006 to $138 million year-to-date in 2008.
In addition, more and more pharmaceutical companies are cutting back their sales forces or turning to companies like inVentiv Health, a sales-and-marketing firm, to outsource pieces of their sales force. According to inVentiv, “[R]ather than recruit, hire, or keep full-time representatives on the books, we're creating a more flexible approach,” so companies can shrink or grow their sales forces at will.
One interesting side-effect of this problem, however, is that new opportunities for sales reps affected by layoffs could be created via the pharmaceutical industry’s continued growth in emerging markets. Of course, this would require relocation outside the U.S. But given the current state of the economy, a change of scenery might not be so bad…
 CNN (2008, October 16). Citing electronic sources retrieved October 17, 2008 from http://money.cnn.com/data/markets/dow/?
 CNN (2008, October 3). Citing electronic sources retrieved October 17, 2008 from http://money.cnn.com/2008/10/03/news/economy/jobs_september/index.htm
 Wall Street Journal (2008, September 4) citing electronic sources retrieved October 17, 2008 from http://blogs.wsj.com/health/2008/09/05/walgreen-ceo-bad-economy-hurts-prescriptions/
 FiercePharma (2008, September 30). Citing electronic sources retrieved October 17, 2008 from http://www.fiercepharma.com/story/pharma-cuts-2008-ad-budgets/2008-09-30
 FiercePharma (2008, September 22). Citing electronic sources retrieved October 17, 2008 from http://www.fiercepharma.com/story/merck-outsources-sales-force/2008-09-22
Monday, October 20, 2008
Most would agree that the US in modern times has become a highly litigious culture, with lawsuits ranging from the absolutely ridiculous to the very serious. The Bush administration has long been making efforts to reduce lawsuits and curb this litigious behavior. Now when it comes to product safety, most would probably agree that lawsuits are of the “very serious” nature and should be aggressively pursued. However, the Bush administration has recently been revising a number of regulations to incorporate language that serves to prevent lawsuits.
These regulations are related to a number of industries, and one of the most important is the pharmaceutical industry. In fact, a majority of the new lawsuit pre-emption rules have been introduced in the FDA. Many of the numerous product safety lawsuits have centered on a failure to provide adequate warnings. The pharma industry argues that one of the key problems has been inconsistency between state and federal product warning regulations. Pharma companies can have different standards to comply with, which is no doubt a serious problem when it comes to product labeling.
The pharma industry, however, does have the FDA on its side now when it comes to regulations aimed at pre-empting product warning lawsuits. FDA drug labeling rules basically make the FDA accountable for the language in product warning labels. If a drug maker complies with FDA product labeling regulations, then it can be protected from a product safety lawsuit. In addition, according to FDA regulations, federal safety standards take precedence over state standards. So in cases of inconsistency between state and federal standards, a drug company will be protected if it has complied with the federal regulation.
A good example is a case to be heard by the Supreme Court next month: Wyeth vs. Levine. Diana Levine developed gangrene after being administered an anti-migraine drug manufactured by Wyeth, which then caused her to lose an arm. Diana Levine is claming that Wyeth did not provide sufficient warning of the potential side effects under Vermont law. However, Wyeth is claiming that it followed federal standards in its warning label and is therefore not liable. The FDA is supporting Wyeth.
The Bush administration’s efforts to curtail product safety lawsuits are undoubtedly a positive for the pharma industry. However, it is tough to not look at both sides of this issue. Many feel that these efforts show that the administration is in favor of protecting corporate America at the expense of the common consumer. On the other hand, there is a legitimate need to protect corporations from unfair lawsuits. Some would argue, however, that when it comes to drug safety, all lawsuits designed to protect the public are fair. It will be interesting to see the long-term impacts of these recent and current efforts to curtail product safety lawsuits.
Wall Street Journal
Thursday, October 16, 2008
The FDA is targeting pharma’s use of social media, such as YouTube, to promote drugs. Many believe there are no regulations regarding the content of videos posted, and that pharma companies can say whatever they want. Please do not be fooled into thinking this is the case. The FDA is, in fact, focusing on the content within these videos, and they are very quick to respond with a warning letter if necessary.
The question now is “what is appropriate to post on YouTube?” While there is no specific guidance from the FDA addressing this issue, I imagine there will be one within the next year or two. Many suggest that pharma companies should begin their YouTube campaigns by promoting unbranded drugs or disease states, and avoid promoting their branded drugs through the social media outlet. However, YouTube generates more viewer traffic than any other medium, so companies could lose a valuable edge by excluding the promotion of their branded drugs. Just remember that promotional material intended for YouTube should be treated like any other promotional content intended for a pamphlet or informational website. All relevant regulations apply. For example, do not promote off-label indications, do not omit important safety information, and do not overstate efficacy. In other words, content will always be content despite methods of advertising.
Now, one problem is that anyone can post to YouTube, so this raises the issue of whether the manufacturer/affiliate promoted the drug or a random consumer decided to talk about his/her experience taking the drug. This issue was raised during a question/answer period this past September at the FDLI conference in Washington, DC. Someone explicitly asked if we, meaning the pharma companies, were responsible for random promotion on YouTube. The representative from the FDA was quick to answer yes and suggested that this be monitored and flagged for removal by the relevant company.
I encourage the use of YouTube as it is an effective means of advertising drugs but remember that the FDA is watching, and it is wrong to assume that lack of regulation means you can do it (in this case). As for the random promotion from non-affiliates, you must keep those in check and flag/eliminate anything that is false or mis-leading.
Wednesday, October 15, 2008
District of Columbia Final Rule: Licensure of Pharmaceutical Detailers – Summary of Chapter 83, Title 17
The Director of the Department of Health for the District of Columbia (DC) has given notice of the adoption of a new chapter (83) of Title 17 (Business, Occupations and Professions) of the District of Columbia Municipal Regulations, entitled “Pharmaceutical Detailers”, which requires the licensure and regulation of the practice of pharmaceutical detailing in Washington, DC.
As of April 1, 2009, Pharmaceutical Detailers, more commonly known as pharmaceutical sales representatives, must hold a license to work in DC or risk a fine of up to ten thousand dollars ($10,000.00). In order to receive a license an applicant must: complete an application; submit two (2) recent passport-type photos and a photocopy of a government issued photo ID such as a driver’s license; submit a notarized statement attesting to the fact that the applicant agrees to abide by the requirements of pharmaceutical detailing including the code of ethics described in the law; and submit proof of graduating from an institute of higher education. (The Department of Health has made accommodations for an applicant that has worked as a pharmaceutical representative but is not a graduate by allowing a waiver for applicants who have worked fulltime as a representative for at least 12 months prior to March 26, 2008.) As the present ruling stands, after the initial licensing period, all licenses will expire at mid-night on the last day of February 2010 and at the same time on even numbered years thereafter.
In order to renew, reactivate or reinstate a license, an applicant must complete a minimum of fifteen (15) hours of approved continuing education during the two (2) year period proceeding the date the license will expire. The licensee will be required to attest to the completion of the continuing education and may be required to provide proof if requested to do so as part of an audit. To reactivate or reinstate an inactive license, the applicant would be required to submit proof of completing the continuing education credit within the two (2) year period preceding the date of the application, plus an additional eight (8) hours of continuing education credit for every year the license was inactive.
One continuing education credit is defined as a program of a minimum of fifty (50) minutes that provides instruction in one of the following areas: instructions in FDA laws and regulations pertaining to drug marketing, labeling and clinical trials; general medical and pharmaceutical terminology; professional ethics and pharmacology. Continuing education programs can be given through a variety of means including conferences, lectures, seminars or on the internet and can be offered through an accredited program provider, a governmental unit, a healthcare facility, a pharmaceutical company or an accredited institute of higher learning. The applicant is responsible for determining if a program is approved by the Board prior to attending the program. The Board allows for instructors, speakers, in-service training or publishing an article in a professional journal as alternative continuing education activities.
In addition to the requirements for continuing education, detailers will be required to retain documents and information regarding communications with healthcare professionals, the employees of healthcare professionals for five years. Retention of the records is addressed through the requirement that the Board be notified within ten (10) days of the end of the employment with the contact information of the contact person in the company who will be responsible for retrieving the records until the five years period is expired.
The final rule includes fees for the licensure and the provision for the Board to begin random audits of the licensed detailers after the year 2010.
Tuesday, October 14, 2008
With the stock market in a downward spiral, and the unemployment rate at 6.1%, the highest since 2003, there is no doubt that difficult financial times are upon us. Every industry has been affected, and the pharmaceutical industry is no exception. Layoffs have hit many pharma companies in the past few years, with some companies laying off over 10,000 employees (1). Even the companies not laying off their employees have slowed or frozen hiring for new and open positions. Then there are the pharmas being bought by larger companies or filing for bankruptcy.
AtheroGenics is among those filing for bankruptcy, but the company is hopeful that its products in clinical and pre-clinical studies will continue to be developed, and someday sold (2). Along with layoffs, Pfizer is narrowing its research focus by cutting current research areas, as well as embarking on projects that it hopes will be able to increase profits (1). “As part of its shift, the company will sell or share rights to at least 11 medicines in early testing for diseases the company no longer believes profitable enough” (1).
Layoffs. Bankruptcy. Selling product rights. What do these things mean for compliance?
Layoffs of older employees, who are then replaced by less experienced employees to reduce cost, mean certain roles may be filled by people who are not familiar with important compliance issues. If these employees do not follow procedures that are written to be compliant with federal statutes, the company could be vulnerable to negative audit findings, and resulting fines or sanctions imposed by the federal government.
Companies acquiring products from other pharmas as the result of a sale or bankruptcy filing must also be very proactive in assuring compliance. Any issues acquired with a product or its associated procedures will become the responsibility of the new owner, and must be dealt with immediately to prevent fines and loss of revenue.
Another factor affecting compliance issues in these unsettling financial times is the upcoming presidential election. While the presidential candidates have different ideas of how to deal with health care and the economy, they agree that something must be done. CIS posted articles exploring the Obama/Biden ticket (“Obama-Biden Ticket Planning for Change” by Clarissa Crain) and the McCain/Palin ticket (“McCain-Palin Ticket Free Market Driven” by America Castro), and Tuesday night’s debate allowed further insight into each of the candidates’ plans.
Senator Barack Obama and Senator John McCain have different opinions on how to provide choices in healthcare coverage, with Senator Obama wanting to expand federal healthcare programs to provide more coverage, and Senator McCain wanting to provide a tax credit to reduce healthcare costs. “McCain also said it was important to reform the giant benefit programs such as Medicare, Medicaid and Social Security” (4), and Obama said “we’re going to have to take on entitlements and I think we’ve got to do it quickly,” adding that he would do it in his first term as president (3). For more on each candidate’s plan, see their websites: BarackObama.com and JohnMcCain.com.
Either way, both candidates mean changes to compliance issues faced by the pharmaceutical industry. But we’ll think about that in November.
1. Pfizer Narrows Research Focus in Chase for New Drugs (Update 1)
2. AtheroGenics Files Chapter 11 Bankruptcy
3. The Second Presidential Debate
4. McCain, Obama clash over economic crisis
Monday, October 13, 2008
This one’s a bit off topic for the Pharma Compliance Blog, but it’s dominating the headlines so much I thought I’d take a stab at giving some serious --- and not so serious --- economic advice in this time of great uncertainty.
1. Don’t look at the Stock Market. As in, don’t ever look. 10,000 to 9,000 to 8,000 to ? It’s not worth it. As much as it is truly human nature to partake in morbid curiosity, this is one of those times that you want to close your eyes. Like looking at the sun or rubber-necking at the site of an awful accident, you’re going to regret it. Collectively, we need to take an oath to avoid looking at the market so we can eliminate some of the negativity that inevitably arises from this behavior. As I write this, the DOW is down 282.04 points…
2. Oh --- that includes your 401K. Okay, this is a definite. Don’t look at it. Ever. The way 401Ks are set up, if the market plummets, you guessed it. Diversifying your portfolio is awesome --- except when the entire breadth of that diversity is tanking. So don’t look at your 401K unless you absolutely have to. Oh yeah, I just checked with co-worker Clarissa Crain and her personal rate of return beats mine…Dangit!
3. Buy Stocks that involve Alcohol. I don’t think I have to explain this one. If you think I do, you need a drink.
4. Don’t buy bank stocks. See #3.
5. Shop for clothes at places like Ross & Marshall. Big secret to let out here --- I do! Why spend $79 on a Polo shirt when you can get one equally as nice with a small brown spot for $9.99. Why spend $40 on designer flip-flops. They’re flip-flops for crying out loud! Why buy a suit for $1,000. Nobody wears suits any more except for bankers and, well…
6. Buy multiple birdfeeders or a SMALL fish tank. I’m a big nature guy and beautifying your own home is one way to deal with economic crisis. It keeps you home and keeps you happy. Birdfeeders bring our colorful, winged friends close by. Birdseed is inexpensive and your children and family can learn to appreciate the beauty of birds without leaving the house and pay $3.80 per gallon. Oh and just remember that squirrels are just like bunny rabbits, except for the whole cute, not a nuisance thing. The same goes for a fish tank. But please, for the love of all things sacred and holy, make it a small one. As some of you know, a major malfunction with my fish tank caused a wet headache that still requires several Advil a day.
7. If you’re young, stay in the game but look out for your parents. This is not funny. This is the truth. If possible, get in the game now and you’ll be happy you did some day. However, these times are going to be tough for the younger generation’s parents. Look out for them and, while not being nosy, try to make sure they have safe positions in this unwieldy market.
8. If you’re old, go after your children’s money. Hey, you’ve supported us our whole lives. You bought us the original Nintendo on Christmas Eve, punching out some random guy to get it. You came to our dreadfully boring soccer games from the age of 5-8 and even brought sliced oranges. You tolerated us through puberty. You bought us a puppy that we cared about for the first 3 months when the dog was actually ‘cute,’ and you ended up walking it at 5:30 every morning before catching the bus --- in the rain. You fed us. You paid for our vacations. You took us fishing. You took us shopping. You made our proms special. You looked the other way when it was right. You didn’t look the other way when it was necessary. You paid for our college education, our housing and books. You let us move home when we struggled right out of school. It’s your turn to look to us and, I’m willing to bet, most of us are more than willing to help out if need be.
9. If you did not heed #1, put on some music --- when you’re home alone --- and cry. There’s nothing like a good cry. I prefer listening to James Blunt’s ‘Goodbye My Lover’ with a Dirty Stevetini in hand. A good cry always makes you feel better --- or at least leads to another drink.
Hang in there everyone. As you know, the market has always gone in cycles. And always remember to try and laugh whenever possible.
Laughter is 100% free and has the greatest return on investment out there right now.
For Your Space,
Thursday, October 9, 2008
Are you aware of where your company stands on commercial compliance? This quick quiz will help you evaluate your company’s program, as it relates to the key components and considerations of US Commercial Compliance. Please note that this is not an exhaustive quiz; there are many other considerations that must be taken into account when evaluating your company’s program.
1.) Are you aware of, and compliant with, the “OIG Compliance Program Guidance for Pharmaceutical Manufacturers?”
The “OIG Compliance Program Guidance for Pharmaceutical Manufacturers” outlines the seven elements of an effective compliance program. These elements are:
• Implementing written policies and procedures;
• Designating a compliance officer and compliance committee;
• Conducting effective training and education;
• Developing effective lines of communication;
• Conducting internal monitoring and auditing;
• Enforcing standards through well-publicized disciplinary guidelines; and
• Responding promptly to detected problems and undertaking corrective action.
While the OIG’s guidance does not have the power of law, it is considered the standard for US Commercial Compliance.
2.) Do your sales and marketing processes adhere to the “PhRMA Code on Interactions with Healthcare Professionals?”
The PhRMA code is an elective guidance document developed by the members of PhRMA to guide their sales and marketing forces in interactions with healthcare professionals. The PhRMA code outlines guidance related to areas including:
• Basics of Interactions;
• Informational Presentations;
• 3rd Party Educational or Professional Meetings;
• Speaker Training Meetings;
• Scholarships & Educational Funds;
• Educational and Practice Related Items; and
• Independence and Decision Making.
The code, while elective, has been written into law with respects to the California Health and Safety Code Section 119400-119402 and Nevada’s Assembly Bill 128. (Hint: this may come up in another quiz question…)
3.) Are you aware of, prepared to implement, and provide training on the revised “PhRMA Code on Interactions with Healthcare Professionals” which becomes effective January 2009?
The revised PhRMA code provides further guidance on areas such as meals, entertainment, speakers, and non-educational promotional items. In addition, the code adds guidance related to disclosure of consultative relationships with physicians, use of non-patient identified data, and training of sales representatives. For an in depth review of the changes and additions in the 2009 Code, see Pharma Compliance Blog Post “The New PhRMA Code,” at: http://pharmacomplianceblog.blogspot.com/2008/07/new-phrma-code.html.
4.) Are you in compliance with California Health and Safety Code Section 119400-119402, which requires you to post your Comprehensive Compliance Program on the web and provide a hotline number for questions related to the Comprehensive Compliance Program?
The California Health and Safety Code calls for manufacturers marketing prescription drug products in the state of California to publish a Comprehensive Compliance Program, which includes a commitment to adhere to the PhRMA Code and the OIG Compliance Program Guidance for Pharmaceutical Manufacturers, and publish a toll free hotline number.
5.) Are you aware of, and in compliance with, Nevada State Board of Pharmacy Assembly Bill 128?
According to Nevada AB 128, effective October 1, 2007 manufacturers marketing prescription or over the counter drugs in the state of Nevada are to complete a compliance form and register with the state. Registration suggests that manufacturers should develop compliance programs in alignment with the PhRMA Code. These programs should also include clear procedures for compliance investigations and training.
Note: Nevada was to have published a listing of manufacturers registered with the state in June 2008, however to date, the listing has not been published.
So, how did you fair? Is your company on track with respect to US Corporate Compliance issues presented in this blog?
Direct-to-Consumer (DTC) advertising by the pharma industry for prescription medications has been under scrutiny for many years. Now the medical device community is dealing with similar pressures. Although medical device DTC advertising may be less common, we are nevertheless being exposed to it. The poster on the waiting room wall of the Orthopedics office, advertising replacement knees for women, is not geared towards medical professionals.
In mid September, the US Senate heard from the Center for Devices and Radiological Health[i] (CDRH), which explained that the misbranding of devices in DTC advertising is usually not discovered until trade complaints are received. Since device manufacturers are not required to submit promotional materials to the FDA at the time of dissemination, involvement from the CDRH’s Office of Compliance is mostly post hoc. Even so, 20% of warning letters issued in the last 12 months by CDRH address product misbranding[ii]. But should all device manufacturers be required to submit promotional materials to the CDRH prior to dissemination? I don’t think it will be long before promotional submissions become a requirement for restricted devices (i.e., devices for which the FDA is authorized to restrict the sale, distribution, or use).
For non-restricted devices, the Federal Trade Commission (FTC) regulates advertising, but what kind of advertising? Who is regulating the promotion of non-restricted devices from device manufacturers to healthcare professionals? I ask this question because I’ve had conversations with former sales professionals who had experience in this environment. One made references to using slander of competitors as a sales tactic. The other indicated cold calling with the promise of free samples for trial. These certainly aren’t new sales tactics, but when it comes to healthcare it takes on a new light. When dealing with a patient with a compromised immune system, do you want to be trying a new product that it turns out has a higher rate of infection than its competitor? Not really. But as a healthcare professional you don’t want to limit yourself or your institution from advancement because you are afraid to try a product either.
I predict the requirement for submission of restricted device promotional materials to CDRH at the time of dissemination will come to fruition within the next two years. How long do you think device manufacturers will be able to keep up their sales tactics for non-regulated devices before they come under higher scrutiny?
Wednesday, October 8, 2008
Anyone who’s worked with customer classifications in the pharmaceutical and biotechnology industries can attest that, in some cases, you have to be practically standing on a facility’s doorstep in order to properly assess the nature of its business. To complicate matters further, once you know what an entity is, you then have the task of determining which Class of Trade (COT) definition fits that facility type, depending on which price type you’re calculating.
CIS Practice Lead, Chris Coburn regaled you in August with some of the reasons that reliance on a single source, such as a GPO list, for COT designations can lead to errors in your Federal pricing calculations and reporting (The pitfalls of using GPO COT designations!). In November of last year, another of our esteemed colleagues, Clarissa Crain described the importance of being “plugged in” to the definitions and methodology developed by the GP pros (Common Class of Trade Challenges). If you spend enough time with COT, you begin to realize that the more you know, the more you need to know. So, to help you in your COT journey, here are some tips on how to get it right.
You have to start somewhere, right? So, take the original source (e.g., GPO) designation as a starting point… keeping in mind that trust issues aren’t always a bad thing. When data integrity is at stake, never trust a single source. Establish a logical discovery process that can be consistently replicated by multiple users, even if the users don’t have COT knowledge, or any idea how the assignments affect GP. This can be accomplished by developing a decision or classification tree to derive a discrete outcome. Besides promoting consistency, integrating this step into your process provides documentation that your business practices support your company-specific assumptions.
Your decision tree will be as unique as your business model and data collection methodologies, but there will still be gray areas (we are talking about Federal programs, after all). Hospital inpatient and outpatient classifications are good examples. Hospital drugs administered to inpatients are specifically excluded from AMP by law, but outpatient sales are included in the Medicaid Drug Rebate Program’s definition of “retail class of trade.” CMS acknowledged in the DRA Final Rule that manufacturers often experience difficulty determining whether drugs sold to hospitals are used in an outpatient setting. Therefore, where the manufacturer cannot identify and document hospital sales for outpatient use, CMS permits manufacturers to exclude hospital sales from AMP.
As a tool designed to make informed conclusions, the decision tree should include links or references to the various industry sources that will facilitate, support, or even definitively confirm the trade classification and calculation treatment of each entity type. These links and references should be diverse, and inclusive of the many market segments into which a class of trade might fall.
The OPA Covered Entity and Contract Pharmacy Data Extracts are also essential references for your toolbox, as these lists contain quarterly designation changes. Not keeping up with the lists could cost a company dearly. Without an accurate data extract, for example, a company could unintentionally set their Medicaid Best Price (BP) too low. If a 340B Covered Entity or Contract Pharmacy drops off the list, but 340B pricing is still honored for that facility, that price could set BP for that quarter. Think about what that would do to your Medicaid rebate liability and PHS pricing down the line. You might realize that you never knew your CFO’s face could turn that shade of purple!
Sound COT business practices will serve your GP functions and larger strategic objectives well. CIS can get you on the right track, and we’re just a click away!
Learn more about our COT schema and validation services at:
View our contact information at:
Tuesday, October 7, 2008
This is the story of Mount Sample. It begins on an ordinary day in Albany, NY. Jonny Rep opens his eyes and stares at the ceiling in the master bedroom of his spacious, three bedroom townhouse. He gets up, walks downstairs, opens his computer and traces his first signature of the day.
2 boxes of samples
x Lou Spitzinhouser, MD
Shortly after that Jonny gravitates to the TV.
“Springer - SWEEEEEET!”
After an hour of trashy television, Jonny throws on his jeans, traces another signature, and shuffles out the door. Today is different than most, because today Jonny has work to do. He has to get ready for tomorrow’s appointment with the Independent Sample Auditor.
Jonny arrives at his storage facility with a pen and paper in one hand and a calculator in the other.
“It’s sample reconciling time!”
How many samples did I receive in last month’s inventory?
- How many samples did I say I gave out this month?
= How many I’m going to have when my independent auditor counts my samples!
It’s simple math! Perfect every time!
Everything a rep needs to fake his inventory is in his company issued computer system.
Reps are supposed to visit doctors, tell them about new products, and give them free samples of drugs for their patients to try. Doctor sign that they received the samples, and the reps record the transactions on their computers. This seems pretty straightforward, but then again why would you spend time talking to doctors when you can forge their signatures from home?
Most companies tie the number of samples handed out to the number of signatures obtained… So if a rep is forging signatures, what happens to all the drug samples he never delivered?
I’ll give you a hint…. Did you ever look closely at Oscar the Grouch? I heard he used to be the Swedish Chef from the Muppet Show, but you can’t tell because they covered him up and threw him in a trash can.
And that’s what Jonny does, he carries 10 doctor’s visits worth of samples from his storage unit to the trash bin. He goes back to his car, traces another signature and off he goes.
If a rep forged 1 signature per day, for 1 year, he would be credited with over 200 calls he never made!
If he says he handed out 1 box of samples per call, that’s 200 boxes per year. Not 200 samples, but 200 boxes of samples. Most sample boxes contain anywhere between 2 and 24 samples.
Look at Oscar again. He’s not grouchy, he’s strung out.
After being dumped in the trash bin, the samples are shipped off to their final resting place, somewhere off the Belt Parkway in Staten Island, where they become “Mount Sample,” a mountain of pills that doctors (and patients) will never see. If you’re ever in Staten Island, and you see a massive, billion dollar mountain of beautifully colored, professionally marketed boxes just south of the sweltering, tear soaked piles of Mets paraphernalia, you have found Mount Sample.
So how do you bring down the mountain? Change your system. Signature audits are not enough.
1. Start at the manager level.
- Managers are the closest to the source and need to be held accountable. If a manager’s
career is at stake, he WILL tighten the noose, and that’s enough to stop most reps.
- Train managers to look for the patterns and signs of forgery. If managers know
what to look for, they will recognize the actions of dishonest reps.
- Have managers perform random storage facility audits. If a rep’s samples are off
beyond a reasonable threshold, report it to your Compliance group.
2. Make sure your Compliance group investigates ALL doctor visits questioned by the managers.
- Predictable sample audits are a waste of time
- Focus your priorities on the reps managers suspect of
3. Do not allow pharmaceutical reps to review past sample activity on their computers.
- As soon as you take away their ability to compare signatures to samples, you will begin to find discrepancies in many of your reps samples. Pay close attention to the signatures they obtain.
4. Conduct Independent Sample Audits
- Independent resources specializing in sampling audits can train compliance officers and managers to recognize fraud.
- Utilize independent resources to audit your practices and recommend improvements on a regular basis.
Oh, and if you think Jonny doesn’t work for your company, then you’ve already been beaten!
See you next month! Go Phillies!
Thursday, October 2, 2008
In July of 2004, Mayor Thomas Menino began a pilot program for city employees and retirees in Boston, MA. The plan was to offer lower priced brand name pharmaceuticals supplied by Canadian based Total Care Pharmacy, through the “Meds by Mail” program(1). Boston’s contract with Total Care put quality and safety standards into place, and the program focused on maintenance medications that did not require heavy medical management. Canadian pharmacies offer brand name pharmaceuticals at pricing which is generally lower due to national price controls. Considering pricing alone, the plan seemed solid, and Boston hoped to prove that considerable cost savings could be achieved through popular participation by their enrollees paired with the discounted pricing that the Canadian government mandates.
These goals, however, were never truly realized in Boston. One reason for the program’s failure is that cost savings were limited due to a lack of participation. The insured had little incentive to participation since the co-pay difference between using the standard plan pharmacies and Total Care was insignificant. In 2006, only seventy-three prescriptions were being filled by Total Care at a cost savings of $4300 for the city. By July 2008, Total Care terminated its contract with Boston with only 16 retirees still participating in the program(2).
The Canadian importation program has been mirrored in cities and state across the United States and has met with similar results, primarily because people are not interested in receiving Canadian prescription drugs if they can receive the same basic cost savings in an American pharmacy. Usage of generic substitution has become increasingly popular. Studies are also showing that American generic pricing is lower than Canadian brand name pharmaceutical pricing.
The Medicare Prescription Drug Benefit has given senior citizens a domestic option for receiving low cost prescriptions. Seniors were shopping for Canadian pharmacies trying to achieve higher savings for ever increasing prescription costs. Since the Medicare Drug Benefit was introduced, America seniors have been looking to Canada in diminishing numbers(3).
Aside from the cost factors, importation has started to lose favor in the United States. Both Presidential candidates have been reviewing the positions regarding in light of the numerous quality and safety standard issues that have been reported over the last year(4). Although cost savings are enormously important, the Boston model seems to show that with an ever changing market environment, Americans will choose to receive their pharmaceuticals in the United States if they can get similar results at reduced costs to them.
1:City of Boston – Meds by Mail Program description
2: Kaiser Daily Health Policy Report : Boston Ending Canadian Drug Importation Program After Few City Workers Enroll, 9/28/08
3:Drake, Boston Globe, 9/26/08
4: Heavey, Boston Globe, 9/18/2008