How drug companies can avoid penalties, revenue loss, resource drain, reputation issues, and relationship challenges

With the passing of the Physician Payments Sunshine Act, the importance of precise and timely expense report management by drug manufacturers ballooned, magnifying the challenges of an already-burdensome process. The 2012 rule was designed to increase transparency around the financial relationships between physicians and drug and device manufacturers, and it has serious implications for pharmaceutical companies.

Noncompliance with the Sunshine Act, even if it’s unintentional, can result in hefty fines and adverse publicity. Many physicians concerned with maintaining transparency are already curtailing their interactions with pharmaceutical reps. Any misreporting can create further distrust between physicians and sales reps, undoing hundreds of hours of relationship-building efforts and eliminating sales prospects.

Complying is Complicated

While the principles of transparency are nothing new for many large drug companies, even big manufacturers usually find that internal expense tracking and reporting requirements differ from those mandated by Sunshine Act. Rigorous standards demand that most transfers of value—such as meals, entertainment, and even office-based lunch-and-learns—between rep and doctor be reported in minute detail. A juxtaposed number, outdated contact details, or other inaccuracy can have tremendous implications for the manufacturer.

Many transfers of value are reportable, but there are also several categories that are not reportable, or are reportable only in certain circumstances. While underreporting can mean stiff penalties, overreporting has its own set of consequences. Reporting more than what’s required can negatively impact a manufacturer’s image and impact its relationships with physicians.

Five Steps to Compliance

Simply put, pharmaceutical companies face enormous challenges in maintaining Sunshine Act compliance. To help address these issues, we recommend the following best practices:

1. Take a Team Approach: Delegate a specially trained financial team to report, process, and monitor expenses. This team should function as the facilitator of the entire expense reporting process, employing the necessary checks and balances to improve compliance alignment, data quality, and cost avoidance.

2. Review Every Report: Rather than simply performing random audits, this expense report management (ERM) team should carefully inspect each and every report generated by sales reps for accuracy, compliance, correctness, and completeness, then send a revision list to the appropriate rep for completion.

3. Employ Ongoing Education: During the revision step, it’s critical that the ERM team help each rep understand why the changes need to be made. Not only will this result in more accurate reporting, but it will ultimately reduce the time reps need to spend on future reports. When expense reporting becomes easier to manage, reps are less likely to avoid or put off the task.

4. Lighten the Load: By handing off the majority of the review process to an ERM team, district managers need only review reports when they have been fully reviewed and are ready for sign-off. This reduces bottlenecks and frees management up for more mission-critical tasks.

5. Engage in Continuous QI: To streamline the initial report creation process and facilitate more timely submission, the ERM team should perform regular service reviews. The results of each analyses should be used to fine-tune reporting processes and practices, ensuring continuous quality improvement even as the company grows and evolves.

Boost Productivity, Revenue, and Compliance

Studies show that companies who implement these best practices see huge improvements in productivity and cost savings. A recent study of a large pharmaceutical manufacturer found that after deploying a dedicated ERM team, there was an average reduction of time spent creating, updating, filing, and correcting an expense report by a sales rep that averaged out to nearly 3 hours per week. That same study showed a reduction in time for the Regional Manager of nearly 65% per report due to the shift in report analysis eliminating non-compliance corrective reviews. The Regional Manager only needed to review to ensure that the reports were completed in accordance with company requirements. There was also an 11% increase in sales call activity, resulting in additional three sales calls per week for each sales representative, in addition to an average savings of $70K per month in penalty payments.

The costs of regulatory noncompliance are simply too great to ignore. By implementing these best practices, managers and reps are free to focus on sales, relationships with physicians and public perception remain positive, and significant cost savings are realized.

Learn how CMK Select’s outsourced expense report management solutions are helping pharmaceutical companies maintain Sunshine Act compliance so their sales teams can focus on building revenue.

PART II

As a healthcare marketer, it is important to understand the health transaction model. We recently talked about how good information is necessary as well as access to medications for healthcare providers.

In this healthcare transaction model, the last step we covered was the consumer bringing their medication home and following the instructions offered to them – or compliance. Once the patient starts taking the medication, they decide after a couple of days if the treatment is working. If so, they keep going until the course of treatment is complete and move on. If not, they probably go back to the physician who gave them that prescription and seek further help. How can we, as marketers, ensure compliance with the treatment throughout the course of therapy? In short, how do we make sure that we have satisfied the end users?

Determining Whether Goals Have Been Met

At the end of the transaction, a physician is “rewarded” for doing good work by the consumer’s utilizing his services again either in that course of treatment or subsequent illnesses. Marketers can help build this relationship between patient and physician by doing our jobs well all along the pathway.

Let’s think about this transaction graphically. It will help illustrate the story:

Transaction Flow:

As marketers, we need to be able to think through the steps of this transaction and help to influence and/or mitigate the barriers to each step.

• How do we make the finding of help easier?
• How do we ensure that the physician knows how to properly diagnose the patient’s problem?
• How do we know that physician will prescribe the right treatment?
• Will that treatment be available at the patient’s local pharmacy?
• Is the treatment easy to use for that patient and will the patient comply with the treatment?
• Will they need more help?
• Does the MD know how to help further or will the patient need to seek specialized therapy?
• How does the patient find that special help?
• Once the therapy works, what feedback do they give to the MD who helped them?
• Who paid for all this work and how was it paid for?

Understanding the Transaction Model Helps Build Successful Brands

The transaction model is complicated with many twists and turns. We do our clients the best service by properly understanding each of these steps and helping them think through the strategic and tactical options to maximize their brands across this broad spectrum of work. One of the key steps to being a good marketer is to know which of these steps we want to make an impact on and how – as well as knowing which ones we can and cannot reasonably influence. If we can successfully navigate this transaction, we can help build successful brands.

All healthcare transactions begin with the consumer. By transaction, I mean the literal interpretation of the word – taking an action across a set of circumstances. As Healthcare Marketers, it is critical that we understand how these transactions take place and what we can do to enhance the actions that a consumer takes and mitigate any exposure to the hurdles that may arise during this transaction.

When thinking about how we all interact with the Healthcare system as consumers, first think about how we know we have a need – are we sick/injured/in need of help:  Do we have a headache? A belly-ache? What is the cause of this? How do we think about the issue and the solution? If it’s minor, we probably either ignore it or take some basic OTC medication to help us solve the problem on our own. The more “major” it gets, the more we start to seek out help from family, friends, possibly the Internet, and ultimately, a medical professional.

Importance of Good Information

As marketers, it is critical that we ensure the consumer has access to good information from the very first thought of seeking help from the healthcare system. We need to know what information is readily available to them through these initial channels. What do their friends and family tell them? What is online? Is it accurate? How do we make sure it is accurate and appropriate? This first interaction with the system is where marketing begins. We need to understand this process, how to handle the initial information, and how we can properly influence the consumer to take the action we would like them to take.

In the case of the pharmaceutical industry, we want consumers to seek out the proper medical professional who can help them with their problem.

We need to ensure the consumer can do this quickly and efficiently. The various channels the consumer follows to find this professional need to be clear and easy to follow. We need to understand how we can properly impact those channels. Once the consumer reaches the medical professional, the next critical step is to make sure that the professional will diagnose the issue appropriately, recommend and/or prescribe medications or treatments that could help the patient, and talk to them about how to feel better.

Once the solution or prescription is written, the next step is to seek the medication – getting a prescription filled for instance. Typically, a consumer will drive to a local pharmacy and submit the prescription for filling, utilize insurance to help pay for the prescription, take the medication home and follow the instructions – compliance.

Ensuring Access to Medications

All of these steps require marketers to make sure the right decisions are made along the way to get our product into the hands of the consumer – make a sale. We need to make sure the medical professional is aware of our brand, knows how to prescribe it –dosage and administration, etc., and actually does write the prescription. Next, we need to make sure that the consumer knows where to find the treatment. While most prescriptions are filled at local pharmacies, there are certain medications that need special handling through specialty pharmacies or there could be an element of mail order or other non-personal access. Marketers need to understand this supply and fulfilment system intimately and know how to make sure our products are where they need to be when they need to be there. Ensuring access is absolutely paramount in the role of a marketer.

But the story doesn’t end there. Stay tuned for our next blog post as we navigate why it is important to understand the healthcare transaction model.