New Cegedim survey documents whether European industry is ready for the challenge.
Making sense of the promotional spend and anti-corruption compliance burden is emerging as a key strategic issue for pharma — not just in the US but in the global market space as well, where regulatory safeguards are still porous. New survey research just published by Cegedim Relationship Management documents this trend with a focused review of the growing pressure in Europe to follow the US with demands for a full tracking of how, where and when pharma companies seek to influence the prescribing behavior of physicians and other health care practitioners.
Not only are the legal standards for disclosure becoming tougher in Europe, but distinct characteristics in local standards of practice can make the process of compliance a daunting logistical and financial challenge. The survey concludes that failure to build internal capacity to address the new regulatory agenda can lead to costly citations and a sharp drop in trust and reputation. Because most European governments subsidize access to medicines through the tax or social insurance system, this can have a significant impact on commercial returns as well as the industry’s overall “license to operate” granted through official public sanction.
Findings of the Cegedim report are based on data and interviews conducted earlier this year among some 120 life sciences company executives with responsibility for compliance issues across Europe. An interesting side observation gleaned from the research is that few companies in Europe at present have staff with specialized expertise in managing promotional and relationship development with health professionals, from a regulatory perspective — it is still largely a function of the overall sales and marketing operation. This is going to have to change as the pressures on disclosure ratchet up.
Staff also worked with governments and other organizations to discern the regulatory horizon and assess the impact of new country-based initiatives like the UK Anti-Bribery Act, which enters into force in April 2011 and carries stiff criminal sanctions that can be applied to individual executives as well as entities. The European Union [EU] Commission’s Competition Directorate and the Organization for Economic Cooperation and Development [OECD] are also increasingly active. In addition, the decision of the US Department of Justice to accelerate application of the 1977 Foreign Corrupt Practices Act to specific pharmaceutical transactions will likely be most acutely felt in Europe, where the industry has extensive operations.
From a policy point of view, a major issue of debate is just how regulators in Europe will choose to apply this increased scrutiny. The region lacks the strong litigious tradition of the US and is more comfortable with setting broad standards that effectively allow industry to regulate itself under the leadership of trade and professional associations. What this means in practice is that regulation is likely to focus more on high level governance, leaving it to companies to figure out how to build the right tools for compliance at an operational level. In the US, in contrast, such operational standards are dictated at a strict level of detail, with a fundamental emphasis on enforcement.
Preparing for the Deluge?
Despite this basic uncertainty, the Cegedim survey found near universal consensus — 93 per cent of those polled – that compliance is going to be a key strategic challenge going forward. Some 75 per cent of respondents agreed that this challenge would follow the pattern laid out in the US in terms of requirements to track and disclosure promotional spend. Hence the need for better awareness and training in proactive ways to get ahead of disclosure requirements, or at least to be ready for them when the regulatory agenda becomes more fixed.
Nevertheless, most companies in Europe believe they are well-positioned to manage the transition, with the survey noting that 73 per cent of respondent claim they can handle requirements already in place or underway. There is less certainty about the future, as expressed in results that anticipate a much higher level of internal investment in meeting promotional spend mandates over time – 42 per cent of respondents expect their commitments to grow. Following on that metric, companies cite confusion about the very kinds of “relevant data” to collect as the most pressing issue in managing their exposure to compliance issues.
The awareness is compounded by the absence throughout most of Europe of clear definitions that can be applied to classify the status of a health care provider; without this, building a data set to track relations with them obviously becomes a major hurdle, a conclusion exemplified in Figure Three, where 37 per cent of those surveyed see “managing disparate formats and standards” as the process point that will be most difficult to adhere to using the compliance tools companies now have on hand.
Current standard of practice in this area lags behind the US, with nearly a quarter of the survey population still relying on Excel spreadsheets to meet their data retrieval obligations. One approach that can bear fruit in Europe is expansion of the Key Account Management [KAM] structure adopted with vendors by many companies in the US, which provides a platform for the implementation of customized software and information bases that can both define and then identify transactions carrying potential compliance risks.
Not surprisingly, the most significant practical finding in the survey is the expectation that promotional spending by the industry is Europe is set to drop. Nearly two thirds — 62 per cent — of the group agreed this would be the outcome.
Clearly, it sets the stage for the kind of debates that have already taken place in Europe over support for patient groups: will governments and the European Commission move in to fill the gap left by the private sector and create subsidies to fund high profile — and highly valued — activities like continuing medical education? As this issue evolves, expect many other ramifications that companies will be required to address. These extend well beyond data management to encompass the industry’s place and positioning as providers of useful information to the health care community — but without building a good practice around compliance the opportunity to enhance reputation will likely be squandered.