PharmExec Blog

Confessions of a Compliance Director

In anticipation of CBI’s (a PharmExec sibling company) 11th Annual Pharma Compliance Congress happening later this month, PharmExec spoke with a compliance director at a mid-sized pharma ($5 billion in annual sales) about life under a CIA, and the potential trigger issues for 2014. In an effort to promote candor and avoid overly circumspect responses, we agreed to withhold the interview subject’s identity.

PharmExec: Are there any specific areas you expect OIG/DOJ to take a particular interest in this year?

Compliance Director: It will be a little of everything. OIG will remain very diligent and tenacious in going after off-label, because they continue to find it, and it makes a lot of money.

PE: The Caronia decision hasn’t given regulators pause about pursuing off-label violations?

CD: There’s been no real effect from Caronia. There’s some buzz around manufacturing inspections, an increase in audits, so that could lead to more [manufacturing] issues surfacing. I heard Mary Riordan [senior counsel, HHS OIG] speak recently about drug reimbursement with respect to Medicare/Medicaid pricing issues…ensuring federal health plans are paying an average sales price or average manufacturing price. [Note: OIG is advocating for rebates on drugs covered under Medicare Part B.]

PE: What’s new on the global front? Is the recent hubbub with GSK and others in China likely to break the seal on a new round of FCPA or anti-kickback infractions?

CD: I don’t think it broke the seal but it highlights a new set of issues, but it’s not just China. If you go back to the FCPA stuff that happened with Schering in Poland – that was a biggie – but these specific infringements just open up new cans of worms.

PE: Do you think government is likely to score a Park Doctrine exclusion stemming from an FCPA violation any time soon?

CD: They’ll continue to try for exclusions…[regulators] want to nail people, because they can’t nail companies. Well, companies can pay but you can’t send a company to jail.

PE: Has there been a case where an executive went to jail who was never actually shown to have direct knowledge of illegal activity? Does the language in the Park Doctrine actually survive a criminal court hearing?

CD: It’s not that hard to prove [direct knowledge]. I’ve seen some pretty stupid things in writing in my life. At the end of the day, though, the government will get more of a benefit from holding companies as a whole liable – a lot of it is about the settlement dollars. And companies will protect their individuals.

PE: Your company has worked under a CIA for the last few years. What kind of an effect has the CIA had on the company’s culture and business strategy?

CD: The things that we’ve had to implement as a result of the CIA are things we should be doing regardless, it’s good business practice. The challenge is when the CIA is handed down and the first reaction is, OMG, we need to build a gigantic corporate compliance organization under a very aggressive timeline.

PE: As someone tasked with implementing compliance programs, do you face resentment from business operations that view compliance as a burden?

CD: At the end of the day, it’s the business that owns compliance. If I’m unsuccessful in instilling ownership and accountability into the business – following laws and regulations and corporate policies and procedure – then I’ve failed as a compliance person. The business has to own [compliance], otherwise I’m putting out fires every day. Sometimes business pushes back, but we’re not the police, we’re partners.

PE: Is your chief compliance officer a member of the C-suite?

CD: She is not.

PE: Is she a part of the legal department?

CD: She’s independent – most CIAs want you independent of legal, and she does report to the CEO.

PE: Any talk of elevating her to the executive team?

CD: Yes. I don’t know if it will happen but it should.

PE: A lot of physician groups – and members of the GOP Doctors Caucus in the House – have lined up against medical journal reprints and textbooks being covered under the Sunshine Act. Letters have been written. Do you have an opinion on this?

CD: I certainly do. A lot of companies are struggling with this. I did some benchmarking for our company and spoke to some of my colleagues externally, and we’re all scratching our heads. How are we supposed to put a value on this stuff? It’s not like each reprint costs us a certain dollar amount. We have a medical education library with thousands of reprints that are passed out when there’s a request from a physician. Isn’t that educational? I’m hoping [CMS] pulls off of that. Here’s the other problem. You have physicians who work for VA hospitals who are government employees. Have you heard of the 20/50 rule? [See example 1] What if I have a reprint that’s worth $23?

PE: Are you concerned at all about the Sunshine Act dispute period, when physicians have the opportunity to dispute the dollar amounts next to their names before the data goes public?

CD: I think people will be surprised at how many physicians they don’t hear from. Too many companies have already been [releasing physician payment information], as a requirement of a CIA.

PE: So the dispute period is overblown as a major concern for companies.

CD: When we launched our [physician payments] website, we informed our physicians up front. We sent out a letter: “We’ve entered into a CIA, we have new transparency requirements, we’re going to have a website, here’s what you have to do.” We set up a call center to answer questions. Guess what? Not that many physicians called. You’ll always have a handful, but considering how many physicians are listed on our transparency website, it’s a small minority.

PE: Did the requirement to publish payments to physicians, and ProPublica’s work in this area, cause companies to rethink some of those practices?

CD: The first thing pharma companies did internally – and from a benchmarking standpoint I can tell you that a lot of companies have done this – was to set payment caps.

PE: Does your company place an annual cap on payments to an individual physician?

CD: Yes, and it is not that much money. Based on our research, most companies have caps ranging from $75,000 to $150,000 per year, for a single doc. Our cap is within that range.

PE: Any final compliance issues you’d like to mention that we haven’t yet discussed?

CD: I think social media continues to be a huge challenge. Unfortunately people think that on their own time they can do whatever they want, but they’re still company employees.

PE: Are you looking forward to FDA’s guidance in this area?

CD: Why not? They make the rules, we don’t. Tell me what’s appropriate and what’s not, and I’ll get my people on board.

PE: What’s so difficult about social media?

CD: Controlling it. I can put an iPad in a sales rep’s hands, and we can make whatever material available on a website, but what matters is how it’s used and what’s done around it. We build materials to be safe and compliant, but it’s the one-offs that can happen. It’s not a corporate initiative to violate social media rules. It’s the individual one-offs that are hard to handle.

Note: The original interview has been edited for length and clarity.

This entry was posted in compliance, Corporate Responsibility, E-Media, Emerging Markets, FDA, healthcare, Legal, Marketing, Medical Education, pricing, Regulatory, Sales, social media, Strategy and tagged , , , , , , , , , , , , , , . Bookmark the permalink. Trackbacks are closed, but you can post a comment.

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