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Case Study: Planning Aggregate Spend Activities for the Next Three Years
The National Disclosure SummitWashington DCMarch 6, 2009
Cynthia “Cindy” Cetani Jon Wilkenfeld
2
DRAFT
Introductions
Cynthia “Cindy” Cetani*
Executive Director
Novartis Pharmaceuticals Corp.
(862) 778-3949
Jon Wilkenfeld
President
Potomac River Partners
(610) 470-7616 (M)
*Disclaimer: The views of the Novartis presenter reflect a personal perspective and should not be considered an endorsement by or specific views of Novartis Pharmaceuticals Corporation
3
DRAFT
ARS: Aggregate Spend Status
Where are you within the lifecycle of building an aggregate spend solution regarding physician spend?
1. Fully implemented for HCP spend
2. Partially automated and partially manual for HCP spend
3. Building a solution now; spend capture is manual by state
4. We are in early planning stages
5. We haven’t started planning or building yet
4
DRAFT
6. Change Management
Today: The Basics of an Aggregate Spend System
Monitoring
Disclosure
Policy&
Practices
“Integrated Customer Master”(HCP/O and Non-HCP/O)
ER
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Item
s Data Consolidation & Reporting
Spend Monitoring &Disclosure Rules
1.
2.
3. 4.
5.
5.
5
DRAFT
What do you believe will follow the Sunshine Act?
1. States will be satisfied with the data reported at the federal level and will not request additional information. The federal government will take no additional action.
2. States will be satisfied with the data reported at the federal level but the federal government will require additional disclosures.
3. States will not be satisfied with the data reported at the federal level and will continue to proliferate new reporting requirements.
4. Don’t know
6
DRAFT
US Regulatory Environment
Current and Future Regulatory Environment
Physician Payment Sunshine Act
Additional congressional action• Grant transparency• Samples
Changes to existing state laws
New state laws
Mid-level prescribers and other HCPs
Specific requirements from CIAs, consent decrees
How will the changing regulatory impact your rules engine?
Definition of HCP
HCP degree/specialty
Purpose/nature of spend
Meal allocation methodologies
Medicare billing / State Licensing #s
Other?
MAINE
IOWA
7
DRAFT
Q . Do you currently have the capability to link individual HCPs to organizations?
1. Yes, we can link HCPs to affiliated organizations (e.g. medical practices, hospitals, universities, societies) within our aggregate spend system
2. No, we cannot link HCPs to affiliated organizations within our aggregate spend system
3. We are currently working on implementing the capability to link HCPs to their affiliated organization
4. Don’t know
8
DRAFT
Future: Customer Master With Relationship Data
•What relationship aspects will be included within your data?•Will you be able to automatically toggle between individuals and DBAs? •Will you be able to automate identification of Government Employees? •Will you be able to identify all members of a medical practice? All members of an association (e.g. Wisconsin Medical Society)? Those employed by Stanford?
Questions to Consider:
ID Name Degree Specialty Address
1234 Jane Smith
MD Cardio 123 Main St.
New York, NY 10001
1235 John Jones
DO Onc 1600 Penn Ave.
Washington DC 20001
2008 Customer Master: 2D
HCP Smith
MedicalPractice
Managed Care Plans
Peer HCPs
StaffAddress(es)
Degree/Specialty
Association Memberships
Hospital Affiliation
2012 Customer Master: 3D
D/B/A Corp.
9
DRAFT
ARS: Spend Capture on HCOs
What is the status of your aggregate spend solution for HCOs?
1. Fully automated for HCO spend
2. Partially automated and partially manual for HCO spend
3. Building an automated solution; spend capture is manual
4. We are working on our plan now
5. We don’t intend to capture any HCO spend
HCOs include: hospitals, clinics, medical practices, universities, pharmacies, professional associations (American Med Assoc) and medical societies (American Cancer Society)
10
DRAFT
Challenges with Healthcare Organization (HCO) Spend
How will the changing regulatory environment impact HCO spend capture?
How do you define HCO?
State law disclosure reports include the following: • Hospitals, clinics, universities, pharmacies, medical groups, disease-specific patient advocacy / support groups
Challenges with building your HCO Customer Master• Establishing consolidation rules (local vs. national orgs; corporate parent structure)• Two-dimensional vs. Three-dimensional data
Data capture requirements• Payable to vs. recipient for grants• Convention / health fair spend capture
Data integrity challenges unique to HCOs?• False positive (e.g., NAIC Codes are too broad)• Less effective, costlier scrubbing processes• Incomplete third-party data
11
DRAFT
ARS: Data Integrity
What actions are you taking to ensure accurate data? 1. Full-time “Data Steward” responsible for data integrity
2. We periodically audit/monitor data
3. Manual checks by Aggregate Spend owner (e.g. Compliance) that focuses primarily on data outliers
4. We rely exclusively on data accuracy within the source systems
12
DRAFT
Can your data pass the sniff test?
Will it hold up to intense scrutiny?• Media • Individual physicians • Associations • Plaintiffs Bar
What are the sources of data errors?• False matching/merging records• Incomplete internal data entry • Inaccurate third-party submissions
What are you going to do about it?• Enhanced manual auditing and monitoring of data• Enhanced IT validation (e.g., drop-downs)• Monitoring data outliers or all data?
Do you have validation timing concerns?
Can you track data changes? Can you see changes over time?
Data Monitoring: Garbage In – Garbage Out
13
DRAFT
Q . Does your data certification process lead to corrections in source system data or manual adjustments to your reports?
1. Yes, corrections to data are identified and corrected in source systems prior to final certification sign-off
2. Yes, corrections are identified during certification sign-off and addressed via manual adjustments to reports that are filed
3. Both 1 and 2, depending upon the system
4. We have never identified a necessary correction
5. Don’t know
14
DRAFT
Data Certification
What is the ideal format and structure for certifications by C-level or Board?
What is the ideal format and structure for sub-certification (e.g. Head of Medical Affairs)?
How frequently will certifiers get data?
How do you measure data quality? What is an acceptable error rate?
What is the impact of unintended disclosures?
Impact of manually removing entries from Aggregate Spend solution?
Have you developed a procedure stating how and when you would re-file a submission?
15
DRAFT
ARS: HCP Impact
In your humble opinion, which do you believe will be the biggest impact of PPSA on HCPs?
1. Some HCPs may limit their industry compensation for concern over disclosure
2. HCPs may refuse to accept value (e.g. a meal) while still attending an event
3. Attendance at promotional programs will decline
4. HCPs will demand to see copies of their disclosures prior to publishing on the web
5. No impact– HCPs will continue to interact with pharma companies exactly as before
16
DRAFT
HCP Impact
How do you think HCPs will respond to disclosure?• Fewer speaker events per speaker• Will you need to track promotional attendees with and without meals consumed
What role will your company need to play?• Preemptive reports to all HCPs• Proactive communications/training on PPSA to HCPs • Responding to inquiries (methodologies, interpretations, errors?)
• Public relations responses
Will HCP response impact representative performance metrics?
Will you be in a position to point out emerging data patterns to senior management?
17
DRAFT
ARS: Business Impact from Aggregate Spend
How does your company “use” aggregate spend data?1. We haven’t built our system yet
2. Use it only for state law reporting and monitoring
3. State laws + Compliance uses it for various monitoring activities
4. Compliance + Operations Groups (Sales Ops, Sourcing) look at cost figures
5. Compliance + Ops + the rest of the organization including Business Analysis, Market Research, Brand Teams, and/or Senior Management
18
DRAFT
Business Value from Aggregate Spend
Compliance Monitoring
Modest meals
Minimum attendance
Fair market value
“Occasional” or similar quantity language
Promotional $ cap
Other outliers?
Cost Containment
Speaker payments for cancelled programs
Unused minimum guarantees
Unapproved pass-through expenses
Spending on non-HCPs and non-targets
Top Line Growth
No ROI on payments!
But…can you use aggregate spend to optimize promotion?
Do some promotional programs have better results?
How can you leverage this data in an ethical manner?
19
DRAFT
Q . Do you currently report on behalf of a merged company or an affiliated legal entity?
1. Yes, we manage reporting for our company and the company we merged with
2. Yes, we manage reporting for our company as well as other affiliated legal entities
3. Yes, we manage to both above
4. No, we report for our legal entity only
5. Other
6. Don’t know
20
DRAFT
“Subsidiary” Reporting and Post-Merger Integration
Have you started to capture spend for other US subsidiaries? • Animal? Consumer Health (i.e. OTC)? Generics?
• Lessons learned?
What IT challenges would you face in the event of a major acquisition for your firm? • Integration of Customer Master systems
• Coordination of third-party vendor reporting standards
• Potentially two different ERP systems (e.g. SAP and JD Edwards or Oracle)
What change management would be required?• New business rules and supporting matrices
• Training on new policies and data standards
PPSA Disclosure =
Any entity which is engaged in the production, preparation, marketing, or distribution of a covered drug, device, biological or medical supply
Undefined
+ Subsidiary /Entity Affiliated with Such EntityManufacturer
21
DRAFT
ARS: Global Spend
Which payments are captured by your system? 1. Only US-Parent Corporation spend on US HCPs
2. All payments to US HCPs (US and Global subsidiaries)
3. All payments from US-Parent Corp (US and Non-US HCPs)
4. #2 and #3
5. All spend (US and Global Subs) to all HCPs (US or Global)
22
DRAFT
Global Spend
How do you leverage internal knowledge, resources, and IT systems?
Are you concerned about corporate separateness?
Are you confident that global spend doesn’t violate US law (e.g. FCPA)?
Will other regulatory bodies require global reporting? EU? EFPIA? Specific countries?
What is your approach to IT systems? • Portals or spreadsheets to capture payments? • Global Customer Master?
How do you implement change management around the world?
23
DRAFT
Solution: Develop [Another?] Three-Year Plan
20112011
Initial PPSA report with corresponding disclaimers
Automated HCP affiliation identifications
Begin capturing global or subsidiary HCP spend
Global / subsidiary change management
Compliant revenue optimization
Initial PPSA report with corresponding disclaimers
Automated HCP affiliation identifications
Begin capturing global or subsidiary HCP spend
Global / subsidiary change management
Compliant revenue optimization
20102010
Begin including advanced hierarchies into customer master
Enhanced data audibility (storage of legacy data)
Data integrity: Avoidance of errors
Project plan for global and/or subsidiary spend
Cost management; Key opinion leader (KOL) management
Testing for PPSA reporting and other new requirements
Begin including advanced hierarchies into customer master
Enhanced data audibility (storage of legacy data)
Data integrity: Avoidance of errors
Project plan for global and/or subsidiary spend
Cost management; Key opinion leader (KOL) management
Testing for PPSA reporting and other new requirements
20092009
Finish building automated Aggregate Spend system (HCPs)
Begin building HCO infrastructure
Data integrity: Outlier analysis
Compliance monitoring
Sub-certifications by management
Communications to HCPs about PPSA
Finish building automated Aggregate Spend system (HCPs)
Begin building HCO infrastructure
Data integrity: Outlier analysis
Compliance monitoring
Sub-certifications by management
Communications to HCPs about PPSA
Illustrative
24
DRAFT
Questions