EIGHTH INTERNATIONAL PHARMACEUTICAL EIGHTH INTERNATIONAL PHARMACEUTICAL COMPLIANCE CONGRESSCOMPLIANCE CONGRESS

May 6, 2014May 6, 2014

MINI SUMMIT VI: TRAINING ON COMPLIANCE MINI SUMMIT VI: TRAINING ON COMPLIANCE AND ETHICS BASICS AND ETHICS BASICS ---- ADDRESSING CORE ADDRESSING CORE COMPLIANCE RISKSCOMPLIANCE RISKSSue Egan, Director and Principal Consultant, Sue Egan Associates, Great Missenden, Buckinghamshire, UKKeith Korenchuk, JD, MPH, Partner, Arnold & Porter LLP, Washington, DC, USA Laura Nassar, Regional Pharma HCC Officer, Emerging Markets, Johnson & Johnson, Beirut, Lebanon

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PROGRAM AGENDAPROGRAM AGENDA

MINI SUMMIT VI: TRAINING ON COMPLIANCE MINI SUMMIT VI: TRAINING ON COMPLIANCE AND ETHICS BASICS AND ETHICS BASICS ---- ADDRESSING CORE ADDRESSING CORE COMPLIANCE RISKSCOMPLIANCE RISKS

The Basics of Anticorruption The Basics of Disclosure/Transparency The Basics of Pricing, Reimbursement Tendering and Public Procurement The Basics of Data Protection

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The Basics of AnticorruptionThe Basics of Anticorruption

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The EnvironmentThe Environment

FCPA: Foreign Corrupt Practices Act (1977)OECD anti-bribery convention (1997)UN CAC: UN convention against corruption (2003)Directive 2001/83/EC (article 94)UK Bribery Act 2010In US - Other statutes provide federal prosecution of violations of state anti-bribery statutesOUS - Local anti-bribery legislations

“It is unlawful to bribe government officials to obtain or retain business”

Three key questionsWho?

Any official of a state-owned business

Why? To induce an official to use his/her influence improperlyto affect or influence any act or decision. No need of success.

How much? Anything of value in cash or kind

What is Corruption?What is Corruption?

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The misuse of entrusted

power for private gain

Definition by Transparency International TI

Sales and tender intermediariesVendors as Event Planners, CROs, etc

Logistics intermediariesJoint ventures & Acquisitions

Third Parties

Tender Committees membersProduct & Site regulators

Health Economics & Pricing authorities

PolicymakersFormer government employees

HospitalityFees for Services

Educational GrantsMedical Education Programs

Patients Organizations SupportMarket research

Research: IIS, studies, surveys

Where Should We Focus?Where Should We Focus?Value transfer Sensitive GOs

Why?Clear business needsObjective

Who?Fair Selection CriteriaHow much?

ModestyFrequencyProportionalityFair Market ValueProof of activity

How Can We Mitigate Risk?How Can We Mitigate Risk?

Right Intent Transparency

StandardsApproval processDocumentation

Value transfer trackingEscalation

PerceptionAuthoritiesPublic“Media” Test

Congress Appropriate Location?Congress Appropriate Location?

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From: Franchise DirectorTo: District Manager, Sales Representative

OK

From: District Manager To: Franchise Director

OK. Please accept this – she is the main decision maker in tenders.

-----Original Message-----From: Sales RepresentativeTo: District ManagerCc: Franchise Director

Please give your OK to financing the training: „Procedures for the award of public contracts – practical aspects”. Venue – AB (a ski resort). Ms. XY – the Head of the Public Procurement Department in hospital C. Training cost – 2,000.

This is a part of the post-tender obligations to be fulfilled, tender won for 2 years.

Thank you.

Example: Example: Email exchange between employeesEmail exchange between employees

Focus on principles: People follow people….

Tone at the TopCompliance is the responsibility of every individual

Everyone can contribute in their own wayEveryone can make a personal commitment

No need to wait for processesEthical business is the only sustainable business

The Basics of The Basics of Disclosure/Transparency Disclosure/Transparency

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Transparency Regulations: Fundamental Transparency Regulations: Fundamental ElementsElements

Jurisdiction/ Regulatory body?US, France, Slovakia : Law/ UK, Netherlands,

Europe, Japan, Australia: Industry CodeTiming?Scope? (HCPs/HCOs)Scope of transactions? HCOs: Granular

payments, HCPs :Aggregate payments? , all payments or value exchanges? , some exceptions (trivial transfers below threshold)?Threshold?Unique ID?

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Important ConsiderationsImportant ConsiderationsThe proliferation of these regulations is prompting lifesciences companies to consider important questions, such as:

Will more laws/regulations be passed? Where? When?How should we address the new laws? Should we implement a global

solution, or should each country’s offices manage efforts locally?How much can we leverage the systems and data investments made

in the U.S. and other countries to develop global capabilities?What controls should we put in place to make certain that the data we

are collecting is complete and accurate?Who in our organization should own this responsibility?What are other organizations doing?

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Global HCP/O transparency continuum

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By 2015, over 70% of pharmaceutical sales will occur in By 2015, over 70% of pharmaceutical sales will occur in countries with HCP Transparency regulations!countries with HCP Transparency regulations!

Similarities and NuancesSimilarities and Nuances

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Similarities Nuances

Local or Global Solution?Local or Global Solution?

There is a great deal of redundancy in the data, IT capabilities and processes required to meet the disclosure requirements by each country with applicable regulations.

This redundancy has led many companies to begin development or consider future development of a center of excellence with shared capabilities to service several or all countries with HCP’s transparency requirements within a company.

Any further opportunity to coordinate across the industry to develop data, IT capabilities and operations which can be shared by multiple companies??

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What Can Be Centralized?What Can Be Centralized?1. Monitor environment for new regulations2. Interpret disclosure regulations and translate into system requirements3. Define/update guidelines or policies, business processes and standard operating procedures (SOPs)4. Train individuals on new policies, procedures and SOPs5. Build technology capabilities based on approved requirements6. Enter HCP/O spend data entry into source systems7. Monitor data quality8. Correct data errors in source systems9. Maintain HCP/O master data10. Develop and execute communication plan11. Execute/produce draft disclosure reports12. Review disclosure reports prior to submission internally13. Review HCP spend data with HCPs and make updates to data, ifneeded14. Submit disclosure report (or post on web)15. Support technology

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OWNERSHIP?

The Basics of Pricing, The Basics of Pricing, Reimbursement, Tendering and Reimbursement, Tendering and

Public ProcurementPublic Procurement

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Procurement in the EUProcurement in the EU

Where public entities in any of the 28 EU member states wish to purchase goods, services or works from private sector enterprises, they must follow the processes set out in EU public procurement legislationOn 28 March 2014, the EU published three new public procurement Directives

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Procurement in the EUProcurement in the EU

Public purchasers (contracting authorities) are required to treat suppliers (economic operators) equally and without discrimination and act in a transparent and proportionate wayThe design of a procurement must also not be made with the objective of excluding it from the scope of the public procurement rules or of artificially narrowing competition between economic operators

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Procurement in the EUProcurement in the EU

Current rulesUnder the prior (2004) directives (which continue in force until replaced by the new rules as explained in the introduction to this advisory), generally all European procurements are to be conducted using one of four procedures:- Open- Restricted- Competitive dialogue- Negotiated procedure (with or without notice).The open procedure is the most simple, advertised one. The contracting authority notifies a contract for the supply of goods, services or works in the Official Journal of the EU and all companies are free to tenderThe restricted procedure is also a simple, advertised procedure, but it uses an initial pre-qualification stage whereby the contracting authority is able to reduce the number of interested suppliers who will be invited to tender, on the basis of published selection criteriaThe competitive dialogue and negotiated procedures are more complex. The competitive dialogue procedure is similar to the restricted procedure; however, the pool of pre-selected suppliers is invited to participate in a competitive dialogue to develop one or more solutions to meet the contracting authority’s procurement needsThe negotiated procedure envisages that pre-selected suppliers will be invited to negotiate the terms of the procured contract directly. There are currently strict limitations on use of both the competitive dialogue and the negotiated procedures

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Procurement in the EUProcurement in the EUNew rules

Under the new rules, there will be the following six procedures:- Open- Restricted- competitive dialogue (which can now be used in broader circumstances)- competitive procedure with negotiation (new)- negotiated procedure without notice- innovation partnerships (new)As before, the new rules will set a high bar for any departures from the “open” or “restricted”procedures.Competitive procedure with negotiation. This new procedure is intended for use for any type of contract, provided the supplies sought are not merely “off the shelf.” The European Commission envisages that the procedure will be useful for services or supplies contracts that require some adaptation or design effort, for example purchases of sophisticated products where negotiations may be necessary to guarantee that the supply or service corresponds properly to the complex needs of the contracting authority. The new procedure, however, is subject to various safeguards. Contracting authorities must specify the subject matter of the contract, the award criteria and the minimum requirements at the time the contract notice is published. Any changes must be communicated to all candidates and every candidate must be given the possibility to submit a final tender. Finally, the conduct of the negotiations must be documented in a report to be drawn up by the contracting authority.Innovation partnership. This new procedure can be used where the contracting authority is procuring an innovative product,service or works. “Innovative” is anything not readily available on the market. The partnership is aimed at the development of the product, service or works (e.g., R&D services) and the subsequent purchase and supply of the resulting product, service or works. The contracting authority is able to set up a partnership with one partner or several partners conducting separate research and development activities.

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Procurement in the EUProcurement in the EU

New criteria for assessing tendersCurrent rules

Currently, tenders may be assessed either on the basis of (a) lowest price or (b) the most economically advantageous tender (MEAT) which includes quality criteria in addition to lowest price.

New rulesUnder the new rules, MEAT will be the only basis for award, and it has now been defined in the new Directive. Under the new MEAT-only approach, national procurement laws:- must identify which is the most economically advantageous tender on the basis

of price or cost using a cost-effectiveness approach. Such approach may be based on explicitly stated life-cycle costing criteria which include, among other things, the cost of acquisition and use

- may allow public authorities to use a methodology referred to as best price-cost ratio – which includes, among other things, qualitative and social aspects linked to the contract. Quality includes features such as technical merit, social and innovative characteristics and technical assistance

- may prohibit public authorities from using cost only or price only as the sole award criterion.

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Compliance Issues in Compliance Issues in Procurement/ReimbursementProcurement/Reimbursement

New tendering processes create compliance risksGovernment official interactions in tenderingInteractions with competitorsUse of third party agents, regulatory consultants, or tendering consultantsWarning signs in third party compensation

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The Basics of Data ProtectionThe Basics of Data Protection

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EU Directive 95/46/EC EU Directive 95/46/EC

Translated into national laws, e.g. UK Data Protection Act 1998“Personal data” means any information relating to an identifiable natural person“Processing” means any operation carried out on personal data, whether automated or not“Personal data filing system” means any structured set of personal data whether centralised or not“Data subjects” have the right to request a copy of their information from organisations

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UK Data Protection PrinciplesUK Data Protection Principles

Personal data shall be processed fairly and lawfully

Personal data shall be obtained only for one or more specified and lawful purposes, and shall not be further processed in any manner incompatible with that purpose or those purposes

Personal data shall be adequate, relevant and not excessive in relation to the purpose or purposes for which they are processed

Personal data shall be accurate and, where necessary, kept up to date

Personal data processed for any purpose or purposes shall not be kept for longer than is necessary for that purpose or those purposes

Personal data shall be processed in accordance with the rights of data subjects under this Act

Appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data

Personal data shall not be transferred to a country or territory outside the European Economic Area unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data

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USA HIPAA Privacy RuleUSA HIPAA Privacy Rule

The Health Insurance Portability and Accountability Act (HIPAA),1996:Defines Protected Health Information (PHI)Gives patients rights to access and amend their PHIIncludes electronic, paper or oral informationRelates to health, healthcare treatment, and

payments for such treatment

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Compliance Program ConsiderationsCompliance Program Considerations

Patient data in Clinical Trials, e.g. use of analytics

Employee HR data, e.g. sickness, involvement in compliance investigations

Internal / external Reporting Lines

Case notes regarding compliance investigations, whether proven or not

HCP data in Field Automation Systems / Reps’ “little black books”…

Disclosures / Transparency Reporting for HCP Transfers of Value

“Bad documents”65

SummarySummary

Remember that “data subjects” have the right to see their data

State clearly the purpose of the data collection

Collect only enough data required to fulfil the purpose

Keep the data accurate and up-to-date

Keep the data secure

Safely destroy the data when no longer needed to satisfy the original purpose

Beware of “bad documents”, including hand-written notes

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Questions?Questions?

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