pwc medical device compliance survey discussion of survey results march 30, 2006
TRANSCRIPT
Medical Device Compliance SurveyDiscussion of Survey ResultsMarch 30, 2006
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Presenters
Peter Claude
Brian Riewerts
John Bentivoglio
Partner, Pharmaceutical and Life Sciences Advisory Practice, PricewaterhouseCoopers LLP
Partner, Pharmaceutical and Life Sciences Advisory Practice, PricewaterhouseCoopers LLP
Partner and Co-Chair FDA/Healthcare Group, King & Spalding LLP
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Survey Background
PwC decided to conduct an in-depth benchmarking survey on industry compliance practices.
Together with King & Spalding and Compliance-Alliance, PwC:
• Worked with an advisory committee of device company compliance personnel to ensure survey questions were relevant.
• Invited 30 medical device companies to participate in the 35-question survey, 20 agreed to participate
• Analyzed the data to identify the better practices in the industry
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Survey Demographics
Distribution of 2004 Global Sales for the twenty firms that participated in the survey:
15%
20%
15%
50%
$101 million -$250 million
$251 million -$500 million
$501 million -$1 billion
> $1 billion
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General Compliance Environment
Survey Results
The industry has overwhelmingly adopted the AdvaMed Code
• Nearly 100% adoption rate of AdvaMed Code among companies surveyed.
Express endorsement by company leaders
• About two-thirds of companies’ presidents or CEOs have personally endorsed the AdvaMed Code in a written statement addressed to company employees and/or customers.
• Included AdvaMed Code in written business practices, company Code of Ethics, company website.
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General Compliance Environment, continued
Survey Results
Companies are requiring that all employees follow the AdvaMed Code
• Nine out of 10 companies apply the AdvaMed Code to all company professionals, regardless of title or seniority.
Website disclosure
• 75% of companies surveyed have posted their compliance program on their company websites.
• Website hits range from 1,000 to 20,000 but have generally resulted in less than 100 inquiries.
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General Compliance Environment, continued
Survey Results
The general impression among the companies surveyed is that compliance with the AdvaMed Code varies depending on company size, market presence, and geography.
• “Emerging or niche companies” do not “seem to follow” or are “slow to adopt” the Code.
• Larger companies are “generally good” but “have occasional lapses,” typically from “rogue sales people” who do not abide by the Code.
• Some “egregious” violations are committed by “non-U.S. companies doing business in the U.S.”
• Practice is mixed – but there are “better practices” to highlight.
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Gifts, Meals, and Entertainment
Survey Results
Companies have implemented controls over gifts for HCPs to varying degrees:
• Practice is mixed as to whether pre-purchase approval occurs centrally or locally.
• Value of individual gifts vs. Frequency of gifts.
• Restriction of the types of interactions in which gifts can be given.
Variability in definition of “reasonable”/”modest” meals and entertainment.
• Quantified measures cluster around $100.
• Some geographical flexibility allowed.
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Gifts, Meals, and Entertainment, continued
Better Practices
• There is a list of pre-approved gifts from which reps can purchase.
• Gift-giving is only permitted for specified interactions.
• Quantified measures of “reasonable”/”modest”.
• Gift/meal/entertainment limitations are applied to all employees, regardless of title.
• Tracking process to monitor the volume of gifts received by reps for distribution.
• Gift/meal/entertainment expenses are tracked by HCP in aggregate spend analyses.
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Engagements of Healthcare Professionals
Survey Results
• Most companies have instituted robust controls over the engagement of healthcare professionals, including:
- Approach to determining Fair Market Value (FMV).
- Ensuring value is received for engagement of HCPs.
• There is varied practice on the use of limits on the frequency of engagements or the total value of compensation an HCP can receive in a given period of time.
• FMV determined via a variety of methods (most common are use of MGMA Survey, external consultants/benchmarking, relevant experience).
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Engagements of Healthcare Professionals, continuedu
Better Practices
• Contracts for each engagement that include language addressing anti-kickback risks.
• Articulated standard for consistent determination of FMV that includes objective measures such as MGMA survey, hourly rates, evaluation of CV, written justification that is reviewed and approved)
• Limits on frequency and value of engagements
• Domestic coach travel, International business travel
• Evidence obtained of services received and used
• Establish annual limits on total value of compensation paid for engagements.
• Reduce involvement of sales force in selecting participants.
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Preceptorships
Survey Results
• Preceptorships continue to be used by some companies to train sales representatives through planed interactions with HCPs
• Participants include:
- New sales representatives
- Sales reps detailing a new product
- Sales reps detailing a new indication of an existing product
• There are restrictions over the number of preceptorships a rep can do in a year, but not for the physician.
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Preceptorships, continued
Better Practices
• Preceptorships treated as an external training course:
• Physician retained as consultant
• Approved in advance, including program approval by Legal or Compliance
• Address an identified knowledge or training deficit or need,
• Specific training protocol used
• Programs run by the company’s Sales Training Departments
• Post-training skills and knowledge assessment.
• Physician compensation determined based on FMV, typically standard across HCPs.
• Restrictions over the number of preceptorships an HCP can do in a year.
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Grants
Survey Results
Companies continue to place restrictions around the involvement of the sales force for the distribution, receipt, processing, and approval of grant requests.
0% 20% 40% 60% 80% 100%
Other (please specify)
May notify/deliver checks to grant recipients
Involved in review/approval of grant requests
May process/submit grant applications
May receive grant applications
May distribute information re: grant opportunities
No involvement
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Grants, continued
Survey Results
There is growing use of grants committees for approval of educational/ charitable grants and research grants. Participants include:
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
R&D
Finance
Regulatory
Compliance
Legal
Medical Affairs
Marketing
Sales
# of Companies at which the Functional Area is represented on the Grant Committee
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Grants, continued
Survey Results
At the companies that use grant committees, budgets are being moved out of Sales:
0%
20%
40%
60%
80%
100%
Clinica
l Affa
irs/S
uppo
rt
Med
ical A
ffairs
Resea
rch
& EdG
rant
s Bud
get
Mar
ketin
g
"Req
uesti
ng b
usine
ss u
nit."
Profe
ssio
nal R
elatio
ns
Financ
e
Sales
CEOR&D
Educational
Research
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Grants, continued
Survey Results
Charitable Contributions
• Most companies have established controls over charitable grants, with articulated selection and giving criteria.
• The sales force is excluded from the decision making process.
• Many companies have monitoring processes in place to ensure that denied educational or research grant requests are not resubmitted as charitable grant requests.
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Educational and Research Sponsorship
Better Practices
• Involvement of sales force limited to guiding requestors on how to initiate a request.
• Requests are supported by a request letter.
• Documentation of business purpose.
• Requests are reviewed by a grants committees (or separate committees for research and non-research grants) or Compliance/Legal
• Proof of performance received.
• Payments are made directly from A/P to recipient.
• Limit educational grants for for-profit customers
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Speaker Programs
Survey Results
Speaker programs continue to be a popular promotional event.
Most companies track and obtain detailed information on attendees.
Sales Force commonly involved in identification and selection of HCPs for speaker bureaus.
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Speaker Programs, continued
Survey Results
Most companies review and/or approve speaker program content prior to event:
• Review by Legal, Regulatory, Medical/Scientific, and Compliance functions
• FDA package or use approvals to identify and omit off-label promotion
• Comparative claim verification
• Speakers may use their own material, but it must be approved in advance
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Speaker Programs, continued
Better Practices
• Speakers pre-qualified for use with established honoraria determined through objective FMV calculation
• Training of speakers prior to use
• Pre-approval of speaker content
• Policies on meals and entertainment applicable for speaker program events
• Tracking of attendance of HCPs at events
• Compliance performing onsite monitoring of the speaker programs
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Sales Force Compensation
Survey Results
• Companies are beginning to consider compliance issues in sales compensation planning
• The majority of respondents stated that an employee’s violation of corporate compliance policies affect his/her compensation, bonus, promotions, or other terms or conditions of employment.
Better Practices
• Evaluate sales force compensation model to ensure that the metrics and base/bonus mix are consistent with compliance expectations.
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HCP/Customer Spend Tracking
Each company engaged their customers through a series of business activities, or customer events that should be clearly defined, compiled, monitored, and tracked as part of well-structured business and data processes.
70% of companies reported having processes in place to track:
• Gifts, meals and entertainment
• Travel
• Honoraria, grants, investigator payments, preceptorship fees
• Free goods (if provided) and other value provided.
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HCP/Customer Spend Tracking – Best Practices
– The ideal situation is an integrated reporting system that tracks all expenditures to/for customers.
– Common processes, systems, and data require multiple users to access the same information for different purposes, including meeting compliance monitoring, state reporting, and commercial performance improvement goals.
– With proper teaming, data assessment, integration efforts, and compliance controls, multiple stakeholder groups can improve the operations of the overall business, as well as their individual goals.
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Next Steps
Topics for next study?
For additional information, please contact:
• Peter Claude - (973) 236-4289 [email protected]
• Brian Riewerts - (410) 783-8920 [email protected]
• John Bentivoglio - (202) 626-5561 [email protected]
• Nancy Singer – (703) 525-4159 [email protected]
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Questions?
FP-FP-06-0250-A © 2006 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
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