Fort Washington, PA

Tuesday, January 12, 2010

With the increasing involvement of Federal and State Governments in sales, marketing and promotional activities, it is critical that organizations properly implement compliance procedures and closely monitor sales and marketing activities to mitigate compliance risks in order to avoid sizeable fines and violations.

At a high level, compliance must exert control over sales, marketing and promotional activities through

          -Who is promoted to

          -What occurs during promotion

          -How much is spent

The product indications and mix for the inline portfolio create unique challenges for each manufacturer, as well as for each function within the commercial organization.

A key responsibility of the sales function within a pharmaceutical organization is to align the sales and operations strategy with the compliance guidelines of the other commercial functions, including managed markets, brand and marketing teams.

An equally important role of the sales function, however, is to drive product growth-therefore a sales and operations strategy constrained by the organizations compliance strategy guidelines is essential.

These levels of control add complexity to both sales and ongoing business processes. The deployment strategy of sales resources must incorporate the "Who", "What" and "How Much" in accordance with compliance guidelines, requiring support from each sales function within their specific role. The focus on a provider and their various locations of practice, hospital, group and clinic require a unique identification of the provider across sales forces and brands.

When developing a deployment strategy, in order to understand the "Who", the following high-level approach can be integrated into business processes that most pharmaceutical organization already utilize today, however, within each step compliance guidelines can be exerted.

Who—Customer Targeting

While off label usage of products by healthcare providers is common practice, off-label promotion is a violation of PhRMA's marketing code. Therefore diligent targeting practices must be observed to reduce the risk of field sales delivering the wrong message to the wrong customer.

Although it is a common practice to prioritize customer targets mainly by "value" determined by levels of prescribing, this approach presents a risk-particularly in products with high off-label usage. Addressing the question of should we target these customers is an equally important compliance measure to mitigate risk, which can be answered by incorporating the following information:

1. Specialty Validation—This important information extends beyond physician valuation, and considers the product indication when determining "Should this physician be targeted based on our product indication, or should they be explicitly excluded".

Unfortunately, how a physician is identified as a particular specialty can be complex, and is often surprisingly inaccurate. This inaccuracy can be costly, and is a result of two primary factors 1) physicians ability to self designate a specialty and 2) the mistake of only considering 1 source of data. The business practice of Specialty Validation helps mitigate this risk by combining multiple historic data sources with primary research to dramatically increase the confidence and accuracy of the specialty to assess a potential physician target.

2. Patient Mix—Using patient level data, organizations can gain an understanding of the types of patients that providers treat. While a full census of a provider's information is seldom attainable, through developing patient ratios, this additional dimension of information can bolster a targeting decision or provide insight to safeguard against potential promotional violations.

3. Group Practice Affiliation—The growing trend of physicians practicing in groups provides an important dimension-the physician's relationships with other physicians. As the utilization of group practice affiliation information continues to expand within organizations to optimize promotional efforts, it can also be used as a tool to identify compliance risks.

In multi-specialty groups, it is important to recognize these relationships in order to avoid the potential of unknowingly incentivizing field reps on accounts where off-label usage could be very high. Additionally, providing samples intended for a valid target that are actually more heavily utilized by non-target customers affiliated within the same group practice could be construed as promoting off label usage. Aggregate spend at the account level is an additional consideration for necessitating the understanding of these provider relationships.

4. Incentive Compensation—The conflict of interest that exist between off label product usage and off label promotion violations require sales organizations to be cautious not incentivize field representatives to inappropriately market products. Therefore, the design of the incentive compensation plan needs to consider these aspects to avoid driving undesired behavior that could violate compliance guidelines.

5. License Validation—Up-to-date state license and DEA license information is essential for both initial targeting and ongoing monitoring to safeguard against promotional compliance violations.

Case Study

Overview

AdvantageMS was retained in 2009 by a top 15 pharmaceutical company to assist with sales and marketing compliance efforts by delivering data and developing ongoing business processes to maintain their customer master information. The company had recently received an exceedingly substantial fine by the Justice Department for marketing one of its medicines for uses not approved by the Food and Drug Administration. The company needed to develop and maintain SOPs across several functions and departments to ensure compliance with regulatory guidelines. AdvantageMS collaborated with senior leadership to address their data and information needs, including:

     - Performing a gap analysis to assess the current condition of their customer data

     - Collaborated to identify business user requirements, developed business rules and created functional and technical specification documentation

     - Implemented the solution through initial information cleansing, data integration , ongoing data management support and data cleansing and verification services

     - Collaborated to develop customer segmentation sales strategies in accord with compliant customer master information, using specialty and license verification services

Scope and Methodology

AdvantageMS focused its assessment and ensuing initiatives on the evaluation of their customer master information, including the sources, information systems, accuracy and documented procedures for maintaining this information.

AdvantageMS also evaluated how business users used this information, and collaborated with key stakeholders to develop business rules and ongoing business processes for the functional area, aligned with the broader organizational compliance strategy and guidelines.

Deliverables

In collaboration with sales administration, operations and IT, AdvantageMS provided data to support compliance guidelines through:

     - A comprehensive healthcare provider database, containing over 8 years of historical demographic data, covering all licensed healthcare providers in the United States.

     - Verification of specialty, state licenses and DEA licenses built from healthcare agencies, including state license bureaus , hospitals, NPI, AMA, AOA and DEA

     - Proactive, weekly flash updates of State License and DEA license actions

     - Tele-center verification services, staffed with research consultants

     - Documented business processes

     - A targeting and incentive compensation strategy aligned with compliance guidelines

Benefits

Compliance risk control of sales and marketing information, through master data management and strategic consulting, is resulting in:

- Standardized, streamlined and documented business processes that are aligned with organizational compliance guidelines.

- Assurance that sales and marketing functions are provided with timely and accurate information needed to develop and execute strategies aimed at avoiding off label promotion risks through target identification, incentive compensation design and customer target messaging.

Advantage Management Solutions is an outsourcing partner and consultancy to the health care industry, with a specialization in information technologies, healthcare provider data, and strategic consulting. Key personnel are tenured professionals with extensive health care industry experience, focused on strategic and operational business issues in the functional areas of sales and marketing, information technology and compliance.

Daniel Goodman

Senior Director, Sales Strategy Consulting

Advantage Management Solutions

Fort Washington, PA

(215) 290-1421

dgoodman@advantagems.com