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The Pulse of the Pharmaceutical Industry

U.S. trends in aggregate spend, disclosure, and transparency: Writing the next chapter on transparency initiatives

Written by: | | Dated: Tuesday, February 14th, 2017



By Don Soong, general manager, transparency, QuintilesIMS



QuintilesIMS’ annual survey of pharmaceutical and device manufacturers was initiated in 2009 – when only a handful of U.S. states required disclosure of certain healthcare practitioner payments. Since then, of course, state, federal and global requirements have continually evolved and expanded. Our latest survey findings, which reflect responses from 112 manufacturers, underscore that while the bar keeps getting higher, manufacturers’ confidence and sophistication are also on the rise.

Though they have largely mastered the reporting “basics,” companies are still planning to invest in aggregate spend and disclosure reporting and compliance. More than one-third (35 percent) expect their level of investment to remain the same and 63 percent expect it to increase, with just 2 percent anticipating a decrease (see Figure 1).

Figure 1. Investment in aggregate spend, disclosure, and compliance

How and where are companies investing? The survey points to more investment in implementing upfront controls, integrating management of the full spectrum of payments and using analytics to transform transparency data into valuable business insights (see Figure 2).

Figure 2. Where companies are making additional investment

From automation to integration
Most companies (77 percent) have established and are continuing to use automated solutions for disclosure reporting. A large percentage rely on automated solutions for HCP consultant management (40 percent internal and 27 percent third-party) and grants management (47 percent internal and 20 percent third-party).

With these resources in place, the focus is shifting to a central question: How can they ensure that the reportable payments are consistent with fair market value and represent services that satisfy a bona fide need? To that end, manufacturers are implementing upfront controls for engaging healthcare practitioners and organizations (HCP/Os) in the areas of consulting, honoraria and grants to mitigate the risk of inappropriate relationships. The survey revealed that 38 percent of respondents indicated that having a single global solution for HCP interaction and disclosure reporting is “absolutely a requirement” (see Figure 3). This finding underscores the growing trend toward linking HCP payment and relationship approvals to the outcomes in disclosure reporting – an approach well supported by an integrated solution.

Figure 3. Global compliance

Turning spend data into strategic insights
Consistent with prior years’ results, the 2016 survey affirmed the value of aggregate spend data in gaining additional insights about a company’s HCP programs. Sixty-six percent of respondents are taking a more analytical view of the data – supporting applications for marketing and financial reporting while enabling more informed decisions that increase efficiency and effectiveness of HCP programs across the enterprise (see Figures 4 and 5). More specifically, the survey found that 31 percent are using analytics to gain insight into compliance programs, 17 percent to help drive cost efficiencies, and 33 percent to understand and enhance sales and marketing activities. (Nineteen percent said they are using business insights for other purposes.)

Figure 4. Business insights

Applying analytics to aggregate spend data also helps compliance teams ensure a more complete view of HCP business relationships both internally and externally. And, it empowers companies to apply corrective action if activities pose a potential risk – whether real or perceived.

Figure 5. How companies are using insights

To pre-submit or not to pre-submit?
This year’s survey showed that 44 percent of companies initiated a “pre-submission review” – that is, they provided covered recipients relevant spend information before they submitted it to the Centers for Medicare and Medicaid Services. That percentage is very similar to last year, when 47 percent of respondents said they offered such a review.

Giving HCPs and HCOs an opportunity to review payments in a private, secure portal helps keep channels of communication open and often leads to more satisfied physicians. Although CMS provides a secure website for physicians to review spend transactions before the information is published publicly, any disputes must be managed directly with the manufacturer with only 45 days for review and resolution. (Interestingly, 80 percent of respondents said that excluding duplicates, 0 to 1 percent of their transactions were disputed by HCPs. Only 3 percent of companies reported having disputes on more than 5 percent of transactions.)

Companies often decide to do a pre-submission review only when spending reaches a certain threshold. Last year, most companies (67 percent) triggered such a review when HCP/O spending hit the $1,000 to $4,999 range, and no companies reported a threshold amount of up to $1,000. The 2016 survey uncovered a big change – with 35 percent of companies using a threshold amount of up to $1,000 and 23 percent opting for the $1,000 to $4,999 range.

It is possible that with the experiences over the past few years, some companies have discovered that it is more appropriate to lower the spending thresholds based on the volume of pre-disclosure inquires by HCPs and/or continued alignment with company compliance programs.

Final thoughts
When analyzing the results from today against those from years ago, it becomes clear that manufacturers have made significant progress. However, they are not closing the book on their transparency initiatives. Rather, they are just beginning the second chapter as they focus on the broader compliance picture, work to implement more centralized systems and processes, and identify opportunities to use analytics to gain additional insights from transparency-related information.


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Spotlighting ‘Sunshine’

The Federal Sunshine Act preempts any state laws requiring reporting of the same information concerning payments or other transfers of value made by applicable manufacturers to covered recipients. This means that manufacturers only need to report to the states in cases where state laws are either more stringent – or when they require different types of information.

In 2015, half of respondents reported taking advantage of preemption and reporting only to the states information not covered by Sunshine. This year, just 28 percent said they will do so. Forty-one respondents are undecided on whether to submit all reportable spend to states or to use preemption and submit only what was not submitted to CMS.

For CMS reporting, most respondents (51 percent) did not create an Assumptions Document for 2016 Sunshine reporting. The remaining 49 percent were split, with 29 percent creating but not submitting one and the other 20 percent delivering an Assumptions Document with the rest of their report submission.

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