Case Study: Planning Aggregate Spend Activities for the Next Three Years

1
Case Study Planning Aggregate Spend Activities
for the Next Three Years
The National Disclosure SummitWashington
DCMarch 6, 2009
Cynthia Cindy Cetani
Jon Wilkenfeld
2
Introductions

• Cynthia Cindy Cetani
• Executive Director
• Novartis Pharmaceuticals Corp.
• Cynthia.Cetani_at_novartis.com
• [phone]

• Jon Wilkenfeld
• President
• Potomac River Partners
• Jwilkenfeld_at_potomacriverpartners.com
• [phone] (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
ARS Aggregate Spend Status

• Where are you within the lifecycle of building an
  aggregate spend solution regarding physician
  spend?
• Fully implemented for HCP spend
• Partially automated and partially manual for HCP
  spend
• Building a solution now spend capture is manual
  by state
• We are in early planning stages
• We havent started planning or building yet

4
Today The Basics of an Aggregate Spend System
5
What do you believe will follow the Sunshine Act?

• 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.
• States will be satisfied with the data reported
  at the federal level but the federal government
  will require additional disclosures.
• States will not be satisfied with the data
  reported at the federal level and will continue
  to proliferate new reporting requirements.
• Dont know

6
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

7
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. Dont know

8
Future Customer Master With Relationship Data
2008 Customer Master 2D
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
Questions to Consider

• 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?

9
ARS Spend Capture on HCOs

• What is the status of your aggregate spend
  solution for HCOs?
• Fully automated for HCO spend
• Partially automated and partially manual for HCO
  spend
• Building an automated solution spend capture is
  manual
• We are working on our plan now
• We dont 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
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
ARS Data Integrity

• What actions are you taking to ensure accurate
  data?
• Full-time Data Steward responsible for data
  integrity
• We periodically audit/monitor data
• Manual checks by Aggregate Spend owner (e.g.
  Compliance) that focuses primarily on data
  outliers
• We rely exclusively on data accuracy within the
  source systems

12
Data Monitoring Garbage In Garbage Out

• 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?

13
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. Dont know

14
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
ARS HCP Impact

• In your humble opinion, which do you believe will
  be the biggest impact of PPSA on HCPs?
• Some HCPs may limit their industry compensation
  for concern over disclosure
• HCPs may refuse to accept value (e.g. a meal)
  while still attending an event
• Attendance at promotional programs will decline
• HCPs will demand to see copies of their
  disclosures prior to publishing on the web
• No impact HCPs will continue to interact with
  pharma companies exactly as before

16
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
ARS Business Impact from Aggregate Spend

• How does your company use aggregate spend data?
• We havent built our system yet
• Use it only for state law reporting and
  monitoring
• State laws Compliance uses it for various
  monitoring activities
• Compliance Operations Groups (Sales Ops,
  Sourcing) look at cost figures
• Compliance Ops the rest of the organization
  including Business Analysis, Market Research,
  Brand Teams, and/or Senior Management

18
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!
• Butcan 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
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. Dont know

20
Subsidiary Reporting and Post-Merger Integration
PPSA Disclosure
Subsidiary /Entity Affiliated with Such Entity
Manufacturer

• 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

21
ARS Global Spend

• Which payments are captured by your system?
• Only US-Parent Corporation spend on US HCPs
• All payments to US HCPs (US and Global
  subsidiaries)
• All payments from US-Parent Corp (US and Non-US
  HCPs)
• 2 and 3
• All spend (US and Global Subs) to all HCPs (US or
  Global)

22
Global Spend

• How do you leverage internal knowledge,
  resources, and IT systems?
• Are you concerned about corporate separateness?
• Are you confident that global spend doesnt
  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
Solution Develop Another? Three-Year Plan
24
Questions