Gift Disclosure and Registration

1
Gift Disclosure and Registration

• Tom Tremble, AdvaMed
• Julie Cohen, AdvaMed
• Vickie McCormick, St. Jude Medical
• Debjit Ghosh, Huron Consulting Group, LLC
• March 27, 2008

2
Overview of State Legislative Activity

• Presented by
• Tom Tremble
• AdvaMed

3
Overview of State Legislative Activity

• Background
• Current Proposals
• Whats Driving Them
• Outlook

4
Overview of State Legislative Activity

• Background
• Enacted Laws
• Reporting Registration/certification
• Minnesota (1993) California (2004)
• Vermont (2005) Nevada (2007)
• Maine (2004)
• District of Columbia (2004)
• West Virginia (2004)

5
Overview of State Legislative Activity

• Bans
• Minnesotaprohibits gifts of 50 or more
• Exceptions
• Samples, conferences, honoraria, and faculty.
• Device companies that distribute drugs as an
  incidental part of business
• Separate MN provision requiring annual report of
  payments totaling 100 or more to individual
  practitioners
• Reporting Provisions
• DC, ME, and VT require reporting of gifts over
  25.00

6
Registration Requirements

• California SB1765 Signed by Governor 9/29/04
• Requires a pharmaceutical company to adopt a
  comprehensive compliance program in accord with
  the OIG guidelines
• Companies are to include provisions for complying
  with the PhRMA Code
• CCP to include limits on gifts or incentives
  provided to medical or health professionals
• CCP to include a specific dollar limit for gifts
  to individual physicians
• Exempts samples, conference support, and
  scholarships
• Defines dangerous drug as drugs and device(s)
  that may be dispensed only by prescription

7
Registration Requirements

• Nevada
• Requires drug and device manufacturers and
  wholesalers to adopt a marketing code of conduct
  that addresses
• Basis for interactions, informational
  presentations, third-party educational meetings,
  use of consultants, scholarships, and educational
  items
• By June 1 every year, device firms are to notify
  the NV Board of Pharmacy of their code of conduct
  and should indicate if they are adhering to the
  AdvaMed Code.

8
Overview of State Legislative Activity

• Recent and Current Activity
• ? District of Columbia
• Safe RX Act of 2007
• ? Massachusetts
• S2535
• ? Washington
• ? New Jersey
• Attorney General Task Force on Physician
  Compensation
• ? New Hampshire HB1518
• ? Tennessee HB3602/HB2677
• Who and Whats Driving It
• ? Consumers Union, AARP, NLARx, Ortho
• Outlook

9
Discussion of Physician Payment Sunshine
Legislation

• Presented by
• Julie Cohen
• AdvaMed

10
Environment on Capitol Hill

• Democratic Majority in Congress made
  pharmaceutical pricing, influence, safety and
  transparency a top priority issue
• Medical devices are increasingly included in
  scrutiny of industry practices.
• Congressional Budget Office hearings/reports/state
  ments about the influence of medical technology
  in driving overall health care cost increases
• Oversight hearings on FDAs ability to carry out
  its mission
• Passage of 2007 Ethics/Lobbying Disclosure
  Legislation

11
Recent Congressional Activity on Gift Disclosure

• June 2007 Senate Aging Committee hearing on
  Drug Industry Payments to Physicians chaired by
  Senator Herb Kohl (D-WI)
• July 2007 Rep. Peter Defazio (D-OR) introduced
  H.R. 3023, Drug and Medical Device Company Gift
  Disclosure Act
• September 2007 Senators Grassley (R-IA) and
  Kohl introduced S. 2029, Physician Payments
  Sunshine Act
• Efforts by Grassley-Kohl to include Sunshine
  Act in Medicare legislation in Fall 2007
• February 27, 2008 Senate Aging Committee
  hearing on Device Industry Payments to Physicians

12
Grassley-Kohl legislation (S.2029)

• Requires all manufacturers of drugs, devices, and
  medical supplies, with annual gross revenues of
  more than 100 million, to disclose any payment
  above 25, quarterly and in an annual summary
  report
• Must disclose all payments, including
  compensation, food, entertainment, gifts, trips
  or travel, discounted products, continuing
  medical education, product rebates, consulting
  fees or any other economic benefit as defined by
  the Secretary. Product rebates and discounts
  specifically included
• Covered health care professionals include
  physicians or an entity a physician is employed
  by, has tenure with or an ownership interest
• Exceptions include free drug samples for
  patients, payments for clinical trials
• Penalties for non-compliance minimum 10,000 up
  to 100,000 per violation

13
AdvaMeds Key Advocacy Points

• Collaboration with health care professionals is
  essential to invent and improve medical devices,
  and to ensure health care professionals are
  trained to use devices safely and effectively
• AdvaMed has embraced a strong Code of Ethics to
  preserve collaborations with health care
  professionals
• With some key changes to the legislation to
  ensure a fair and level playing field, provide
  clear and meaningful information to patients, and
  to preserve relationships that benefit patients
  and innovation AdvaMed could support the
  legislation.

14
Understanding Collaborative Relationships Between
the Medical Device Industry and Physicians

• Physicians are key partners in the development
  and improvement of medical technology
• - Innovation requires ongoing collaboration to
  improve technology for patients
• - Partners in invention, development, clinical
  testing, education/training, providing feedback
  for improvements
• Physician training is a critical component in the
  safe and effective use of medical devices
• - Physician technique/skills are critical with
  medical devices.
• - Hands-on training is essential.
• Physician collaboration with the device industry
  has led to ground-breaking advances in patient
  care

15
AdvaMed Has Embraced a Strong Code of Ethics to
Preserve Collaboration with Health Care
Professionals

• The medical device industry recognizes that
  strong ethical standards is critical to our
  ability to continue collaborative relationships
• Our Code of Ethics, effective January 1, 2004,
  distinguishes bona fide interactions that benefit
  patients from those that may influence medical
  decisions inappropriately
• We have aggressively promoted adoption of the
  code with members and health care professionals
• An independent 2006 survey found nearly 100
  compliance among members surveyed
• The Code addresses training and education,
  consulting, support of third-party educational
  conferences, sales and promotion, gifts, grants
  and charitable contributions
• AdvaMed member companies take the Code further
  with dedicated resources and additional
  compliance procedures

16
AdvaMeds Position on S. 2029

• AdvaMed supports appropriate disclosure of
  relationships between medical technology
  companies and physicians
• We could support the legislation if key changes
  are made to ensure a fair and level playing
  field, provide clear and meaningful information
  to patients, and to preserve relationships that
  benefit patients and innovation
• Preemption create one uniform, strong Federal
  standard
• Alternative threshold companies that make more
  than 250,000 in
  annual reportable payments to physicians should
  disclose
• Physician-owned entities should be included
• Context of relationships should be provided to
  patients

17
Additional Legislative Changes Sought by
AdvaMed

• Instead of reporting transfers of value,
  legislation should enumerate specific types of
  payments to be disclosed
• Delayed disclosure of product development
  agreements/clinical trials to protect proprietary
  information
• Exclude reporting of discounts, rebates, and
  other pricing information
• Exclude reporting of warranties, technical
  support, reimbursement information, and device
  samples/models for provider and patient
  demonstration
• (continued)

18
Additional Legislative Changes Sought by
AdvaMed

• Require reporting for education and training to
  be limited to the value of meals, travel, and
  compensation only rather than imputing a value
  to the training itself
• Provide two years before implementation to allow
  companies to develop or refine tracking systems
• Require annual reporting instead of quarterly
  reporting
• Cap penalties
• Allow reporting of payments in dollar ranges or
  bands

19
Legislative Prospects for 2008

• Sponsors are considering revisions to the
  legislation
• New House bill expected to be introduced that
  more closely aligns with S.2029
• Medicare legislation expected in first half of
  2008 sponsors are well-positioned and will
  likely seek to attach S.2029
• AdvaMed doing outreach to Hill offices to
  advocate for key recommendations to improve the
  legislation

20
Discussion of Aggregate Spend Tracking
Challenges Key Operational Issues

• Presented by
• Vickie McCormick
• St. Jude Medical
• Djebit Ghosh
• Huron Consulting Group, LLC

21
Defining the Data Integration Challenge

• Systems for most Medical Device Companies are
  designed to meet very specific needs of
  functional areas within the company (e.g., sales,
  clinical, finance, etc.)

ERP System
Designed to facilitate enterprise finance and
logistic functions.
SFA
Designed to track sales force contacts and
prescription activity.
Grants
Designed to track grant payments and activity
milestones for recipients.
TE
Designed to accurately reimburse employees for
expenses incurred.
KOL Tracking
Designed to track Medical Affairs contacts with
KOLs and Investigators.
Investigator Trial Activity
Designed to track milestones and payments for
Investigator Trials.
For Illustrative Purposes
22
Changing the Paradigm for Data Tracking
Measuring General Effects
Accuracy and Completeness
Key Points for Consideration

• Tracking spending on healthcare professionals
  (HCP) requires accurate and complete data
  integration across key legacy systems
• The need to integrate data at the transactional
  level across enterprise systems has not been a
  previous focus of medical device IT departments
• Data across multiple systems cannot be accurately
  and completely integrated without the ability to
  identify transactions at the HCP level
• Every transaction must be identifiable and
  attributable to an individual HCP for
  aggregation, tracking, and reporting (aggregate
  spend)

23
Tracking and Disclosure is a Bottom-Up Process

• The transactional data must be in a form that can
  be used for aggregate spend tracking purposes
• If a record for a trackable expense does not
  have adequate and identifiable information (e.g.
  value, nature, purpose, recipient, identifier,
  etc.), identifying the details of the transaction
  and the individual later in the process becomes
  significantly more difficult
• Rather than receiving an accurate record of the
  HCP from the source system or the individual
  responsible for the expense or activity, a
  downstream system or process will have the
  burden of identifying the transaction
• Solving the data integration challenge requires a
  data capture approach that will be sufficiently
  flexible, scalable, and adaptable to integrate
  transactional data across multiple source systems
• Although an Enterprise Level Customer Master
  Strategy is generally the most effective
  approach, it is not always feasible
• The cost of changing enterprise systems or adding
  functionality may be insurmountable
• Disruption to company operations can range from
  being minimal with buy-in from functional areas
  or excessive if functional areas do not cooperate

24
Identifying all HCP Touch Points
For Illustrative Purposes
Commercial
Clinical Medical
Contracting
Clinical Medical
Marketing
Commercial
Clinical Medical
Sales Force
Marketing
Commercial
Clinical Medical
Sales Force
Marketing
Sales Force
Marketing
Sales Force
Managed Care
Affairs
Affairs
Managed Care
Affairs
Managed Care
Affairs

• Transactional Data
• Unique HCP Identifier
• Product Association
• Value
• Nature
• Purpose

Third Party
Third Party
Third Party
Third Party
Direct Payments
Direct Payments
Direct Payments
Direct Payments
Indirect Payments
Indirect Payments
Indirect Payments
Indirect Payments
Speakers
Advisory
Meals
Investigator
Speakers
Advisory
Meals, Travel, Lodging Gifts
Investigator
Grants, Royalties, IP Payments
Grants
Consultants
Boards
Gifts
Activities
Consultants
Boards
Activities

• Identifying all of the HCP touch points across
  the enterprise is a critical step in defining a
  data capture approach
• Incomplete data from a functional area or the
  inability to integrate a data source will likely
  result in non-compliance
• Companies should consider both direct and
  in-direct (third party payments) in developing a
  data capture approach

25
Defining an Enterprise Customer Master

• The goal of an enterprise level customer master
  strategy is to identify unique HCPs at the time
  of the transaction or at a later time in order to
  facilitate tracking and reporting
• Integrating an enterprise customer master into
  individual source systems will present unique
  challenges and requirements

• Key Challenges
• Maintaining accurate and timely customer data
• Linking the same HCP across multiple systems
  (matching)
• Complete and accurate reference data identifying
  key data attributes such as state licensure,
  affiliations, tax information, etc.

Customer Master File
26
Key Considerations in Developing a ECM (1)

• Development and maintenance of a customer master
  file
• Multiple practices
• Institutional affiliations
• Multiple addresses
• Multiple Tax IDs
• Name Changes
• Multiple State License Numbers
• Managing multiple HCP types
• Physicians
• Mid-Levels (NP, PA, RPh, etc.)
• Hospitals and ambulatory surgical centers
• Academic institutions

27
Key Considerations in Developing a ECM (2)

• Managing history
• Identifying data elements can change from year to
  year.
• History should be maintained for audit and
  tracking purposes.
• Develop cross-walks for multiple affiliations
  or duplicate records
• Use of reference data
• Third party vendors
• National Provider ID (HIPAA mandated)

28
Interfacing an ECM with Enterprise Systems
For Illustrative Purposes

• ERP System
• Typically accounts payable functions
• Accurate name, address, and tax ID
• SFA System
• Call plan synchronization
• Cross-walk to sales data
• Grants System
• Customer master data for institutions
• Back-end linkage to HCP
• TE System
• Would require current data from customer master
  for HCP selection
• Transactional level allocations
• KOL Tracking
• Typically used only by Medical Affairs/MSL force
• Tracking of fee-for-service activities
• Investigator Study Tracking
• Part of an overall aggregate spend tracking
  strategy

29
Challenges in Implementing Aggregate Spend
Capture Processes
30
Changing Systems and Business Processes

• Effective data capture at the front end is the
  only reasonable strategy to improve accuracy and
  completeness of aggregate spend data
• However, integrating a customer master strategy
  into existing legacy systems and business
  processes is a significant challenge
• Existing processes and systems may not be able to
  support enhancements to core transaction sets
  that have been designed to meet very specific
  functional requirements
• ERP
• TE
• KOL Contact Management Portals
• Grants Management Systems
• Investigator Study Management Systems
• Organizations should assess their exposure and
  risk tolerance in assessing the need to change or
  enhance core systems or business processes
• Paretos principle of 80/20 may apply in
  assessing exposure and risk

31
Discussion of Core Challenges
Travel and Expense (TE) Systems

• The integration of a customer master strategy
  into the Companys TE system can be a
  significant effort.
• Integrated customer master functionality within
  the TE system can reduce significant manual
  reconciliation and data entry efforts while
  substantially increasing accuracy and
  completeness of core data.

TE System
ERP A/P Function
TE Data Entry
Which customer master? Who maintains it and how
are updates handled? Exception processing? How
are allocations handled? Universe Optimization?
Customer Master File
32
Developing a Scalable Process
Data Integration and Warehousing
Accounts Payable
Aggregate Spend Tracking Database
T E System
ETL Functionality
Investigator Pmts
Third Party Vendors
Data Staging
Reporting Functionality
Integrating Data Across Multiple Sources

• Many organizations use manual processes to
  integrate data across functional areas
• For aggregate spend tracking to be truly
  scalable, a systems based approach must be
  developed where source data can be automatically
  loaded into a relational database