James Pierce | Appian
Starting August 1, 2013 manufacturers of bio-pharmaceuticals and medical devices are required to begin collecting and tracking payment, transfer and ownership information when the Physician Payments Sunshine Act (PPSA) goes into effect. The purpose of PPSA is to reduce the potential for conﬂicts of interest that US-based health care providers (HCPs) or teaching hospitals could face as a result of their relationships with manufacturers. Such manufacturers are also required to track payments to HCPs overseas, who typically qualify as “foreign officials” under The Foreign Corrupt Practices Act (FCPA). If manufacturers do not comply with these regulations, they are subject to criminal prosecution and significant fines, to say nothing of the damage to their corporate reputation.
While there are distinct differences between these two distinct compliance requirements, there are enough similarities to raise the question of whether it is more efficient for manufacturers to develop global transparency systems using a single platform for data collection and tracking.
Today, manufacturers might comply with these two similar regulations separately. Each initiative would have its own team, and each team would have its own software applications to capture data and process compliance requirements. There are innate problems with setting up a new IT system for each new compliance initiative. Developing new systems can be needlessly costly, creating faulty or duplicative data and adding to the workload for compliance personnel.
A more effective approach would address compliance globally, with solutions built on a single platform that ties into accounting and management systems, automatically compiling report information and sending investigative work tasks to appropriate team members. Combined with social media for improved collaboration, this single system approach could turbo-charge regulatory compliance programs, minimizing effort while maximizing effective reporting.
What follows is a closer look at PSSA and FCPA, and how pharmaceutical companies can follow a unified approach to improve compliance, reduce the chances of violation, and make their compliance systems more cost effective.
Understanding PPSA and FCPA
Under PPSA, applicable manufacturers of drugs, medical devices, biologics, and medical supplies operating in the US must report any payment or benefit given to a HCP. The initiative was launched on August 1, 2013, and any direct or indirect payment above $10 to a HCP must be reported.
This can be challenging for life science manufacturers, because HCP payments are often recorded in separate systems depending on the type of expense. Expense reporting systems may track meals and small expenses, marketing event management systems may track speaking honorariums, and medical affairs systems may report unrestricted research grants. Unless the HCP lists are coded similarly, it can be difficult to link these systems and reconcile the data in them.
Similarly, the FCPA prohibits anyone with a connection to a company operating in the US from offering, authorizing, or giving “anything of value” to a “foreign official” to gain a business advantage. This is complicated in countries with national healthcare systems. In these cases, facilities offering healthcare or treatment are essentially government agencies; their employees, therefore, can be seen as foreign officials.
The penalties for noncompliance are steep. A single violation of FCPA can lead to millions of dollars in fines, and much more than that to remedy the violation.
Coordination, control, and document retention are essential to ensure compliance with both of these regulations, and life science manufacturers need a way to report on and respond to questions in the field, as well as simplified ways to report and correct suspected illegal behavior.
New systems to track both PSSA and FCPA data only add to the workload of compliance professionals. Separate systems increase the need for manual entry, which adds to the likelihood of data error. This approach can adversely affect data quality, which in turn adds to the risk of falling out of compliance. Besides that, it can be extremely costly and burdensome to modify commercial off-the-shelf (COTS) compliance software to work with a company’s existing processes.
The passage of the PPSA provides a unique opportunity to improve FCPA compliance. If manufacturers think of the PPSA and FCPA as two sides of the same coin, they could streamline their compliance tracking procedures globally and more efficiently monitor their relationships with foreign medical professionals by addressing similar directives using a single platform. Such an approach could also essentially function as an early warning system and curtail, if not avoid, time-consuming investigations and expensive settlements that are becoming increasingly more commonplace.
Worldwide spend-tracking and data collection systems could prove useful in monitoring relationships with state-employed HCPs, uncovering improper spending activities, and training personnel on how to remain within the limits of U.S. law. Ultimately, the global implementation of transparency systems would help to ensure compliance with the PPSA while serving as a proactive tool for monitoring FCPA compliance.
The single platform approach to multiple compliance problems
A single platform approach to compliance would draw data from existing systems and process the data appropriately for compliance reporting. To do so, the platform would need to connect with accounting and other management systems. That connection would fill in the gaps in compliance information, route investigative responsibilities and easily compile report information. A single system would allow compliance professionals to find and gather necessary information quickly and easily.
For example, let’s consider a pharmaceutical marketing event that features several international health care providers as speakers. Because the speakers are typically paid honorariums for their services, each will have to be vetted through the compliance process. But there is typically separate tracking for contracting the speakers, determining whether they actually spoke, and whether lunch may have been provided to attendees. An event management system may generate data for compliance reporting, while attendance information may only be recorded on paper, and may have to be re-entered by hand into the event management system.
The most logical way to deal with this data shortcoming might be to wrap the event management system in a business process management platform with a mobile user interface. That way, attendee tracking becomes a simple matter of checking names off on application list maintained on a tablet or other mobile device. By tying this check-in application with the compliance application, it would be easy to get data on who actually received gifts or remuneration without any more user input.
The same work automation platform could tie into a corporate travel system so that any compensation for travel expenses could be appropriately documented for compliance reporting as needed.
Work process automation demands collaboration
FCPA investigation and PSSA tracking both require internal and external resources, many of them similar enough in nature that a single approach to compliance could easily cut costs and improve accuracy. But work process automation alone is not enough. Real benefit also calls for collaborative technology – essentially a “social media” component to automating processes.
By using a work automation platform with collaboration capability, compliance professionals can easily gather information, due diligence reports, and payment histories into a single secure location to improve a secure review and audit process.
Collaboration technology can speed the investigative process by compressing time otherwise taken up by waiting for feedback among members of the investigative team. The social media component of work process automation – what is increasing referred to as “worksocial” – can allow for even faster compliance reporting if collaboration can be conducted from mobile devices. The more immediate the collaboration and response time, the faster decisions can be made, which in turn reduces the risk of improper payments.
Work automation platforms with social collaborative technologies can usher in an entirely new way to connect compliance applications and the data in them, making it easier for compliance professionals to share information as appropriate. A single, unified approach to compliance is the cornerstone of a sound anti-corruption program that can adapt as regulations change or are added, to provide real defense against possible violations and improve the compliance process overall.