Preparing for Healthcare Professional Transparency

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The webcast focuses on what Executives need to know as the Open Payments Program is fully implemented focusing on the broader implications of how to prepare for healthcare professional transparency.

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  • Beth:- Check any reference to pharma should say “pharmaceutical and medical device” - Change the word “manufacturer” to “company” throughout
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  • Preparing for Healthcare Professional Transparency

    1. 1. Presented by Sponsored by © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution
    2. 2. Introduction WEBINAR MODERATORS AND SPEAKERS Moderated by Ben Comer, Senior Editor, Pharmaceutical Executive, the following leaders from Huron Consulting Group and King & Spalding will serve as today’s webinar speakers: Paul Silver Managing Director Huron Consulting Group Manny Tzavlakis Managing Director Huron Consulting Group Nikki Reeves Partner FDA & Life Sciences Practice King & Spalding LLP Seth Lundy Partner FDA & Life Sciences Practice King & Spalding LLP © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 1
    3. 3. Introduction WHY ARE WE HERE TODAY? After this webinar, you will gain additional insight into:  How various entities (e.g., regulators, competitors, customers, etc.) could interpret Open Payments data and the associated risks to your company  The potential for personal liability with regards to wrongful reporting  Ways to utilize this information to add greater business value © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 2
    4. 4. Introduction & Review of the External Landscape
    5. 5. Introduction RECENT INDUSTRY HEADLINES © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 4
    6. 6. Introduction DISCLOSURE, LITIGATION & THE FUTURE $30.2 billion Payments the pharmaceutical and medical device industry has paid for civil and criminal penalties to the US and state governments- the industry continues to face more allegations of wrongdoing on a global scale (i.e., China).1 What will be the total number disclosed to CMS in 2014 by industry? 1. 2. $? billion $2.1 billion Approximate amount of HCP payments publicly disclosed as of 2013 by 15 pharmaceutical and medical device companies– under Corporate Integrity Agreements or voluntarily. 2 How will this impact/influence future litigation, media and public opinion? Source: Kelton, Erica. Is Big Pharma Addicted To Fraud. Forbes. July 2013. Source: www.ProPublica.com. November 2013. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 5
    7. 7. Introduction MEDIA PLAYS A ROLE IN TELLING THE STORY How will the media interpret open payments disclosure data to grab attention, to tell a story… Will your company have the facts and be prepared to respond? 1. Source: Clips sourced on www.youtube.com © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 6
    8. 8. Making Sense of the Publicly Available Data
    9. 9. Publicly Available Data THE AFTERMATH OF DISCLOSING DATA  All payments and transfers of value exceeding $10 must be reported and tracked against the individual HCP who received it by the company. The report is due March 31, 2014.  HCPs will have access to the total reported information prior to public posting.  HCPs will have the right to dispute and/or question the expenditures with the company.  Once this information is publicly posted, it is available to regulators, newspapers, customers, patients, competitors, and the general public . Source: CMS App for Open Payments for Physicians, CMS website © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 8
    10. 10. Publicly Available Data CURRENT PUBLIC DISCLOSURE  Awareness is driven by mainstream media as well as by alternative media, such as ProPublica, which has published detailed information about physician compensation from Life Sciences companies. The table below in as example of the data available from ProPublica: Name / Payee City Year Category Amount Jane Physician Worcester 2012 Research $2,762 Jane Physician Jamaica Plain 2012 Meals $281 Joe Roberts Holyoke 2011 Items, Gifts $251 Joe Roberts John Smith Boston 2011 Consulting $2,400 Worcester 2010 Speaking $65,890 John Smith Worcester 2011 Speaking $17,400 John Smith Worcester 2011 Travel $5,073  ProPublica also provides profiles for each individual HCP detailing information such as: total compensation by company, specialty, and prescribing patterns. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 9
    11. 11. Mitigating Risk: The Changing Market Landscape
    12. 12. Mitigating Risk CHANGING MARKET LANDSCAPE Publicly disclosing payment information and the increased scrutiny from industry-related entities are causing changes in the market landscape. Companies are being forced to adapt by:  Assessing their internal and external strategies  Strengthening processes and controls  Increasing collaboration across Compliance, Commercial and Clinical Development to mitigate risk and become more efficient Product Commercialization Clinical Development © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution Compliance Healthcare Professional Engagement 11
    13. 13. Mitigating Risk MEDIA / INQUIRY PREPARATION  The media, customers, patients, and others may review this data for: • Spend outliers within company peer groups • Relationships between companies and HCPs – particularly those under or related to an investigation(s) • Since primary specialty will be posted, engagements with healthcare professionals that may be off-label in nature • Research related information such as which researchers are working for competitors © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 12
    14. 14. Mitigating Risk KEY RISK: LOSS OF KEY OPINION LEADERS Loss of KOLs Risk • Changes in the business and transparency landscape may change the willingness of HCPs to engage with pharmaceutical and medical device companies Strategic relationships will be even more critical in the future. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 13
    15. 15. Mitigating Risk KEY RISK: LOSS OF KEY OPINION LEADERS Potential Outcome • Because even small transactions will typically be posted under Open Payments, HCPs may no longer accept sales rep “lunch-n-learns”, educational items, or even samples (which must also be disclosed separately from the Open Payments report) • Potentially more significantly, HCPs may no longer wish to serve as Key Opinion Leaders (KOLs) for clinical trials, speaker programs, consulting, or for other engagements © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution Strategic relationships will be even more critical in the future. 14
    16. 16. Mitigating Risk PLAN: PROACTIVELY MANAGE KEY OPINION LEADERS Proactively prepare responses for relationships that are likely to be highlighted in the media or in other outlets. Consider “Pre-Disclosing” transactions to key KOLs to ensure their awareness of what will be posted prior to actual public posting. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution Handle inquiries and disputes promptly, accurately, and consistently per established policies & SOPs. 15
    17. 17. Mitigating Risk KEY RISK: INACCURATELY REPORTING PAYMENT DATA : Potential Risk A disorganized, insufficient or lack of data gathering & data reporting processes, capabilities, and systems. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 16
    18. 18. Mitigating Risk KEY RISK: INACCURATELY REPORTING PAYMENT DATA : Potential Outcome May result in inaccurately reported payment data, which can damage reputation and the relationship between the companies and HCPs. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 17
    19. 19. Mitigating Risk DEVELOP RISK REMEDIATION FOR REPORTING Specific Risks Associated with Data • Remediation Steps Key Account Management (KAM) systematic for  Manual data entry into the systems RISK may is• a Targeted trainingFOR REPORTING PLAN: DEVELOP of record REMEDIATION toprocessemployees ensure that managing incorrectly. be carried out interactions and relationships with your mostcomplete and understand the importance of valuable accurate data capture. customers. • File transmission errors may occur – these include issues related to date ranges, missed files, or other system issues. • Ensure that transactions from given systems or date ranges are present in the collected aggregate spend data (based on outlier observations). • Transaction data fields may be incorrectly mapped to final report data. • Update reporting engine business rules or configuration to ensure that expected reports are produced. • When the federal government, institutions, or the media display and analyze company reporting data, aggregation, calculation, or other types of errors may result. • Where aggregation or mathematical errors have been identified, contact the federal government or other source to ensure that displayed data is corrected. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 18
    20. 20. Impacts To You & Personal Liability
    21. 21. Types of Potential Impact and Liability  Business and reputational risk  Corporate legal liabilities  Individual legal liabilities © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 20
    22. 22. Calendar the Key Dates  Jan. 1, 2014 – end of CY 2013 reports; begin tracking for CY 2014  March 31, 2014 – CY 2013 reports due  May – June 2014 – 60-day dispute resolution period begins  September 30, 2014 – CMS publication date for CY 2013 data © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 21
    23. 23. Effects of Increased Transparency IOM Industry Groups Press Industry/HCP Relationships Regulatory and Enforcement Agencies Medical Institutions State Legislatures U.S. Congress © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution Physician Groups 22
    24. 24. Business and Reputational Risks  There is little doubt that transparency of these relationships will further increase scrutiny of industry/health care professional relationships  Publication, communication and misunderstanding of these reports may affect: – Customer purchasing – Ability to successfully contract – Patient perception – Public perception – Government agency perception – Peer relationships © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 23
    25. 25. Corporate Legal Liabilities Penalties For Failure to Report (42 C.F.R.§403.912)  Manufacturers are subject to civil money penalties for failing to timely, accurately, or completely report the required information  Inadvertently failing to report data subjects an applicable manufacturer to a civil monetary penalty between $1,000 and $10,000 for each payment or other transfer of value not reported timely, accurately, or completely (for each annual submission, the total penalties for inadvertent failures to report may not exceed $150,000)  Knowingly failing to report data subjects an applicable manufacturer to a civil monetary penalty between $10,000 and $100,000 for each payment or other transfer of value not reported timely, accurately, or completely (for each annual submission, the total penalties for knowing failures to report may not exceed $1,000,000) © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 24
    26. 26. Corporate Legal Liabilities Anti-Kickback Statute – 42 U.S.C. §1320a-7a(b)  The Anti-Kickback Statute makes it a criminal offense to knowingly and willfully to offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a federal health care program.  Penalties: • Felony charge, punishable by maximum of $25,000 fine and up to five years imprisonment, or both for each offense. • Automatic exclusion from federal health care programs. • Administrative proceedings to impose • Civil money penalties • Exclude party from federal health care programs. See Section 1128(a)(7) and Section 1128(b)(7) of Social Security Act. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 25
    27. 27. Corporate Legal Liabilities False Claims Act (qui tam) 31 U.S.C. § 3729 • “Any person who: – (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; – (3) conspires to defraud the Government by getting a false or fraudulent claim paid or approved by the Government;. . . or – (7) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, – allows whistleblowers to bring a suit on behalf of the government against individual or company responsible for the alleged fraud.” 31 U.S.C. § 3729. – “Knowing” or “knowingly” means: “(1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required.” 31 U.S.C. § 3729. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 26
    28. 28. Corporate Legal Liabilities False Claims Act (qui tam) 31 U.S.C. § 3729 (continued)  Penalties: – “Civil penalty of not less than $5,000 and not more than $10,000, plus three times the amount of damages which the Government sustains because of the act of that person.” 31 U.S.C. § 3729 (emphasis added).  No actual knowledge required – Person who acts in reckless disregard or in deliberate ignorance of truth or falsity of information can be found liable under the Act. 31. U.S.C. § 3729(b). © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 27
    29. 29. Corporate Legal Liabilities Federal Food Drug & Cosmetic Act (FDCA)  Section 303(a) of FDCA imposes criminal sanctions against any person who committed a prohibited act or caused such acts to be committed. 21 U.S.C. § 333. – Fines and prison sentences determined by Federal Sentencing Guidelines.  Criminal Charges: Section 303 discusses the penalties for a violation of Section 301. – A violation of 21 USC § 331, a second violation, or the intent to defraud or mislead results in the following consequences. • “(1) Any person who violates a provision of section 301 shall be imprisoned for not more than one year or fined not more than $1,000, or both. • (2) Notwithstanding the provisions of paragraph (1) of this section, if any person commits such a violation after a conviction of him under this section has become final, or commits such a violation with the intent to defraud or mislead, such person shall be imprisoned for not more than three years or fined not more than $10,000 or both.” 21 U.S.C. § 333. – Felony if action done with intent to defraud or mislead, or a second offense without intent – Misdemeanor if no showing of intent © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 28
    30. 30. Corporate Legal Liabilities State Transparency/Aggregate Spend Disclosure Laws and Compliance Program Laws  California Compliance Program Law, (Cal. Health & Safety Code §§ 119400119402)  Connecticut Compliance Program Law, (CT S.B. 428)  Nevada Marketing Code of Conduct and Compliance Program Law (Nev. Rev. Stat. § 639.570)  Massachusetts Code of Conduct and Practitioner Payment Reporting (MA SB 2863)  Washington, DC Marketing Disclosure Laws - D.C. Code §§ 48-833.01-.09  Minnesota Gift Prohibition and Payments to Practitioners Reporting Laws (Minn. Stat. §§ 151.461; 151.47)  Vermont Prescribed Products Law  West Virginia Marketing Costs Disclosure Law (W.Va. Code § 16-29H-1) © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 29
    31. 31. Individual Legal Liabilities PARK DOCTRINE What is the Park Doctrine? • Permits misdemeanor convictions against company executives for violations of the FDCA, even if the executive had no knowledge or involvement in the offense, so long as the person is a “responsible corporate officer.” – Personal knowledge is not required, but only a factor that “may be relevant” in deciding whether to bring criminal charges. • Strict liability crime - can be convicted of federal crime based solely on position in company. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 30
    32. 32. History of the Park Doctrine  United States v. Park, 421 U.S. 658 (1975) – Defendant Park was the president of a large national food store and was convicted of causing adulterated food to enter interstate commerce. Id. at 658. – The Court of Appeals reversed, reasoning based on Dotterweich, that an individual had to have some knowledge of wrongdoing. Id. The Supreme Court overruled this, and held that knowledge of wrongdoing was not a requirement. Id. – “The Act imposes upon persons exercising authority and supervisory responsibility reposed in them by a business organization not only a positive duty to seek out and remedy violations but also, and primarily, a duty to implement measures that will insure that violations will not occur.” Id. at 658-59. – “The defendant had, by reason of his position in the corporation, responsibility and authority either to prevent in the first instance, or promptly to correct, the violation complained of, and that he failed to do so. The failure thus to fulfill the duty imposed by the interaction of the corporate agent's authority and the statute furnishes a sufficient causal link.” Id. at 674. – Supreme Court held that individuals who have the authority to prevent violations can be held vicariously liable for the illegal acts of subordinates. Id. • Responsible corporate officers have an affirmative duty to seek out and remedy violations, and implement measures to prevent those violations. Id. • Delegation to subordinates does not negate liability. Id. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 31
    33. 33. Park Doctrine: Who is a “Responsible Corporate Officer”?  Anyone with authority to prevent or correct violations  Decisions regarding who is the “responsible corporate officer” are left to “the good sense of prosecutors, the wise guidance of trial judges, and the ultimate judgment of juries.” United States v. Dotterweich, 320 U.S. 277, 285.  Typically: – Highest ranking corporate officer (CEO) – Executive with direct authority to implement corrective actions (i.e. compliance officer) – Examples - CEO, President, Chief Compliance Officer, Vice President © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 32
    34. 34. Beyond the Park Doctrine  Park doctrine has been taken to apply beyond FDCA – Anti-kickback Statute – False Claims Act © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 33
    35. 35. Disclosure Under CIAs  Most CIAs implemented since 2008 have required disclosure of payments to HCPs and HCIs “[T]he requirement of public disclosure of these payments will help the Government, as well as the health care industry and the public, to monitor relationships and should have a sentinel effect to deter kickbacks and other inappropriate payment relationships.” Gregory E. Demske, Chief Counsel Office of Inspector General of the Department of Health and Human Services Testimony to the U.S. Senate Special Committee on Aging Roundtable (Sept. 12, 2012) © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 34
    36. 36. Recent Trends in CIA: Accountability  Certain senior management identified as “Certifying Employees” are required to monitor their areas of authority and annually certify compliance with federal health care program requirements, FDA requirements, and the CIA. – “I have been trained on and understand the compliance requirements and responsibilities as they relate to [department or functional area], an area under my supervision. My job responsibilities include ensuring compliance with regard to the [insert name of the department or functional area.] To the best of my knowledge, except as otherwise described herein, the [insert name of department or functional area] of [company] is in compliance with all applicable health care program and FCA requirements, and the obligations of the CIA.” © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 35
    37. 37. Attestations: (42 C.F.R. § 403.908(h)) Each report, including any subsequent corrections to a filed report, must include a certification by the CEO, CFO, Chief Compliance Officer, or other Officer of the applicable manufacturer that the information submitted is true, correct, and complete to the best of his or her knowledge and belief. If filing a consolidated report, the attestation applies to all applicable manufacturers covered by the consolidate report. If an applicable manufacturer submits updated data to resolve disputes, the applicable manufacturer must re-attest to the timeliness, accuracy, and completeness of the data, as required during the original data submission. (78 Fed. Reg. 9502) © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 36
    38. 38. Protect Against Potential Liabilities  Budget appropriately (dollars and personnel) – Quick changes and responses may be required  Benchmark carefully  Consider some or all of the following proactive steps: – Internal audits of payment data for accuracy and overall compliance (e.g., kickbacks, industry codes and state gift bans) – Policy/procedure reviews to ensure that reported payments are consistent with the company’s internal requirements – Tax reviews/opinions – PR and crisis management planning for possible media reports – Continue training efforts – Coordinate with industry on uniform messaging © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 37
    39. 39. Turning Risk & Liability into Corporate Value: Benefits of Disclosing Data
    40. 40. Turning Risk & Liability into Corporate Value BENEFITS OF OPEN PAYMENT REGULATIONS  After the disclosure data has been analyzed and the trends have been identified, a company can react to operational changes by: Altering sales and other go-to market strategies Developing robust data gathering & reporting processes and systems Providing insight into competitor’s and industry’s actions & strategies © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 39
    41. 41. Turning Risk & Liability into Corporate Value ANALYZE SPEND FOR BETTER BUSINESS INSIGHTS Spend Analysis Example of how to view and show company spend on individual HCPs by specialty area and allows the ability to break down the data by specialty area, payment nature, and time frame. Results may include analysis that shows company spend on HCPs by specialty area in order to help identify which specialty area(s) and HCPs are receiving the most payments. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 40
    42. 42. Turning Risk & Liability into Corporate Value BETTER UNDERSTANDING OF KEY OPINION LEADERS With detailed disclosure data available in the near future, compliance-based influence networks can be created to help understand therapeutic markets and how to market more effectively in a compliant manner. For illustrative purposes only. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 41
    43. 43. Turning Risk & Liability into Corporate Value HELP MAKE BETTER ORGANIZATIONAL DECISIONS Companies that adopt a comprehensive enterprise approach to influence mapping can drive competitive advantage in their respective markets. Disciplined influence intelligence better informs organizational decision making, leading to improved outcomes in product development and commercialization. © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 42
    44. 44. Questions To Consider  How concerned is your organization that Open Payments disclosure will impact your relationships with KOLs?  What is your most significant concern about Open Payments disclosure in 2014?  What topics related to disclosure, transparency and data would you like to know more about for future webinars? To access the ProPublica data, please visit: http://projects.propublica.org/docdollars/ © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 43
    45. 45. Thank You Please contact our speakers for information presented during today’s session. Paul Silver Managing Director Huron Consulting Group 678-672-6160 psilver@huronconsultinggroup.com Manny Tzavlakis Managing Director Huron Consulting Group 646-520-0247 mtzavlakis@huronconsultinggroup.com Nikki Reeves Partner FDA & Life Sciences Practice King & Spalding LLP 202-661-7850 nreeves@kslaw.com Seth Lundy Partner FDA & Life Sciences Practice King & Spalding LLP 202-626-2924 slundy@kslaw.com © 2013 Huron Consulting Group. All Rights Reserved. Confidential - Not for Distribution 44
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