How is European pharma responding to stricter transparency laws?

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As the tough promotional transparency laws in the US reach the European shores, Cegedim Relationship Management finds out how prepared pharma organisations are. The pharmaceutical, medical device and biotech industries are currently witnessing the rise of transparency...As the tough promotional transparency laws in the US reach the European shores, Cegedim Relationship Management finds out how prepared pharma organisations are. The pharmaceutical, medical device and biotech industries are currently witnessing the rise of transparency... Hannah Blake

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In this article, we look at European pharma promotional compliance trends as reported in Cegedim Relationship Management’s third annual survey: ‘2012 European Trends in Aggregate Spend, Transparency, and Disclosure’.

The pharmaceutical, medical device and biotech industries are currently witnessing the rise of tighter promotional transparency regulations. As many expected, the stringency of anti-corruption and anti-bribery laws already in place in the United States are beginning to make their way over to Europe, with some countries in Europe already surpassing the enforcement levels set by the US.

Last week, Cegedim Relationship Management released its third annual survey titled ‘2012 European Trends in Aggregate Spend, Transparency, and Disclosure’.

The report found that nearly 71% of life science companies are increasing the scope of their compliance strategy and developing regional standards in anticipation of greater transparency requirements in Europe. When asked whether the respondent’s company has already begun to enforce corporate standards for spending on healthcare professionals, 82% said yes, while 4% admitted that their company does not have standards (see Figure 1). So it seems that most companies are more than willing to enact calculated measures to proactively regulate themselves.

figure-1-company-corporate-standards-spending-hcp

Figure 1: Current status of corporate standards for spending on hcps

This could be because most global companies have already had experience complying with US legislation, such as the US Foreign Corrupt Practices Act (US FCPA) as well as the UK Bribery Act. The anti-bribery section prohibits any company from providing anything of value to a foreign government official to obtain or retain business.

However, according to this report ‘new breeds of law and enforcement agencies aimed at the operations in Europe are cropping up’.

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"...the stringency of anti-corruption and anti-bribery laws already in place in the United States are beginning to make their way over to Europe..."

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In particular, France’s Reforme du Medicament now requires the reporting of expenditure to be posted to a web interface within 45 days for review. But it’s not just asking for the records of payments to HCPs, but also to medical students and any relevant company, such as an IT supplier, consultancy or media company, remotely linked to the life sciences business interactions.

And, while the Sunshine Provision of US PPACA gave companies two years to prepare, organisations in France were given no time to anticipate the new requirements.

Why the sudden urgency to comply?

Europe has a long-arching tradition of self-policing and is now encountering a radical change. Due to the reality of global transparency, Europe ‘no longer questions the presence of transparency law in a given country but only the degree of enforcement’, according to the report. Nearly all countries within the continent now feature provisions designed to effectively expel unethical behaviour.

The UK Bribery Act states ‘that an individual convicted of failing to implement adequate anti-bribery control measures can face up to 10 years in prison and unlimited fines’.

Criminal sanctions are no longer reserved for US operations. Just last August, one of the world’s biggest pharmaceutical companies paid over US $60 million to settle bribery charges after violating the 35-year-old US FCPA law.

And France isn’t the only country to jump head first into the pool of US-style promotional compliance regulations –a number of participant countries that are not yet facing transparency legislation have realised the importance of proactively instituting compliance best practice.

This could largely be attributed by the work of groups such as the European Federation of Pharmaceutical Industries and Association (EFPIA), the Organisation for Economic Co-operation and Development (OECD) and the Association of the British Pharmaceutical Industry (ABPI). These groups have been ‘advancing their requirements and increasing their realm of influence to create a level playing field for the life sciences across Europe and the world’.

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"...even a number of participant countries that are not yet facing transparency legislation have realised the importance..."

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Within as little as one year, the division between those countries operating under heavy legislation and those that are dealing with only moderate legislation could be dissolved by the encouragement from these multiple member-based agencies that exercise both global and local reach.

What are companies doing to maintain compliance?

In this survey, a vast majority of respondents cited that their companies were internally enforcing corporate standards across the board. Figure 2 shows the reportable fields cited by respondents as having been implemented.

figure-2-corporate-standards

Figure 2: Core areas where corporate standards are being applied

When asked to rate their ability to meet upcoming transparency requirements, 8 out of 10 respondents felt confident that their company is either excellently (27%) or well (51%) capable of doing so. But just how committed are these organisations in aligning with the industry to drive efficient compliance programs and reduce administrative burdens?

According to the survey, 44% of executives said they are satisfying existing reporting and disclosure requirements with internally developed proprietary software systems, while only 31% are manually tracking expenditures and just 8% are leveraging third-party solution. On a positive note, it seems time-consuming methods of manual and Excel-spreadsheet-reporting are finally on their way out, with a significant decline in usage reported. In 2011, 44% said this was their method of reporting, whereas in 2012, only 31% agreed.

What are the biggest challenges in regulatory compliance?

A total of 39% agreed that one challenge was in the disclosure to management, while over 35% of respondents agreed that one of the most significant process challenges is matching and establishing unique identification of HCPs from the entire expense data source.

A number of other challenges were recorded in the survey, including:

• Managing incomplete spend and customer information (26%)

• Identifying all data sources (22%)

• Regulatory analysis and monitoring (21%)

What’s important to note, is that these responses have not changed significantly since the last survey, 2011 European Trends in Aggregate Spend, Transparency, and Disclosure.

How can companies overcome these challenges? Well before Europe can begin to tackle the task of assigning a unique customer number, for example, they must first ‘implement solutions to reconcile multiple systems and owners, different file formats, and numerous third-party sources, as well as ensuring that end users are capturing accurate and complete spend data at the source’. So it’s fair to say it’s a long process.

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"Europe cannot continue to drive a fragmented approach to its data operations..."

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The deceleration of progress, due to these challenges, is also shown in the survey when the respondents were asked what the current stage of preparation was for their company. Nearly half cited that they were proactively collecting a multitude of required data, yet over a third are still frozen in the stages of analysing needs and waiting for more European laws (see figure 3).

figure-3-stage-preparation-transparency-Europe

Figure 3: Comparison of compliancy preparation between Country Head Office and Regional Headquarters

But does Europe have the luxury of time, like the US did? No it doesn’t, especially in focal countries such as the United Kingdom and France. European executives agree that their regulatory structure will mirror the United States within 0-5 years, with over 64% believing it will be sooner (1-3 years).

What does the future look like for Europe?

Europe cannot continue to drive a fragmented approach to its data operations, says the report, but must find ways to improve data management – most likely by implementing a centralised platform to collate data across diverse sources.

According to Cegedim, ‘the earlier next generation solutions are deployed, the more quickly companies can derive benefits and mitigate legal risks across local, regional, and global business models’.

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"...the earlier next generation solutions are deployed, the more quickly companies can derive benefits..."

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Although some improvement in strategy implementation is evident over the three-year study, it’s clear that the pace of multiplying laws is outrunning the commitment to compliance innovation within pharmaceutical, medical device and biotech companies.

And unless the challenges previously discussed are resolved in the near future, the weight of new tracking requirements combined with expanding data sources will more than likely cause further complications.

So before companies are ‘caught in the crossfire of strengthened local, region and global regulations’, they must strive to make the maintaining of regulatory compliance central to their overarching business strategy.

For more information, read the full report here

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About the author:

Hannah joined pharmaphorum in early 2012, after graduating with a degree in Magazine Journalism &, Feature Writing in 2011, and leads our news coverage, in addition to liaising with new and existing feature authors. With over three years’ experience working within the journalism industry alongside university, Hannah has written for a number of different print and online publications, within the women’s lifestyle, travel and celebrity sectors. Now focussed on the pharma sector with her role at pharmaphorum, Hannah is embracing the challenges of working within a fast growing media organisation in this rapidly changing industry sector.

For any queries or contribution suggestions, please contact her here or via Twitter @Hannah_Blake2.

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