How To Monitor Pharma Spend With Compliance

Ned Mumtaz
Written By
Ned Mumtaz
May 15, 2017

At the 14th PCC last week, I was invited to lead a workshop on how to “Enhance Skill Sets and Improve Use of Data Analytics for Global Compliance Insights.” I was happy at the kind of questions and experiences my workshop’s participants raised. One area, in particular, I hope, will be a source of continuing interest and development. Using compliance to monitor pharma spend is an activity which has drawn more interest in the aftermath of Sunshine Payments. However, the concern most transparency/compliance professionals raise at my workshops is:

Are we making the most of the resources at our disposal to ensure compliance activities feed directly into enhanced profitability and performance, and improved reputation?

Below, I’ve outlined the basic steps in this direction.

1.Focus On ‘Real Time’ Behavior: A professional hazard of the audit/compliance space, in my opinion, is the focus on diagnostic rather than preventive For those of us who are compliance professionals first and employees second, the tendency to wait for a problem to become a problem before taking action is too pervasive. That’s why proactive behavior is a skill that needs to be aggressively built into one’s compliance toolkit. Place flags. Identify tolerance levels and thresholds, and know when to take action. Waiting for a threshold to be crossed is obviously not the right time. This is easier for companies which have a culture of analytics in place. In such organizations, data management is business-as-usual and not an exceptional exercise.

2. Add In The Numbers: Start with averages, but don’t stay there. Mean value amounts can be misleading in the presence of heavy outliers within your spend data. It’s also a useless indicator if you’re only depending on internal data. (e.g. how would you calculate average spend on a specific HCP if it’s the first time your company is investing in him/her)? Instead, it helps to conduct drill-ups and drill-downs so that you get an overview of spend, as well as the ability to probe individual TOV instances. Other statistical tools like median and mode are basic but helpful indicators of the direction your pharma spend is moving in.

3. Make Technology Count: In earlier blogs, the qordata team has already mentioned that the CMS Open Payments database already hosts over 25 million records (28.20 million, to be exact). It would be impractical to suggest that a company’s compliance/transparency team should manually go through each and every dataset they receive. Indeed, the possibility of human error makes a manual approach not only cumbersome but actually risky. In my workshop, I mentioned that between 1991 and 2015, the average annual cost of penalties and legal action for pharmaceuticals in America was $4million. This of course, excludes the cost of increased exposure, reputational loss, diminished goodwill and brand repair efforts. For many small pharmaceuticals uninitiated in the analytics realm, spreadsheet software is the go-to solution. It’s an improvement over manual processes, but still far from ideal.

4. Make It A 360-Degree Exercise: When setting up KCIs, don’t just consult your current year’s performance. Go back a year. Or maybe two. Better yet, make it three. Visiting historical datasets helps establish more realistic and objective measures of pharma performance. You will get past the bias of ‘this has been a rough year’ or ‘territory XYZ has had unusually good performance this quarter.’ Historical datasets also help you sidestep planning errors that became an organizational habit in yesteryears.

5. Identify Relevant Risk Monitors: Operative word being ‘relevant’. As a compliance professional, it pays to know how to separate the symptoms from the disease. Symptoms are typically visible, or hidden under a very thin layer of data and processes. They can be identified with little groundwork and a beginner-level analytics exercise. ‘Disease’ in this context, is the root cause, or the actual reason behind changed performance behavior.

In my next blog, I’ll be discussing the symptom-and-disease exercise in more detail. Keep visiting this space.

Ned Mumtaz

About the Author

Ned Mumtaz has over 20 years of experience in the pharmaceutical industry. As the VP-Compliance, and Practice Director for Pharmaceutical Services at qordata, he is leading the transparency directive program in the US and EU.