These days, the e-mail boxes of pharmaceutical compliance officers are overflowing with offers for help. Consultants and software developers are pitching a variety of wares, from tools that block sales reps from promoting drugs off-label to software that collects aggregate spend on health care providers.

The surge in government settlements with pharma companies over their sales and marketing practices has put compliance departments in the spotlight. And the corporate integrity agreements inked as part of these deals have imposed ever more onerous requirements on them. While the new rules are a headache for industry, they have been a boon for companies selling compliance tools.

"There are about a gazillion consultants all looking to cash in on compliance these days," said Bert Weinstein, vice president of corporate compliance at Purdue Pharma.

While drug makers have embraced some services, they say it's difficult to come up with adequate solutions. Complying with government mandates is a complex task that reaches into every department and system in a company. Valli Baldassano, executive vice president and chief compliance officer at Cephalon, said the challenge is finding data in the company's business system that is useful for managing compliance.

Baldassano said there is so much data in an organization and it is housed in so many different ways it's hard for an outside shop to find a compliance solution that fits everyone. Cephalon has not utilized any outside compliance services but instead has built its own systems, including a process for reporting payments to health care providers.

Aggregate Spend: The Cutting Edge In Compliance

Purdue Pharma has also built an internal system for aggregating expenditures on health care providers. Margaret Feltz, Purdue's associate director of corporate compliance, said that in order to pull together a lot of applications, one needs to understand the company and an outsider doesn't necessarily have that kind of knowledge. Purdue uses Axentis' software to manage overall compliance, including hotline calls, investigations, compliance training and certifications and reports for the board of directors.

While the task of coming up with a system for aggregate spend is difficult, it's a hot area in the compliance field. States were the first to require reporting of payments to physicians. Currently, four states and the District of Columbia have enacted legislation requiring such disclosure. The reporting requirement has also been included in recent corporate integrity agreements (CIAs).

The CIA Cephalon entered into last year with the HHS Office of Inspector General was the first to include the provision. The agreement was part of Cephalon's $425 million settlement with the Department of Justice to resolve criminal charges that it marketed three drugs for unapproved uses (¹ Also see "Cephalon Must Report Payments To Physicians In Settlement Of Off-Label Charges" - Pink Sheet, 6 October, 2008.).

The CIAs Lilly and Pfizer signed this year as part of their respective $1.4 billon and $2.3 billion settlements with the DoJ also require the posting of payments to health care providers. And it will become an industry-wide requirement with the passage of the Physician Sunshine Act, which has been folded into health care reform legislation. Reporting of such data is not simple, however.

"There is a lot of panic in the market about aggregate spend, how to collect data on doctor X and doctor Y and report it and make sure it is correct," said Saul Helman, managing director of Navigant Consulting's Life Sciences and Health Care Disputes Compliance and Investigations unit.

No Easy Solution For Compiling Physician Payments

Helman said it is a complex task since physicians can be receiving payments from five or six different company budgets and may be entered in a database several different ways. He said companies have taken two approaches to collecting aggregate spend: using a single financial system or adapting existing customer relationship management software to include payment processing and reporting capabilities.

Navigant has come up with a short-term solution that enables companies to meet six-month deadlines imposed by CIAs. Its database identifies the company's annual needs for health care providers and a provider's area of expertise and matches a health care provider to a specific event. The database also includes a contract, annual work plan, payment approval process, payment log and payment reporting. Helman said a company can transfer this warehouse of data once it has a permanent system in place.

Cegedim Dendrite, which sells software to help life sciences companies manage customer relationships, has a tool devoted to state reporting requirements. Dubbed State Guardian, the software consolidates promotional spend from various sources within a pharma company and from third-party partners. Launched in 2006, the product is now used by eight life sciences companies, two of which are among the top five pharma companies. Cegedim does not have a specific system to gather the aggregate spend requirements in CIAs.

Based in Paris, France, the Cegedim Group is one of the largest technology and service companies in the life sciences and health care industries with revenue of €849 million in 2008. Its subsidiary Cegedim Dendrite does not report its sub-business unit revenues, according to Bill Buzzeo, vice president and general manager of Cegedim Dendrites' Compliance Solutions. The company has four primary business units: customer relationship management; marketing services; regulatory compliance; and data management solutions.

Among its services, Cegedim Dendrite conducts audits of drug samples. Pharma companies must know where each sample is distributed and if it is being properly handled. While district managers have historically tracked samples, Cegedim said about 40 percent of the work is now outsourced. The company also helps companies with sales rep layoffs. Cegedim comes in and handles the "close out," collecting their cars, laptops and other property.

Preventing Off-Label Promotion

Another player in the compliance field, Veeva Systems, has developed a tool to prevent off-label drug promotion. Matt Wallach, Veeva's executive vice president and general manager, said Pfizer's $2.3 billion settlement for off-label promotion of several drugs showed the necessity for such services.

"We looked at that and said, 'We've got to help build tools that make it difficult for a sales rep to make a mistake," Wallach said.

About six months ago, the Pleasanton, Calif.-based company added a feature to its existing customer relationship management software that restricts sales reps from talking about a product to physicians or specialists whose patients are not intended users of the drug. An administrator at a pharma company creates a matrix of medical specialties, products and marketing messages that are permissible and restricts others from the system.

The three-year old company has recently had a jump in business. Wallach said it gained six new customers in the last 30 days and now has 30 pharmaceutical companies as clients, including Pfizer.

Veeva considered developing an aggregate spend tool but three months ago decided not to do so. Wallach said there are complexities that make it difficult to build a standard product. For example, he said expense reporting systems do not have modern architecture with open application programming interface that allow integration with other software. As a result, any sales force automation system or customer relationship management company that builds a spend management solution would force sales reps to submit double entries on expenses.

In addition, he said Veeva found that many companies do not want to buy and maintain a product to manage aggregate spend but prefer to outsource the work to someone else. Wallach said the aggregate spend market is probably $30 million-50 million today but will likely drop under $20 million once the industry gets it under control. By comparison, he said the sampling market is over $100 million annually.

Seeing What The Sales Rep Sees

Other companies also have offerings designed to curtail off-label promotion. Last month Prolifiq, which sells marketing and sales automation software, launched a product to assure that sales reps distribute only approved materials to health care practitioners. The software includes an embedded "rules engine" that monitors communication of digital content. Maureen Schaffer, Prolifiq's vice president of life sciences, says the software enables companies to see information sales reps send, and to whom, on a real-time basis.

The Beaverton, Ore. company initially developed its software for high-tech and digital media companies. It created its second-generation product for the life sciences industry at the request of medical device maker AtriCure, which wanted sales reps to be able to access all multi-media content about its product.

Polaris Management Partners, a management consulting firm, has taken a different approach to off-label marketing. It has a tool that looks for a match between a prescription and a diagnostic code - the ICD9 code used by insurance companies - to determine if the prescription was for an off-label indication. Federal and state prosecutors are also analyzing such data in putting together off-label promotion cases against companies.

Polaris has several other automated systems that track continued medical education sponsorship and charitable contributions; information that doctors participating in independent investigations must submit to FDA; and information regarding consulting and speaker engagements, including the fair market value of payments. The consulting company also offers a tool to collect a company's aggregate spend and download it to an outside Web site.

Evolution Of Pharma Compliance

The pharmaceutical industry began instituting much more sophisticated compliance programs about 10 years ago. Purdue's Feltz said that many companies formalized their compliance efforts when the Office of Inspector General issued its compliance guidance for the pharmaceutical industry in 2003. The Pharmaceutical Research & Manufacturers of America came up with its Code of Conduct around the same time, which helped define industry programs further.

Purdue's compliance department, established almost six years ago as a stand-alone unit reporting to the CEO, has grown from one employee to eight. The responsibilities of the group have intensified in the last few years as CIAs have become more pervasive, imposing ever greater requirements on industry. For example, the CIA Pfizer entered into in September has a new provision requiring board-level certification of the company's compliance program. While previous agreements required certification at the executive level, this was the first to put the onus on individual board members.

Those heading up compliance programs have been anticipating the changes.

"This has been like watching a hurricane on the radar system in slow motion," Weinstein said. "Everyone has seen it coming for the last five years. It's pelting the industry." He added that "by and large most companies are not looking for a whiz bang software solution."

"I'm not sure you can develop a perfect and enduring compliance solution," Feltz added. "Every time a new CIA comes out, the landscape changes and you have to respond to it."

Purdue signed a CIA in 2007 as part of a $700 million settlement with DOJ resolving criminal charges and civil liabilities related to the illegal marketing of its pain killer OxyContin (oxycodone). As part of the deal, Purdue's chief executive officer, general counsel and former chief medical officer pled guilty to misbranding (² Also see "Purdue Execs Plead Guilty To Misbranding OxyContin; Company Pays $700 Mil." - Pink Sheet, 14 May, 2007.).

From Kickbacks To Off-Label Promotion And Beyond

Cephalon's Baldassano, who joined Cephalon two years ago to help the company implement its CIA, began working in pharma compliance 10 years ago before there were CIAs and government investigations. She noted that the focus of compliance has changed over the years. While kickbacks and violations of the PhRMA code were initially the subject of government inquiries, attention has shifted to off-label drug promotion, which was not questioned a decade ago.

Although many consultants offer services to help avoid off-label promotion, at least one consultant to the industry is being accused of encouraging it; Cell Therapeutics Inc. is suing the Lash Group, claiming its bad advice on how to seek reimbursement for its former leukemia drug Trisenox eventually led to a $10.5 million settlement with the federal government under the False Claims Act (³ Also see "Cell Therapeutics Can Sue Consultant For Advice On Off-Label Reimbursement" - Pink Sheet, 23 November, 2009.).

It's uncertain what problems compliance departments will have to wrestle with in the future. Most major pharma companies have either reached settlements with the government or are subject to ongoing investigations (⁴ Also see "Health Care Fraud Investigations Bedevil Pharma Industry: If You're Not Under Investigation, It's Only Because You've Recently Settled" - Pink Sheet, 16 November, 2009.). While the inquiries typically involve behavior that occurred many years ago, the government has indicated it is keeping a close eye on industry.

Baldassano said a compliance department is a risk manager, not a risk eliminator. "The goal needs to be that we are ahead of the curve, that we understand where the risks are and put procedures and effort in place to make sure the risks are managed," she said.

And while software companies are eager to help out, the burden of compliance rests on pharma's shoulders.

Having "a system or a tool where you could push a button and see everything you need to manage your compliance risk is still a Holy Grail," Baldassano said.

- Brenda Sandburg ( ⁵ b.sandburg@elsevier.com )

Pharma Compliance Is Big Business; Software Vendors Offer Trove Of Tools

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