Aggregate Spend Trends Disclosure Reporting Whitepaper 2012

7/29/2019 Aggregate Spend Trends Disclosure Reporting Whitepaper 2012

1/40

2012 US Trends in Aggregate

Spend and Disclosure Reporting

Results rom an Industry Survey

March 2012


2/40

Exclusive Survey Results FromLie Sciences Executives onRegulatory Compliance Trends

in the US...

COMPLY


3/40White PaperReproduction and distribution o this report is allowedonly with the written authorization o Cegedim.

The onset o 2012 marks great change in the US, as thesunshine provision o the Patient Protection and Aordable

Health Care Act (PPACA), known as the Sunshine Act, will

require in-depth reporting on payments and transers o value

to physicians and teaching hospitals or 2012 in the spring

o 2013. The ederal US agency responsible or implementing

the regulations o the Sunshine Act, Centers or Medicare

& Medicaid Services (CMS), anticipates publishing nal

regulations during the rst hal o 2012, with the expectation

that data would be required to be collected at some point

during the second hal o 2012. In essence, these new ederal

obligations add to a complex network o existing state laws

that already regulate pharmaceutical, biotech, and medical

device organizations marketing, sales, employee, and R&D

expenditures.

The responsibility o the Sunshine Act has undoubtedly set the

US apart in terms o transparency. This involves implementing

transparency initiatives at all levels o the business structure

and ensuring compliance by monitoring each possible aspecto reportable spend data. Moreover, the solutions required to

meet these strict standards are creating valuable synergies in

the US through increased collaboration and communication

and, in turn, enabling companies to achieve inherently better

commercial productivity.

In addition to the ederal law, global transparency regulations

are coming to the oreront o the issue, as most companies

do business across borders, urther necessitating ull expense

disclosure.

To determine how companies are dealing with these demands,

Cegedim, or a third year in a row, surveyed the industry

to identiy current practices and expected trends around

transparency, aggregate spend, and disclosure reporting and

compliance.

The ollowing report includes responses rom 61 companiesrom the Lie Sciences industry, including pharmaceutical

biotech, and medical device companies. This year, the Medica

Device industry had a much larger representation (25%) than

in past years (7% in both 2011 and 2010) (see Figure 1).

Pharmaceutical

Manufacturer

65%

Medical

Device

25%

Biotech

10%

Figure 1: Index - pg.23

Breakdown o company types o respondents.

All individuals who participated in the survey are either

somewhat or very involved in ensuring that their company

complies with aggregate spend and disclosure laws and

regulations, with 80% indicating they are very involved and

20% indicating they are somewhat involved. Seventy-ve

percent o respondents are also somewhat or very involved in

ensuring that their company complies with sample reporting

or Vermont or ederal 6004 (see Figure 2).

Executive Summary


4/40White Paper4 Reproduction and distribution o this report is allowedonly with the written authorization o Cegedim.

Very

Involved

39%

Not at all involved

15%

Somewhat

Involved

36%

Not very

involved10%


How involved are you in ensuring your companycomplies with sample reporting or VT or ederal 6004?

Respondents are responsible or a range o activities related

to ensuring that their company complies with aggregatespend and disclosure regulations, including tracking legislative

updates, gathering data, generating reports, and managing

vendors (see Figure 3). This breakdown o responsibilities is

mostly similar to previous years, though this years respondents

report slightly more responsibility or report review and

approval. Respondents indicate that their responsibilities

around report generation are down slightly rom last year,

possibly because more companies are utilizing automated

systems versus manual, so ewer people are required to be

involved in the process.

0%

10%

20%

30%

40%

50%

Gath

erin

gan

d/or

Ent

ryofD

ata

Proc

essin

gof

Dat

a

Repo

rtGe

nera

tion

Repo

rtRe

view

and

Appr

oval

Vend

orMan

agem

ent

Vend

orSele

ctio

n

Trac

king

Legi

slativ

eUp

date

s

Othe

r

2010 2011 2012


Responsibilities o respondents pertaining toaggregate spend and disclosure compliance in theircompany.

Respondents work in a variety o departments within their

company, with compliance making up 38%. Respondents in

the other category included mostly Regulatory Aairs, Medica

Aairs, and IT. Compared to last years survey, marketing

sales, and nance have slightly less representation (see Figure

4).

0%

5%

10%

15%

20%

25%

30%

35%

40%

Comp

liance

Sales

Finan

ceLega

l

Operations

Marketin

g

Othe

r

2010 2011 2012


Department in which respondents work

While almost hal o respondents are rom smaller companies

with less than $1 billion in annual revenue, large companies

still have some representation in this years survey, with 20%

o respondents indicating that their company has over $10

Billion in revenue. (see Figure 5).

0%

10%

20%

30%

40%

50%

60%

Und

er$1Billion

$1Billion

-$4

.99Billion

$5Billion

-$9

.99Billion

$10Billion

-$19

.99Billion

$20

Billionor

more

2010 2011 2012


Annual revenue o respondents companies

2012



Most people (over 75%) expect to comply using either aninternal or third-party solution, as more requirements are

implemented.

There is a slight decrease this year in companies

wishing to implement their own internal system,

possibly due to the vast amount o resources

to comply and stay current with all the dierent

regulations i done internally.

While over 44% o respondents currently report

manually or with spreadsheets this year, less than

16% say that practice will continue as more laws are

enacted.

The Sunshine Act will prompt many companies to look

or outsourced help in dealing with their reporting

compliance.

O respondents who currently use a manual/

spreadsheet solution to satisy disclosure reporting

requirements, 67% plan to move to an automated

solution in response to the ederal law.Moving to an internal automated solution (vs. third

party) is down rom 28% in 2011 to 13% this

year, indicating that companies are realizing the

eciencies o outsourcing.

Over three-ourths o respondents indicate that global

aggregate spend and transparency initiatives originate

in US oces, while about 14% originate rom local or

regional oces.

Europe, Asia Pacic, Australia, etc. - seem to be

ollowing the US lead about disclosure and compliance

issues.

In act, Cegedims recent survey in Europe ound that

Europe deers to the mature US enorcement model

or insights into their regulatory uture, with nearly

two-thirds (64%) o respondents anticipating that

promotional spend tracking in Europe will reach US

levels in one to three years.

Slightly more respondents indicate in 2012 that itsa necessity to implement an aggregate spend and

transparency solution that can be used in other countries

across the world.

Only 13% o respondents dont see this as a actor in

choosing a solution

While most respondents acknowledge its importance, the

majority o respondents have not dened when they wil

move orward with a global solution or aggregate spend

and transparency reporting.

Within Europe, respondents were most concerned

with the UK (33% o respondents) and France (28%

o respondents) with Germany not too ar behind

(20% o respondents).

In Asia Pacic, respondents indicated mostly ocusing

on China and Japan or their compliance eorts.

87%o respondentsconsider global capabilities when

choosing an aggregate spend

solution.

Key Findings


6/40



Most people (over 75%) expect to comply using either an

internal or third-party solution as more requirements are

implemented. There is a slight decrease this year in companies

wishing to implement their own internal system. This could

be due to the act that with the increase in legislation and

the ederal law due in 2013, companies are nding that it

takes a vast amount o resources to comply and stay current

with all the dierent regulations i done themselves. Third-party systems can actually be more cost ecient with SaaS

solutions that are updated automatically according to the

latest requirements. While over 44% o respondents currently

report manually or with spreadsheets this year, less than 16%

say that practice will continue as more laws are enacted (see

Figure 8). About 6% o respondents say they are still working

on a plan or how they will comply in the uture, all o them

being rom smaller companies (less than $1 Billion in revenue).

0%

10%

20%

30%

40%

50%

60%

Man

ually

/with

spread

sheets

Internal

softw

aresystem

Third

party

solutio

n

Nots

atisf

ythe

m

2010 2011 2012

Figure 8: Index - pg.26How respondents plan to satisy reportingrequirements as more legislation is passed

The majority o respondents, (62%) have 1-5 dedicated

ull time employees (FTEs) to support aggregate spend and

disclosure compliance (see Figure 9), a similar pattern that

weve seen in the past. Very ew companies indicate having

more than 10 resources, possibly refecting the act that most

companies outsource at least part o the compliance process.

Eighty-nine percent o respondents who indicate not having

dedicated FTEs to support aggregate spend and disclosure

compliance are rom smaller companies less than $1 Billion

in revenue.

0%

10%

20%

30%

40%

50%

60%

70%

80%

Non

e

1-5FT

Es

6-10

FTE

s

11-15FTEs

16-20FT

E's

20+FT

Es

2010 2011 2012

Figure 9: Index - pg.27Number o dedicated ull time employees (FTEs) whohave specic job responsibility to support state andederal aggregate spend and disclosure reporting andcompliance in respondents companies

The majority o respondents expect investment in aggregate

spend and disclosure compliance to increase over the next

year (see Figure 10). The most notable reason or the

expected increase in investment was dealing with the edera

requirements and global transparency trends. A notable reason

or a decrease was that the biggest cost o putting in place a

solution (implementation) was already done in many instances

and that a new system would make previously manual process

more automated saving time, money, and resources.

0%

10%

20%

30%

40%

50%

60%

70%

80%

Decrea

se

Stay

the

sam

e

Increa

se

2010 2011 2012


Expected change in investment (solutions andresources) in aggregate spend reporting andcompliance over the next year



While 57% o respondents currently manage their aggregate

spend and disclosure reporting and compliance solution ully

in-house, 21% o those people would preer to outsource part

or all o that activity based on their resources (see Figure

11). Reasons or this could include the enormous eort

and expertise required to ensure build, host, and update an

internal system while also ensuring that the company is always

up to date with ever-changing transparency and disclosurerequirements.

0%

10%

20%

30%

40%

50%

60%

Fully

in-hou

se

Outsour

ced/third

party

solution

Aco

mbina

tionof

third

party

solution

and

in-hou

se

How respondents currently manage aggregate spend solution

How respondents would prefer to manage aggregate spend solution


How respondents currently manage their aggregatespend and disclosure reporting and compliancesolution based on resources vs. how respondentswould preer to manage their aggregate spend anddisclosure reporting and compliance solution based onresources

While the majority o respondents are still using internal

resources to monitor new and pending legislation, a slightly

greater number o people are reaching out to third parties

to help them handle this (see Figure 12). This is probably

due to the act that there is an increase in regulations to

track with the ederal law and global transparency regulations

coming into eect. Additionally, most companies report that

the compliance or legal department holds this responsibility

internally (see Figure 13). Similar to previous years,

respondents continue to use a mix o resources or legislative

updates, including webinars/web events (87%), industry

conerences (84%), and state/ederal websites (87%).

0%

10%

20%

30%

40%

50%

60%

70%

80%

Interna

lresou

rce/team

Third

party

consult

ant

Wed

ono

tdoan

y

research

orm

onito

ring

Don't

know

Othe

r

2010 2011 2012


How respondents currently monitor new and pendinglegislation

0%

10%

20%

30%

40%

50%

60%

70%

80%

Compliance

Fina

nce

Lega

l

Operations

Other

Don'tk

now

2010 2011 2012

Figure 13: Index - pg.29Departments responsible or tracking current andpending legislation



Capturing HCP spend and samples data is an essential parto aggregate spend and transparency disclosure reporting.

Without complete, accurate data on HCPs and their

aliations, a companys reporting can not be compliant. This

can be a complicated process when the necessary data must

be gathered rom many sources and is in a variety o ormats.

This year there was an increase in the number o respondents

having less than 10 data sources (76% vs 58% in 2011) (see

Figure 14). This could be due to our respondent base including

more Medical Device companies and smaller companies that

may have less comprehensive spend data sources. In act,

86% o respondents with over 10 data sources were rom

pharmaceutical companies (vs biotech or medical device), and

only 14% o respondents with more than 10 data sources were

rom smaller companies with less than $1 billion in revenue.

0%

10%

20%

30%

40%

50%

01-5

6-10

11-15

21-25

26-30

Moret

han30

16-20

2010 2011 2012


Number o data sources (including suppliers) thatcapture HCP and Organization spend inormation

O the number o data sources mentioned, almost hal o the

respondents indicate that less than a quarter o them are

coming rom third parties (See Figure 15). This means that

they are likely coming rom varying internal systems, which

stresses the importance o a companys aggregate spend

system being fexible and ully integrated with a wide variety

o systems.

0-25

47%

76-100

14%

26-50

24%

51-75

15%

Figure 15: Index - pg.30What percentage o those data sources are rom a thirdparty?

Over the past three years, there has been a continual decline

in respondents using solely spreadsheets to obtain spend data

rom vendors, with only 20% indicating that response in 2012

(down rom 37% in 2010). This is likely due to the act thamore companies are using automated systems that have data

eed uploads and/or vendor access or data entry. Three-

ourths o the companies who report only using spreadsheets

are still ensuring compliance with manual or spreadsheet

solutions. Over hal o respondents report using a combination

o two or more methods (up rom 44% in 2011 and 23 % in

2010), indicating that companies are continuing to get more

fexible in how they integrate third-party vendor spend data

(see Figure 16).

HCP Spend Data Collection

201

2



0%

10%

20%

30%

40%

50%

60%

Spread

sheets

Data

le

tran

sfer

Usean

app

licationto

whi

chthevend

or

hasaccess

toenter

theird

ataman

ually

Useacomb

inationof

2or

more

ofthe

abo

vemetho

ds

2010 2011 2012


How respondents currently obtain event and spenddata rom vendors


11/40White Paper 1Reproduction and distribution o this report is allowedonly with the written authorization o Cegedim.

For large, complex companies with multiple businessunits, a big issue we have seen is not having a centralized

listing o their customers, i.e., a true customer master

with unique identiers covering all o their business areas.

While smaller companies typically operate rom a single

customer list, large-company business units may use

dierent healthcare-provider reerence databases. Many

larger companies also dont have a true customer master

data management strategy that links all units to the same

data hub. An eective aggregate-spend solution should

be able to accommodate all segments o the healthcare

market and oer a centralized customer data access

point, and it should be able to address all levels o data

capture, rom manual to advanced ERP system entry, and

seamlessly integrate disparate data sources. So we asked

survey respondents to tell us more about what they were

doing to set up their data or compliance reporting.

Almost a quarter o respondents have a custom solution in

place to manage their customer data (see Figure 17). Morethan 15% o respondents report not having a customer

master in place at their company. Three quarters o those

people are rom companies with less than $500 million in

revenue, and hal o them are still reporting manually with

spreadsheets.

0%

5%

10%

15%

20%

25%

30%

35%

Custom

solutio

n

Oracle

Sipe

rian

IMS

HMS

Cege

dim

Ourc

ompa

nydoe

sntha

ve

acustom

ermaster

Othe

r

2010 2011 2012

Figure 17: Index - pg.31Respondents customer master within their aggregatespend and disclosure compliance reporting solution

When US physicians travel abroad on behal o oreign

aliate(s), most respondents report that they do capture

those payments/expenses or reporting under US Federa

law (see Figure 18).

Yes

74%

No

26%

Figure 18: Index - pg.31When a US physician travels abroad on behal o youroreign aliate(s) do you capture those payments/expenses or reporting under US Federal law?

Customer Data Management

201

2



About eight out o 10 respondents pay HCPs in the US (and

in US dollars) or any work done abroad on their behal

(see Figure 19). This could be due to system shortcomings

around currency conversion or the lack o integration with

oreign aliates.

Pay them in the US

in US dollars

82%

Pay them in the

country that the

activity occured

in foreign

currency

18%


How respondents handle reporting o US Physicians

that travel abroad on their behal

Companies continue to eel more comortable in identiying

all data sources and have been able to be more successul

in applying standards to data ormats. The challenges

in consolidating spend data rom multiple sources have

remained airly consistent over the past couple years

with establishing unique Identication o an HCP andOrganizations and incomplete spend inormation being

ranked the most challenging by respondents (see Figure

20). Other issues mentioned by respondents include

data quality issues and dealing with either organization

changes or global issues.

5

6

7

8

Iden

tifyin

gal

ldat

aso

urce

s

Mat

chin

gan

des

tabl

ishin

gun

ique

Iden

tica

tion

ofan

HCP

and

Orga

niza

tions

from

allt

heexp

ense

dat

aso

urce

s

Inco

mplet

esp

end

info

rmat

ion

Disp

arat

efo

rmat

san

dst

anda

rds

2010 2011 2012


Challenges in consolidating spend data rom multiplesources (scale o 1 to 10, with 1 being the leastchallenging and 10 being the most challenging)

2012



This year, respondents report about the same levelo condence that their company is compliant with

current disclosure requirements, with still under a third

being very condent (see Figure 21). The lack o ull

condence could be due to the act that the landscape is

still changing and companies are still trying to prepare

or the ederal law requirements that will take eect

next year.

0%

10%

20%

30%

40%

50%

Very

cond

ent

Somewha

tcond

ent

Notsure

Notv

erycond

ent

Nota

tallcond

ent

2010 2011 2012


Condence that reporting is ully compliant

System/process shortcomings and lack o policyunderstanding are reported as the top causes o

compliance issues (see Figure 22). Poor record keeping

and/or data entry seems to be slightly less o an issue

this year.

0%

5%

10%

15%

20%

25%

30%

35%

Poor

reco

rdkeeping

and

/or

data

entry

errors

Lackof

und

erstan

ding

ofp

olicy

System

/process

sho

rtco

mings

Nolack

ofc

omplianceseen

Sho

rtag

eof

hum

anreso

urces

Lack

ofb

udge

t

Low

priorit

y

2010 2011 2012


Primary root cause o any lack o compliance withpromotional spend regulations

Condence in Compliance



The Patient Protection and Aordable Care Act - Section6002 (Sunshine Act) will take aect in 2012, with the

rst report due in 2013. This is adding an extra layer o

complexity to current aggregate spend and disclosure

compliance. Much o the industry has been ollowing

the legislative process closely to determine how it will

impact their activities.

When asked about ve key issues - proper identication

o spend recipients, collecting all relevant spend data,

data integrity, certication o spend beore posting, and

handling inquiries ater spend is posted - respondents

level o concern with the Sunshine Act is about the

same as last year (see Figure 23).

0

1

2

3

4

5

6

7

8

Pro

peride

ntica

tionof

spe

ndrecipien

ts

Colle

ctingallrelevan

tspe

nddata

Data

Integrity

-hav

ingac

curate

,

complete,

and

timelyda

ta

Ha

ndlin

ginqu

iries

after

spe

ndis

pos

ted

2010 2011 2012


Condence that reporting is ully compliant

Over hal o respondents are planning on a pre-

submission review by covered recipients (providing

covered recipients relevant spend inormation prior to

report submission) as suggested in the drat regulations

rom CMS. When setting up such a system, make sure

that you allow HCPs a private, secure portal or them

to review inormation, as well as a way or them todispute/ask questions.

Yes

63%

No

37%


Respondents planning a pre-submission reviewby covered recipients as suggested in the dratregulations

The Sunshine Act will also prompt many companies to

look or outsourced help in dealing with their reporting

compliance. O those respondents who mentioned

that they currently use a manual/spreadsheet solution

to satisy various state promotional and marketing

disclosure reporting requirements, 67% plan to move

to an automated solution in response to the edera

law (see Figure 25). Moving to an internal automated

solution is down rom 28% in 2011 to 13% this year

indicating that companies are realizing the eciencies

o outsourcing such a complex task.

Physician Payments Sunshine Act -Issues and Impact

2012



0%

10%

20%

30%

40%

50%

60%

70%

80%

Yes,

toaninternal

solution

Yes,

toapurch

ased

or

outsou

rced

solution

No,wewill

enh

ance

our

current

man

ual/s

prea

dshe

etsolution

Don'tk

now

2010 2011 2012


In response to the Sunshine Act, will you migrate to anautomated solution? 67%o respondents who

report with spreadsheets plan to

move to an automated solution in

response to the ederal law.



Global Issues and Trends

With the trend towards global transparency and theincrease in regulations that have impact outside o

the US, we wanted to nd out how it would impact

respondents compliance activities.

Slightly more respondents indicate in 2012 that

it is a necessity to implement an aggregate spend

and transparency solution that can be used in other

countries across the world (see Figure 26), and only 13%

o respondents dont see this as a actor in choosing

a solution. As global transparency and regulations

continue to come to the oreront o this issue, we

expect that compliance departments may work closer on

some issues across the globe. Consequently, this may

become a more important actor or many companies

over the coming years.

0%

10%

20%

30%

40%

50%

60%

It's

abs

olut

elyarequ

iremen

t.

Itwou

ldbenice

but

it's

not

nece

ssary.

Idon't

seeane

edforthis.I

t'snot

a

factor

atallinch

oosing

asolu

tion.

2011 2012


Importance o implementing an aggregate spendand transparency solution that can be used in othercountries across the world

Western Europe and Asia Pacic are reported as major

priorities in respondents consideration o implementing

a global aggregate spend and transparency solution,

which is aligned with recent developments in regulatory

and / or industry transparency requirements in theseregions (see Figure 27). Within Europe, respondents

were most concerned with the UK (33% o respondents)

and France (28% o respondents), with Germany not too

ar behind (20% o respondents) (see Figure 28). In

Asia Pacic, respondents indicated mostly ocusing on

China and Japan or their compliance eorts.

Western Europe

61%

Latin-America

8%

Eastern Europe

7%

Asia-Pacic

21%

Middle-East

3%


Regions that are/would be a priority in considerationo implementing a global aggregate spend and

transparency solution

0%

5%

10%

15%

20%

25%

30%

35%

Brazil

Mexico Ita

ly

Netherlan

dsCh

ina

Japa

n

Germ

any

Fran

ce UK


Countries that are/would be a priority in considerationo implementing a global aggregate spend andtransparency solution (open text).

2012



Over three quarters o respondents indicate that global

aggregate spend and transparency initiatives originate

in US oces, while about 14% originate rom local or

regional oces (see Figure 29). Since the US was the

rst region to enact specic, detailed disclosure laws

in regards to HCP expenditures, other regions Europe,

Asia Pacic, Australia, etc - seem to be ollowing the US

lead, and discussions about disclosure and complianceare increasing in many regions across the globe. In

act, in Cegedims recent survey in Europe, we ound

that Europe deers to the mature US enorcement

model or insights into their regulatory uture, with

nearly two-thirds (64%) o respondents anticipating

that promotional spend tracking in Europe will reach

US levels in one to three years. But in keeping with the

sea o cultural dierences that separate Europe rom

the US, respondents hint that they will most likely not

ollow the US model entirely, but rather pave their own

way to operational compliance.

0%

10%

20%

30%

40%

50%

60%

70%

80%

Unite

dStates

oces

Localcou

ntry

oces

Regio

nalh

eadq

uarte

rs

Nots

ure

2011 2012


From where do the decisions or your companysglobal aggregate spend and transparency initiativesoriginate?

Only one-third o respondents indicate having some

responsibility or their companys compliance with

FCPA (Foreign Corrupt Practices Act) (see Figure 30).

However, as global transparency requirements increase,

responsibilities o compliance teams across the globe

will likely merge and this number will increase.

Yes

33%

No

67%


Do you have responsibility or your companyscompliance with FCPA (Foreign Corrupt Practices Act)?

Very ew respondents are leveraging their aggregate

spend solution to help comply with FCPA/anticorruption

regulations. This could be explained by many companies

not yet ully embracing a global integrated solution in

their company or internal transparency and interna

auditing, or by the act that they are still catching up

with local US regulations and have not yet turned their

attention ully to the global issues.

15%

No

85%


Are you leveraging your aggregate spend solution tohelp comply with FCPA/anticorruption regulations?

The majority o respondents indicate that the UK bribery

law, which took eect in April 2011, will change how

they comply with current anti-bribery laws (i.e. FCPA)

(See Figure 32).

2

012

2012



0%

10%

20%

30%

40%

50%

60%

Yes

No

2011 2012


Efect o UK bribery law on current anti-bribery lawactivities

While most respondents acknowledge the importance

o one, the majority o respondents have not dened

when they will move orward with a global solution

or aggregate spend and transparency reporting (see

Figure 33). Less than 1 out o 10 respondents report

already having a global solution in place. Still, more

companies are at least starting to work this into their

long term plan, with the number o respondents that

have not dened a timerame down to 41% in 2012

rom 59% in 2011

.

2012

31%

We already have one

8%

2014

7%

2013

13%

Not dened

41%


What is your timerame or moving orward with a

global solution or aggregate spend and transparencyreporting?

2012



Final Thoughts

Some large, global pharmaceutical companies havebegun to voluntarily disclose their transactions with

healthcare providers. Many others, however, have been

waiting or nal implementing regulations rom the

Centers or Medicare & Medicaid Services (CMS) beore

they begin capturing the data needed or the aggregate

spend disclosures required by the Physician Payments

Sunshine Act (Section 6002 o the Patient Protection

and Aordable Care Act, or PPACA). Although companies

will not have to report these transactions until March

2013, it is still recommended that their data-collection

procedures and systems be in place now. For many

organizations, this undertaking will demand extensive

time and nancial resources.

Compliance must be achieved by 2013, and the recently

published CMS proposed regulations provide adequate

direction on what data needs to be captured and

tracked. The uture nal regulations probably will not

signicantly change how organizations do this. Thelaw and the proposed regulations are already very

specic on the types o data that need to be captured

and reportedincluding the nature and purpose o

spend and recipient types. While we dont expect the

nal regulations to dier much rom the proposed

regulations, companies should be ready to capture

and report on any and all payment or transer-o-

value transactions with any healthcare provider or

organization.

Some organizations have still not ully prepared or

compliance with these new regulations. They have

many reasons: One group is sitting on the sidelines

because they havent budgeted enough money to build

the compliance inrastructure. Theyre waiting or nal

CMS regulations beore they start. This is not the

most eective approach. Compliance is not merely

about disclosure; it is also about capturing the sourceo spend, accurately and promptly. Smaller, emerging

companies tend to be somewhat behind the curve

not because they do not wish to comply with the law,

but because they think they can wait and tackle the

issue ater nal regulations appear. Another group

includes enterprises that arent sure whether the law

even applies to them. For example, distributors o

medical devices need to disclose transer-o-value

payments or original manuacturer products that they

re-label. Some organizations are completely unaware

o the law, because they have neither a signicant

compliance operation nor a proactive culture. Others

believe (wrongly) that they dont have to do anything

until 2013.

Companies that have not yet taken the steps ace

nancial penalties or missing ederal and state

disclosure deadlines. Making compliance investments

now will not just avoid penaltiesit will also head opotentially deeper impacts on the companys reputation

No one can aord to have internal and externa

stakeholders, including the media, perceive them as

violating the law. It will be critical or this data to be

accurate rom point-o-capture to point-o-disclosure

In addition, global issues and regulations will play a

greater role in how companies handle their compliance

across the globe. While many regions are taking the

lead rom the US oces right now, the uture may

see compliance departments coming together globally

to ollow a more consistent plan or all company

expenditure tracking.

As the burden grows to comply, companies must adopt

a holistic approach to tracking and reporting that

includes a ocus on high quality healthcare practitioner

and organization reerence data to ensure accurate



reporting and disclosure. This approach needs not only

to encompass all internal departments, third parties,

and systems in the US, but should take into account

global aliates so that the entire company is aware o

disclosure and transparency initiatives.

Companies should also be preparingnowor how

they will manage relationships with their customers,the media, patient associations, and special interest

groups once the ederal government publicly details

o nancial interactions between them and HCPs/

organizations on the internet. Healthcare practitioners

and organizations should not be viewed as just

recipients, but rather be involved in the process i.e.,

given the ability to review transactions or accuracy on

an ongoing basis. Communications and public relations

action plans should reinorce the benets o legitimate

interactions between lie science companies and

healthcare practitioners/organizations.

Finally, as companies become more condent in

their ability to meet aggregate spend reporting

and disclosure requirements, they will begin to

expand processes and solutions to include

more proactive compliance controls prior

to a spend transaction occurring, which

will enhance overall internal transparencyand compliance levels.



Cegedim Relationship Management is the leading global provider o Regulatory Compliance solutions or the LieSciences industry. The company provides the most comprehensively packaged oering, enabling companies to meet

present and uture business requirements and objectives, and to achieve rewarding and lasting relationships with

customers. Solutions include:

Regulatory Compliance

Customer Relationship Management

Customer Data Management

Support Services

Marketing Services

Analytics

Contact Cegedim Relationship Management today for more information.www.cegedim.com/rm

[email protected]

Authors:

Bill BuzzeoVice President & General Manager,

Global Compliance Solutions

Cegedim Relationship Management

[email protected]

1425 U.S. Highway 206,

Bedminster, NJ 07921, USA

Tel: +1 908.443.2000

KNOW PERFORM PROMOTE COMPLY EVALUATE SUPPORT



2011 European Trends in Aggregate Spend, Transparency and DisclosureFebruary 2012

http://crm.cegedim.com/Docs_Whitepaper/Compliance/2011_European_Trends_Compliance_Report.pd

2011 European Trends & Challenges in Customer Data Management within the Lie Sciences Industry

June 2011

http://crm.cegedim.com/Docs_Whitepaper/Data/EU_Cust_Data_Mgmt_Survey_Rpt_June_2011.pd

2011 IDC: Aggregate Spend Compliance - The Next Frontier o Pharmaceutical Sales and Marketing

April 2011

http://crm.cegedim.com/Docs_Whitepaper/Compliance/IDC_AggregateSpend_Cegedim_Feb2011.pd

2011 US Trends in Aggregate Spend and Disclosure Reporting Compliance

March 2011

http://crm.cegedim.com/Docs_Whitepaper/Compliance/Aggregate_Spend_Trends_Disclosure_Reporting_Whitepaper_May2011.pd

2010 European Trends in Aggregate Spend, Transparency and Disclosure

November 2010

http://crm.cegedim.com/Docs_Whitepaper/Compliance/2010_European_Trends_Compliance_Whitepaper.pd

ConclusionRecommended Reading


23/40

Chart Index

Reproduction and distribution o this report is allowedonly with the written authorization o Cegedim. White Paper 2

Pharmaceutical

Manufacturer

65%

Medical

Device

25%

Biotech

10%

Figure 1:Breakdown o company types o respondents

Very

Involved

39%

Not at all involved

15%

Somewhat

Involved

36%

Not very

involved

10%

Figure 2:How involved are you in ensuring your company complies with sample reporting or VT or ederal 6004?


24/40White Paper24

Chart Index

Reproduction and distribution o this report is allowedonly with the written authorization o Cegedim.

0%

10%

20%

30%

40%

50%

Gath

erin

gan

d/or

Ent

ryofD

ata

Proc

essin

gof

Dat

a

Repo

rtGen

erat

ion

Repo

rtRev

iewand

App

rova

l

Vend

orMan

agem

ent

Vend

orSele

ctio

n

Trac

king

Legi

slativ

eUp

date

s

Othe

r

2010 2011 2012

Figure 3:Responsibilities o respondents pertaining to aggregate spend and disclosure compliance in their company. (*Multipleresponses allowed) .

0%

5%

10%

15%

20%

25%

30%

35%

40%

Comp

liance

Sales

Finan

ceLega

l

Operations

Marketin

g

Other

2010 2011 2012

Figure 4:Department in which respondents work


25/40

Chart Index


0%

10%

20%

30%

40%

50%

60%

Und

er$1Billion

$1Billion

-$4

.99Billion

$5Billion

-$9

.99Billion

$10Billion

-$19

.99Billion

$20

Billionor

more

2010 2011 2012

Figure 5:Annual revenue o respondents companies

0%

10%

20%

30%

40%

50%

Manu

ally/

with

spread

sheets

Interna

lsoftw

ares

ystem

Third

party

solut

ion

Wearen

otsatis

fying

them

Weavoid

prom

otion

alspen

din

states

requ

iring

disclos

ure Ot

her

2010 2011 2012

Figure 6:How respondents are currently satisying reporting requirements


26/40White Paper26

Chart Index


0%

10%

20%

30%

40%

50%

Under$

500K

$500

K-$999

,999

$1M

-$1,99

9,99

9

$2M-$4,99

9,99

9

$5M

orm

ore

2011 2012

Figure 7:Costs incurred rom third party system implementation or your aggregate spend and disclosure reporting

0%

10%

20%

30%

40%

50%

60%

Man

ually

/with

sprea

dshe

ets

Internal

softw

aresystem

Third

party

solution

Nots

atisf

ythem

2010 2011 2012

Figure 8:How respondents plan to satisy reporting requirements as more legislation is passed


27/40

Chart Index


0%

10%

20%

30%

40%

50%

60%

70%

80%

Non

e

1-5FTEs

6-10

FTE

s

11-15FTEs

16-20FTE's

20+FTEs

2010 2011 2012

Figure 9:Number o dedicated ull time employees (FTEs) who have specic job responsibility to support state and ederalaggregate spend and disclosure reporting and compliance in respondents companies

0%

10%

20%

30%

40%

50%

60%

70%

80%

Decreas

e

Stay

the

sam

e

Increa

se

2010 2011 2012

Figure 10:Expected change in investment (solutions and resources) in aggregate spend reporting and compliance over the nextyear


28/40White Paper28

Chart Index


0%

10%

20%

30%

40%

50%

60%

Fully

in-hou

se

Outso

urce

d/third

party

solution

Aco

mbina

tionof

third

party

solution

and

in-hou

se

How respondents currently manage aggregate spend solution

How respondents would prefer to manage aggregate spend solution

Figure 11:How respondents currently manage their aggregate spend and disclosure reporting and compliance solution based onresources vs. how respondents would preer to manage their aggregate spend and disclosure reporting and compli-

0%

10%

20%30%

40%

50%

60%

70%

80%

Interna

lresou

rce/te

am

Third

party

consult

ant

Wedon

otdo

any

research

orm

onito

ring

Don't

know

Othe

r

2010 2011 2012

Figure 12:

How respondents currently monitor new and pending legislation


29/40

Chart Index


0%

10%

20%

30%

40%

50%

60%

70%

80%

Complianc

e

Fina

nce

Lega

l

Ope

ratio

ns

Other

Don'tk

now

2010 2011 2012

Figure 13:Departments responsible or tracking current and pending legislation

0%

10%

20%

30%

40%

50%

01-5

6-10

11-15

21-25

26-30

Morethan

30

16-20

2010 2011 2012

Figure 14:Number o data sources (including suppliers) that capture HCP and Organization spend inormation


30/40White Paper30

Chart Index


0-25

47%

76-100

14%

26-50

24%

51-75

15%

Figure 15:What percentage o those data sources are rom a third party?

0%

10%

20%

30%

40%

50%

60%

Spread

sheets

Data

le

tran

sfer

Usean

app

licationto

whi

chthevend

or

hasaccess

toenter

theird

ataman

ually

Useacombi

natio

nof

2or

moreof

theab

ovemetho

ds

2010 2011 2012

Figure 16:How respondents currently obtain event and spend data rom vendors


31/40

Chart Index


0%

5%

10%

15%

20%

25%

30%

35%

Custom

solutio

n

Oracle

Sipe

rian

IMS

HMS

Cege

dim

Ourc

ompa

nydoe

sntha

ve

acustom

ermas

ter

Othe

r

2010 2011 2012

Figure 17:Respondents customer master within their aggregate spend and disclosure compliance reporting solution

Yes

74%

No

26%

Figure 18:When a US physician travels abroad on behal o your oreign aliate(s) do you capture those payments/expensesor reporting under US Federal law?


32/40White Paper32

Chart Index


Pay them in the US

in US dollars

82%

Pay them in the

country that the

activity occured

in foreign

currency

18%

Figure 19:How respondents handle reporting o US Physicians that travel abroad on their behal

5

6

7

8

Iden

tifyin

gal

ldat

aso

urce

s

Mat

chin

gan

des

tabl

ishin

gun

ique

Iden

tica

tion

ofan

HCP

and

Orga

niza

tions

from

allt

heexp

ense

dat

aso

urce

s

Inco

mpl

ete

spen

din

form

atio

n

Disp

arat

efo

rmat

sand

stan

dard

s

2010 2011 2012

Figure 20:Challenges in consolidating spend data rom multiple sources (scale o 1 to 10, with 1 being the least challenging and10 being the most challenging)


33/40

Chart Index


0%

10%

20%

30%

40%

50%

Very

con

dent

Somewha

tcon

dent

Nots

ure

Notv

erycon

dent

Nota

tallcon

dent

2010 2011 2012

Figure 21:Condence that reporting is ully compliant

0%

5%

10%

15%

20%

25%

30%

35%

Poor

reco

rdkee

ping

and

/or

data

entry

errors

Lack

ofu

nderstan

ding

ofp

olicy

System

/process

sho

rtco

mings

Nolack

ofc

omplianc

eseen

Shortage

ofh

uman

reso

urces

Lack

ofb

udge

t

Low

priorit

y

2010 2011 2012

Figure 22:Primary root cause o any lack o compliance with promotional spend regulations


34/40White Paper34

Chart Index


0

1

2

3

4

5

6

7

8

Prop

eriden

tica

tionof

spe

ndrecipien

ts

Colle

ctingallrelev

ants

pend

data

Data

Integrity

-hav

ingac

curate

,

complete,

and

timelyda

ta

Hand

linginqu

iries

after

spe

ndis

pos

ted

2010 2011 2012

Figure 23:Level o concern with issues in preparing or the Sunshine Act (scale o 1 to 10, with 1 being the least concern and 10being the most concern)

Yes

63%

No

37%

Figure 24:Respondents planning a pre-submission review by covered recipients as suggested in the drat regulations


35/40

Chart Index


0%

10%

20%

30%

40%

50%

60%

70%

80%

Yes,

toaninternal

solution

Yes,

toapurch

ased

or

outsou

rced

solution

No,wewillen

hanc

eou

rcurrent

man

ual/s

prea

dshe

etsolution

Don'tk

now

2010 2011 2012

Figure 25:In response to the Sunshine Act, will you migrate to an automated solution?

0%

10%

20%

30%

40%

50%

60%

It's

abs

olutelyarequ

iremen

t.

Itwou

ldbenice

but

it's

not

nec

essa

ry.

Idon't

seeane

edforthis

.It's

not

a

factor

atallinch

oosing

asolut

ion.

2011 2012

Figure 26:Importance o implementing an aggregate spend and transparency solution that can be used in other countriesacross the world


36/40White Paper36

Chart Index


Western Europe

61%

Latin-America

8%

Eastern Europe

7%

Asia-Pacic

21%

Middle-East

3%

Figure 27:Regions that are/would be a priority in consideration o implementing a global aggregate spend and transparencysolution

0%

5%

10%

15%

20%

25%

30%

35%

Brazil

Mexico Ita

ly

Netherlan

dsCh

ina

Japa

n

Germ

any

Fran

ce UK

Figure 28:Number o data sources (including suppliers) that capture HCP and Organization spend inormation


37/40

Chart Index


0%

10%

20%

30%

40%

50%

60%

70%

80%

Unite

dStateso

ces

Localcou

ntry

oces

Regio

nalh

eadq

uarte

rs

Nots

ure

2011 2012

Figure 29:From where do the decisions or your companys global aggregate spend and transparency initiatives originate?

Yes

33%

No

67%

Figure 30:Do you have responsibility or your companys compliance with FCPA (Foreign Corrupt Practices Act)?


38/40White Paper38

Chart Index


Yes

15%

No

85%

Figure 31:Are you leveraging your aggregate spend solution to help comply with FCPA/anticorruption regulations?

0%

10%

20%

30%

40%

50%

60%

Yes

No

2011 2012

Figure 32:Efect o UK bribery law on current anti-bribery law activities


39/40

Chart Index


2012

31%

We already have one

8%

2014

7%

2013

13%

Not dened

41%

Figure 33:What is your timerame or moving orward with a global solution or aggregate spend and transparency reporting?


40/40

2012 US Trends in

Aggregate Spend andDisclosure Reporting

Results rom an Industry Survey

March 2012

For more inormation, please contact

[email protected]

www.cegedim.com/eucompliance

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