Global Transparency Requirements: Pharmaceuticals & Life Sciences

www.pwc.com/us/aggregatespend

EFPIA and O-USTransparency Requirements:Implementing an aggregate spendprogram in a global marketplace

February 2014

PwC

Today’s Presenters

David Wysocky – Principal, Advisory Pharma & Life Sciences

Bharathram Lakshmivarahan, Director, Advisory Pharma &Life Sciences

Alexis Wong – Manager, Advisory Pharma & Life Sciences

Sarah Volden – Manager, Advisory Pharma & Life Sciences

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Agenda

• Evolution of global transparency landscape

• Defining a path to implement a global transparency program

– Identify inputs that will shape your global transparencypolicy

– Define your transparency vision and goals

– Define your optimal framework

– Evaluate your assets

– Define the operational model that fits your organization

• Conclusion

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Evolution of global transparencylandscape

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The evolution of global transparency

PhRMA CodeJuly 2002

AdvaMedCodeJan. 2004

US OIGComplianceGuidanceApr. 2003

AustralianCompetition &ConsumerCommissionMar. 2007

JPMA (Japan)PromotionCodeMay 2008

US HealthcareReformMar. 2010

Revised ABPICode ofPracticesJan. 2011

EFPIA DataCollectionCY 2015

• Belgium’sMedicinesActMay 2006

• ABPI (UK) Codeof PracticesMay 2006

First EFPIADisclosureReport 2016

• RevisedPhRMA CodeJan. 2009

• RevisedAdvaMed CodeJuly 2009

• Revised ABPICode ofPracticesJan.2014

• FrenchSunshineAct Report DueFeb. 2014

• First USSunshineReportDue Mar. 2014

• US Sunshine ActFeb. 2013

• French Sunshine ActMay 2013

• EFPIA DisclosureCode June 2013

• French Sunshine ActReport Due Aug.2013

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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Global aggregate spend benchmarking: Operations

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Reported dedicated resources for O-US aggregate spend programs:

4-6

7+

November 2012

0-3

4-6

7+

September 2013

• Based on the decrease in ‘Unknown’ responses, companies are starting to instituteresources to handle in-country global requirements.

• Most companies still do not have a global strategy in place and many companiesreported a desire for better global alignment and capabilities.

• Will be a key focus of pharma companies in 2014 with EFPIA going into effect in2015.

Unknown

UnknownUnknown

Unknown

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Global aggregate spend benchmarking: Resources

Companies who have implemented a software-based reportingsolution/system for:

90%

10%

U.S. State & Federal Reporting

Yes No

15%

85%

Global Reporting

Yes No

• A majority of companies have implemented a software-based reportingsolution/system for U.S. State and Federal Reporting, but not for global reporting.

• 35% of respondents reported that the company changed solution/system vendorsduring an implementation, indicating a general dissatisfaction with vendors.

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Defining a path to implement a globaltransparency program

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Your path to a global transparency program

Identify inputs thatwill share your globaltransparency policy

Define yourtransparency visionand goals

Define your optimalframework

Define the operationalmodel that fits yourorganization

Evaluate your assets

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1 - Identify inputs that will shape yourglobal transparency program

2 - Define your transparency vision andgoals

3 - Define your optimal framework

4 - Evaluate your assets

5 - Define the operational model that fitsyour organization


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Identify inputs necessary to define globaltransparency

Local Country Laws

U.S.

EFPIAIndustryCodes &

Guidelines

• French “Sunshine”Decree no. 2013-414

• EFPIA Disclosure Codeimpacting 33 Europeancountries

• Federal Sunshine Act

• State TransparencyLaws

• EFPIA MemberAssociations’ nationalcodes

• Japan – JPMATransparencyGuideline

• Australia – MedicinesAustralia Code ofConduct, Ed. 17

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Member Associations’ codes of conduct

• EFPIA Member Associations required to completely integrate the Disclosure Code intotheir national codes by December 31, 2013

• 33 EFPIA Member Associations

• As of January 2014, approximately 11 Member Associations have published updatednational codes reflecting the EFPIA Disclosure Code requirements, including:

- Bulgaria (ARPharM)

- Estonia (APME)

- Finland (PIF)

- Greece (SFEE)

- Ireland (IPHA)

- Italy (Farmindustria)

− Latvia (SIFFA)

− Norway (LMI)

− Portugal

− Slovenia (EIG)

− The United Kingdom (ABPI)

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Member Associations’ codes of conduct (continued)

• Generally, for Member Associations that adopted the EFPIA Disclosure Code haveadopted it as the code has been written with minor variations

• Member Associations’ variations to the EFPIA Disclosure Code include:

- Disclosure of transfers of value related to marketing, promotion, and R&D ofprescription drugs (Bulgaria)

- Express consent to disclose information from Covered Recipient

◦ Written consent required by SFEE (Greece), Farmaindustria (Italy), EIG (Slovenia)

◦ Contractual consent encouraged by ABPI (UK)

◦ Covered Recipient consent to disclosure may be revoked

- Disclosures published in local language

◦ Many Member Associations also encourage dual disclosure in English

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Member Associations’ codes of conduct (continued)

• Modes of Disclosure

- ABPI (UK) to decide by the end of 2014 whether to develop a central disclosureplatform

◦ Current requirement is to disclose via company websites

- SIFFA (Latvia) intends to create a common database for disclosure, and will permitcompanies to choose whether to disclose via the database or company website

- The Netherlands Transparency Register is a central platform that has been requiredfor annual disclosures since 2012

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Define your transparency vision and goals

• Do I want solely to meet transparency requirements?

• Or do I also want to use the data I collect to accomplish more (e.g., conduct analytics such thatshed light on the performance of compliance controls, investments with HCPs and the impact ofdifferent types of promotional and non-promotional activities)?

Purpose

• What is the scope of my global transparency program?

• What are my key responsibilities?

• How can I realistically operate a global transparency program?

Roles & Responsibilities

• What resident subject matter experts, skilled workers, and support staff will I need to run a globaltransparency operation and execute the key responsibilities I’ve defined?

• Can I leverage my US resources and expertise?

• What cross-functional areas will my company need to support the build, implementation, andexecution of my program?

Talent Management

• What are the types and depth of the training and communications programs that will be necessaryto implement my global transparency program?

• What do I want to communicate to my stakeholder groups so they will understand transparencyand its associated reporting requirements?

Communication & Training

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Optimal framework key considerations

• What are the pros/cons of implementing a local, regional, or global approach to transparency?

• How can I leverage existing and planned organization structures, processes, and systems?

• What is an appropriate level of governance, collaboration, coordination, and visibility regardingHCP/HCO spend across the countries that require some form of transparency disclosure?

Governance

• Which existing country-specific compliance, policy, and control considerations can I expand uponor leverage?

• What existing safe harbor considerations and local country privacy laws affect tracking andreporting cross-border spend?

Policy, procedures and controls

• How can I capture, maintain, and report cross-border HCP engagement activity?

• Which of my funding, resource, timing, and capability constraints may impact my ability toeffectively operate?

• What other dependent, existing, or planned investments in systems and data upgrades should Iconsider to promote implementation success?

• Will I manage transparency reporting in-house, outsource it to a third-party vendor, or achieve itthrough a combination of in-house/outsourcing?

• What lessons learned/assets can I leverage from my US efforts?

Resources and investments

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Define your optimal frameworkGovernance

+ Ownership of transparency andaccountability at the countrylevel

- Limited learning, synergies, andstandardization across theorganization

- Inconsistent data review andcertification processes

- Inconsistent transparencydefinitions and documentation

+ Ability to develop synergies andstandardization across a region

+ Oversight and ownership ofprogram across the region

+ Consistent transparency policiesand procedures across theregion

- Data privacy laws may limitability to standardize programand share information across theregion

- Limited accountability forprogram at a local level

+ Clearly defined ownership andaccountability across theorganization

+ Centralized oversight of alltransparency activities across theorganization

+ Consistent and standardtransparency policies andprocedures across the organization

+ Ability to share and implement localleading practices and local lessonslearned across organization

- Data privacy laws may limit ability toshare information across borders

- Neglecting local sensitivities andexpectations

- Organizational-level accountabilityfor local affiliate violations

Local Regional Global

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Define your optimal frameworkSource Systems, Data Capture & Remediation

+ Limit data captured to only thatwhich is required for reporting

- Lack of visibility into interactionswith local HCPs by regionalaffiliates

- Inconsistent use of sourcesystems by local affiliates

+ Consistency in HCP/HCO datacaptured across the region

+ Consistent use of sourcesystems across the region

- Requires capture of data andinformation that may not berequired for reporting in severalcountries in the region

- Requires compliance withstrictest data capturerequirements in the region

+ Standard terms, definitions,processes, and source systemsto capture transaction data

- Update to local law/regulationimpacts data collection acrossorganization

- Requires compliance withstrictest data capturerequirements


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Define your optimal framework

+ Ease of developing,implementing, and maintaining alocal customer master list

+ Avoid duplicative entries for thesame recipient in a singlecustomer master list

- Inability to identify cross-borderspend

- Limited visibility into HCP/HCOspend in other countries

+ Regional unique customermaster identifier

+ Ability to identify cross-borderspend within the region

- Data processing across theregion is difficult

- Recipient identifying informationvaries among countries in aregion

- Differing unique identifiers acrosscountries

- Potential for duplicative entries

- Limited ability to identify cross-border spend outside of theregion

+ Unique HCP/HCO profile acrossthe organization

+ Uniform information available forall HCPs/HCOs

+ Complete list of globalHCPs/HCOs

+ Updates to customer master listavailable to entire organization

- Potential for duplicative entriesfor those customers located inseveral countries

- Recipient identifying informationvaries among countries

Master Data Management


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Define your optimal framework

+ Tailored business rules to meetlocal requirements

+ More flexibility to updatereporting processes and toupdate reports

- Interpretation of requirementsinconsistent among each localaffiliate

- Lack of visibility into HCP/HCOspend in other countries

- Potential for incompletereporting

- Inconsistent approach toresolving inquiries and disputes

+ Greater scalability andautomation of manual reportingprocesses

+ Greater visibility into cross-border activities

+ Consistent approach to resolvinginquiries and disputes within theregion

- Concerns with report quality andcompleteness due to largevolume of transactions

- Larger volume of inquiries anddisputes

- Security and access to reports

+ Consistent process forconsolidating transactional databased on uniform business rulesto generate reports

+ Consistent approach to resolveinquiries and disputes ofreported data

+ Greater automation of manualreporting processes

- Concerns with report quality andcompleteness due to largevolume of transactions

- Large volume of inquiries anddisputes

- Requires certification oftransactions across severalregions

Reporting


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Leveraging lessons learnedAs companies adjust to the evolving global transparency landscape, they should reachout to their counterparts in other countries and leverage the lessons those counterpartshave learned as they created their own transparency programs. Companies shouldincorporate these lessons learned when determining their overall transparencystrategy.

Governance Policies andGuidelines

BusinessProcesses

Systems andData

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Evaluate your assetsOnce a company has identified its transparency program options, it should next determinewhich key drivers impact its ability to implement the program.

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GovernanceOrganization

Reporting

Master datamanagement

Source systems,data capture and

remediation

Talent managementand resourcing

What talent /resources are

needed to supportprogram

implementation &operations

To what extent do weneed standardizerecipient profile

information for moreaccurate reporting

How can wedevelop, review,

finalize andgenerate reports fordisclosure (leverage

existing orpurchase systems,outsource, build)

How do we align thegovernance structure

to implement theprogram options

What sources dowe need toevaluate,

standardize orenhance toimplement

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Data privacy considerations: EU-US data transferrestrictions example

The Issue: The EU Data Protection Directive prevents the transfer and access of EEA-related business and employee data to countries that are deemed “inadequate” such as theUS.

Trans border Date Flows

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EU trans-border data transfer options

• In 2000, the U.S. and the EU entered into a “Safe Harbor Agreement” which allows companies operating in theU.S. to be deemed “adequate” on a company basis for receipt of personal data transferred out of the EEA upon thecondition that the certifying company agrees to abide by seven data handling principles and annually certifycompliance therewith.

Safe Harbor

• The International Chamber of Commerce developed standard privacy terms that have been deemed “adequate” ona contract basis in contracts for transactions involving the transfer of PII processed in the EEA to the U.S. thatprovide privacy guarantees and explicitly subject the U.S. business to the jurisdiction of EU DPAs. These contractsoften have high compliance standards.

Model Contracts

• Similar to a global privacy policy or a corporate code of conduct requiring the approval of each DPA in the countriesin which data is being transferred out of the EEA, binding corporate rules (“BCR”) is a new, untested potentiallycost-effective way to attain adequacy if a company is not in all EEA countries. In general, it is difficult to attainconsensus among DPAs.

Binding Corporate Rules

• Many companies do not use consent for Customer trans-border data transfers as the EU data protection authorities(DPAs) generally do not recognize consent as being valid or freely given in the Customer context, however,consent in the form of opt-in for commercial data is often considered a sufficient method of compliance.

Consent

Due to international data transfer restrictions, there has been several mechanisms that have been put in place in order totransfer data in a compliant manner. The following are some of the compliance mechanisms available for the internationaltransfer of data:

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Define the operational model that fits yourorganization

Individual companies should define a global strategy and operational model to supporttheir transparency program. Considerations can include:

• Define the program’s governance, roles, and responsibilities across the organization

• Detail the resources, activities, timing, budget, and deliverables necessary to operateand manage the day-to-day operations of the program

• Develop data and process standards, focusing on the creation, update, approval,implementation, and enforcement of requirements to provide consistency andpreserve data quality

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Conclusion

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Questions?

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Contacts

David J. Wysocky, Principal

Pharma & Life Sciences – GlobalTransparency

+1 (973) 641-2040

[email protected]

Alexis Wong, Manager


+1 (267) 275-1319

[email protected]

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Bharathram Lakshmivarahan, Director


+1 (917) 747-0767

[email protected]

Sarah Volden, Manager


+1 (323) 528-8158

[email protected]

This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

PricewaterhouseCoopers has exercised reasonable care in the collecting, processing, and reporting of this information but has not independently verified, validated, oraudited the data to verify the accuracy or completeness of the information. PricewaterhouseCoopers gives no express or implied warranties, including but not limited to anywarranties of merchantability or fitness for a particular purpose or use and shall not be liable to any entity or person using this document, or have any liability with respect tothis document.

© 2014 PwC. All rights reserved. PwC refers to the United States member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity.Please see www.pwc.com/structure for further details.

Date post:	22-Nov-2014
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