Deloitte Touche Tohmatsu Limited (DTTL) recently conducted a survey for Forbes Insights of 110 U.S.-based physicians and 223 global executives from life sciences companies worldwide. The survey, Physician Payment Sunshine Act: Physicians and life sciences companies coming to terms with transparency, was conducted in January and February 2012.
The Physician Payment Sunshine Act (PPSA) requires drug and device manufacturers to report certain payments they make to physicians and teaching hospitals over $10. This legislation, passed with the Affordable Care Act, will be implemented sometime next year when the Centers for Medicare and Medicaid Services (CMS) issues final regulations.
Physicians
The survey found that over half of the responding doctors said they have relationships with industry, with the largest group of doctors (65%) saying that they accept free samples. In addition, 52% said they attended industry-supported or sponsored continuing medical education (CME) seminars.
The survey also found that physicians consider industry-supported CME seminars, as the best means for learning about new medications and treatments (57%); detailing (52%) and samples (42%) were also effective.
For respondents, only 5% had an increased financial benefit derived from CME seminars, with 52% staying the same. However, 43% of respondents saw a decrease in financial benefits derived from CME, with 23% saying the decrease was substantial. In the coming year, 23% of respondents expected CME benefits to decrease substantially, 16% to decrease somewhat. Only 5% predicted an increase.
51% of respondents said their primary source for information about new drugs and novel treatments is medical journals, followed by industry (17%), colleagues (14%), and internet (including social media) content (13%). 66% of respondents said they trust the information they get from industry.
One surprising outcome from the study is an apparent disconnect between how physicians say they learn and what the life sciences industry thinks is the most effective way to provide information to them. As noted above, physicians feel that CME is the most effective learning tool, while industry executives believe their most effective tool is free samples. The results also suggest that both detailing and consulting and speaking fees are of lesser importance to physicians than the industry believes.
Most doctors believe that they do not derive material income from their relationship with the life sciences industry. Of the 30% of doctors who said they do derive some income from the relationship, a vast majority reported that less than 1% of their income comes from the industry, while 7% of all doctors surveyed put the share of their income derived from the industry at 1% to 10%.
Despite the continuing financial interactions between physicians and life sciences companies, most physicians (85%) seem to understand what constitutes a conflict of interest under existing regulations. The majority (64%) said that disclosure for doctors should be mandatory, with an even greater percentage (83%) supporting mandatory disclosure for researchers. Interestingly, 44% supported mandatory disclosure for nurses, which are not covered by the Sunshine Act disclosure requirements. However, almost one-third (31%) of those surveyed stated that they were unclear about how the PPSA disclosure requirements operated.
Interestingly, 72% of respondents felt that the new regulations would not affect their relationship with the life sciences industry despite concerns that the new regulations might negatively impact physician-industry relations. Another recent survey showed that the Physician Payments Sunshine Provision in the federal health care law may have a limited effect on prescribing and on expenditures; there were negligible to small effects of the disclosure laws in Maine and West Virginia for both statins and SSRIs
Companies
The survey results support the contention that the life sciences industry is undergoing a compliance-related investment cycle, as new legislation (including PPSA) and increased enforcement worldwide necessitate investments in human capital, software upgrades, and process integration to meet reporting requirements. More than three-quarters of the respondents said that their 2011 investment to comply with HCP disclosure requirements was the same or greater than in 2010; almost the same percentage said that their investment over the next two years (2012-2013) would equal or surpass 2011 expenditure.
On a more granular level, greater than three-quarters of the respondents said they see training programs and software integration and upgrades as consuming the greatest proportion of this increased compliance investment, while 25% also noted that they will be hiring new full-time employees in legal, sales, marketing and IT to work on compliance programs and 26% said they would hire third-party consultants for training.
Although PPSA compliance is complex and challenging for life sciences companies, a third of survey respondents said they are 50% done with preparations and hoped to be ready in time while a another third felt that they were 100% ready, despite the fact that final implementing regulations have not been issued. This statistic, however, is not surprising considering companies have been required to report such payments since 2008, when Eli Lilly began posting such payments as part of a Corporate Integrity Agreement (CIA) with the Office of the Inspector General (OIG) for the Department of Health and Human Services.
Quoted in an article regarding the Sunshine Act’s effect on industry for Compliance Week Glenn Engelmann, former general counsel for Astra Zeneca, describes the challenge facing life sciences companies: “While it seems like an easy thing, it’s actually a fairly complex task to pull all the information together in a usable format.”
When asked to identify the challenges of putting in place a strategy to comply with the PPSA and other laws, respondents pointed to training of employees (52%), financial expenditures for compliance (43%), understanding requirements (41%), and engaging all the necessary stakeholders (40%) as the key challenges. Far fewer respondents listed data quality and integrity (16%) or software upgrades and integration as a challenge (16%). “It is not entirely clear why data integrity and appropriate software reside so far down the list, but it could point to the fact that companies may not be as ready to comply with the new requirements.”
55% of companies expect to have a somewhat or substantially bigger investment over the next two years in HCP transparency-related compliance. 61% of companies manage PPSA and compliance in legal and compliance; 27% use general management.
37% of companies said they are developing an integrated approach and plan to address regulations around the world while 41% said they are addressing regulations by country and regulation.
Companies who participated had the following responses for the approximate percentage of budgets for CME which includes educational grants and direct product education plus investigator initiated research for HCPs:
- 35% have under 10% of their budgets for CME and research
- 24% have between 11% and 25%
- 13% have between 26% and 50%
- 6% have between 51% and 75%
- 6% have over 75%
Over the past year:
- 6% of companies saw a significant increase in their CME and research for HCPs budget (greater than 15%)
- 8% saw a moderate increase (5% to 15%)
- 11% saw a slight increase (less than 5%)
- 57% saw no change
- 7% saw a slight decrease (less than 5%)
- 9% saw a moderate decrease (5% to 15%)
- 2% saw a significant decrease (greater than 15%).
26% said they expect to see a slight to significant increase over the next year in CME and research for HCP funding, with 19% expecting a slight to significant decrease in such funding. These numbers, however, did not break down which proportion of funding is for research and CME. Based on last year’s annual report of CME funds, it is likely that any increases are for research and not CME.
With respect to detailing:
- 39% have less than 10% of their budgets
- 18% have between 11% and 25%
Almost 70% of companies spend less than 25% of their marketing budget on food, entertainment and travel for HCPs.
Conclusion
“As the survey results illustrate, physicians, the life sciences industry, and even the government are expected to expend significant time, effort, and resources complying with PPSA. Health care providers and the life sciences industry will be challenged to figure out how to achieve compliance in the most efficient, cost-effective manner.” Deloitte noted that the “most important consideration for the life sciences industry [may be] that the PPSA provides an opportunity to evaluate spending allocations for health care provider relationships.”
Particularly because “allocation of the money that life sciences companies currently and/or plan to spend is not consistent with how providers say they learn. Therefore, while disclosure may allow companies to reduce negative perceptions around interactions, it may also provide an opportunity to improve overall operational efficiency; thereby reducing costs.”
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life sciences