Life Science Compliance Update

September 24, 2015

How Are Pharma Reps Dealing With The Changing Healthcare Landscape?


A recent article honed in on how regulations and market forces facing the pharmaceutical industry affect the way sales representatives interact with physicians and other healthcare providers. Published in, the article lays out certain evolutions to the life sciences industries, which have occurred in just the last few years that have caused major changes for pharmaceutical sales reps.

First, the article examines the Physician Payments Sunshine Act’s role in making doctors less likely to see sales reps. The Sunshine Act (or Open Payments) was enacted as part of the Affordable Care Act and requires pharmaceutical manufacturers to publicly report any payments they make to physicians or teaching hospitals—this could include lunch, speaker fees, consulting payments, etc. The article quotes a 2014 survey of 3,000 U.S. physicians conducted by Quantia and Capgemini that found about 40 percent of physicians never see a pharma sales rep. Further, 80 percent said their organizations have policies in place that restrict their contact with industry reps.

The article notes that in light of the face-to-face restrictions, the pharma sales model needs to go digital; a process the author states is “already underway.” Pharmaceutical executives reported in a 2013 survey that “one in four direct sales force interactions migrated to digital interactions with doctors, providers, payers, and patients.”

Further, the Quantia and Capgemini survey found that 76 percent of physicians surveyed preferred to receive information about new drugs, products, and indications digitally. (See their complete study here)

The article also looks at a general shift in how providers view the value of what pharmaceutical companies can offer. The Quantia and Capgemini survey found that,
“while providers aren’t interested in promotional educational seminars, 83 percent would like to see more pharma-sponsored accredited CME events,” the author writes. “In addition, 83 percent want more provider-focused information about disease states, while 77 percent want more detailed product information written for prescribers.” Providers “don’t have time to listen to a sales pitch, but they will make time for educational opportunities,” the article notes.

The shift from individual physicians practices to health systems is another large change facing healthcare delivery, and thus sales reps looking to meet with doctors. More and more physicians are moving to health systems and accountable care organizations (ACOs); the article states that as of 2014, 57 percent of all doctors were employed by a health system. However, even more significant “70 percent of newer physicians who had earned their medical degrees in the last 10 years worked for health systems.”

This is clearly a trend and has a large effect on sales reps. “As a result of the new health system landscape, physicians have less decision-making power,” the article states. “The Quantia survey found that 70 percent of physicians who belong to a health care system are restricted in their prescribing behaviors. They don’t control the formularies of their organizations and must follow tight guidelines when it comes to prescribing.”

“This means interactions between pharma reps and physicians carry less weight,” the article concludes. “To be effective, pharma sales reps will need to find other channels to communicate value.”

Executive Vice President at Quantia, Dan Malloy summed his company's survey up:

There is a perfect storm occurring in healthcare as more physicians are being employed by health systems and thereby less accessible to pharmaceutical reps, more constrained in their prescribing behaviors, and increasingly beholden to performance metrics. Yet the survey findings indicate that despite this increasingly consolidated environment, physicians overwhelmingly believe that pharmaceutical companies willing to adapt their physician engagement strategies have the potential to add real value to their organized networks.

Introducing physician engagement strategies such as credible online communities and digital content sharing gives pharmaceutical firms the opportunity to promote the latest, critical drug information to these organized physicians while aligning with the performance objectives of the health systems in which they work—a  true push/pull approach that will drive success for all constituents.

September 17, 2015

DOJ Issues New Policy Focused On Individual Accountability For Corporate Crimes


On September 9, the Deputy Attorney General Sally Quilliam Yates issued a memo entitled “Individual Accountability for Corporate Wrongdoing,” to Department of Justice attorneys. On Thursday last week, Yates introduced the new policy at New York University School of Law, and outlined the DOJ’s focus on prosecuting individuals for their roles in corporate misconduct. Much of the press surrounding the DOJ policy focuses on financial crime (see NY Times, Bloomberg, and CNN). However, the announcement is important for the pharmaceutical industry, which has been one of the Justice Department’s favorite targets recently, paying out billions in fines.  

“One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetuated the wrongdoing,” wrote Yates. However, she notes that “complex corporate hierarchies” and “enormous volumes of electronic documents” have posed practical challenges to putting individuals in prison. “In modern corporations, where responsibility is often diffuse, it can be extremely difficult to identify the single person or group of people who possessed the knowledge or criminal intent necessary to establish proof beyond a reasonable doubt,” Yates said, noting this is “particularly true of high-level executives, who are often insulated from the day-to-day activity in which the misconduct occurs.” She added:

Without an inside cooperating witness, preferably one identified early enough to wear a wire, investigators are left to reconstruct what happened based on a painstaking review of corporate documents, looking for a smoking gun that most financial criminals are far too savvy to leave behind.  And since virtually all of these corporations operate worldwide, restrictive foreign data privacy laws and a limited ability to compel the testimony of witnesses abroad make it even more challenging to obtain the necessary evidence to bring individuals to justice.

Yates went through six steps designed to combat these challenges. “Some are institutional policy shifts that change the way we investigate, charge and resolve cases,” she explained. “Some address the way that DOJ interacts with the targets of an investigation.”

First, Yates states that DOJ has revised its "Filip Factors" for Federal Prosecution of Business Organizations to require that if a company "wants any credit for cooperation, any credit at all, it must identify all individuals involved in the wrongdoing, regardless of their position, status or seniority in the company and provide all relevant facts about their misconduct." Yates emphasized that this responsibility is "all or nothing. No more picking and choosing what gets disclosed.  No more partial credit for cooperation that doesn’t include information about individuals." 

This is a major shift, Yates said. Before the announcement companies could receive partial cooperation credit for disclosing improper corporate practice, but then "stop short" of naming who was engaged in wrongdoing. Now, if a company wants any credit, "they will need to investigate and identify the responsible parties, then provide all non-privileged evidence implicating those individuals."  This is the same way the DOJ would treat drug dealer, Yates notes. "A corporation should get no special treatment as a cooperator simply because the crimes took place behind a desk."  

Second, Yates addressed changes to how prosecutors should "initiate and develop" investigations.  Under the new policy, she said, the government should focus on individuals "from the start of an investigation," and "once a case is underway, the inquiry into individual misconduct can and should proceed in tandem with the broader corporate investigation." 

Third, criminal and civil attorney handling corporate investigations "should be in routine communication with one another." 

Fourth, Yates' memo states that without "extraordinary circumstances," no corporate resolution will product individuals from criminal or civil liability. 

The fifth point relates to the fourth, stating that corporate cases should not be resolved without a clear plan to resolve related individual cases before the statute of limitations expires. "If a decision is made at the conclusion of the investigation not to bring civil claims or criminal charges against the individuals who committed the misconduct, the reasons for that determination must be memorialized and approved by the United States Attorney or Assistant Attorney General whose office handled the investigation," states the memo. Yates further added that "delays in the corporate case will no longer suffice as a reason to delay pursuit of the individuals involved.”

Sixth and final, Yates is calling on U.S. attorneys to evaluate whether to bring suit against individuals "based on considerations beyond that individual's ability to pay." Her memo states: "In other words, the fact that an individual may not have sufficient resources to satisfy a significant judgment should not control the decision on whether to bring suit." 

These revised policies are effective immediately, states Yates, though "the public won’t see the impact of these steps over night. In the coming weeks and months, DOJ will be providing additional training and guidance to prosecutors to help them take full advantage of these policy shifts.  On September 16, for example, the agency hosted a training conference in Washington D.C. based on this new policy. 

Yates concluded with some cautious optimism about the DOJ's new enforcement policy:

We make these changes recognizing the challenges that they may present.  Some corporations may decide, for example, that the benefits of consideration for cooperation with DOJ are not worth the costs of coughing up the high-level executives who perpetrated the misconduct.  Less corporate cooperation could mean fewer settlements and potentially smaller overall recoveries by the government.  In addition, individuals facing long prison terms or large civil penalties may be more inclined to roll the dice before a jury and consequently, we could see fewer guilty pleas.   

Only time will tell.  But if that’s what happens, so be it.  Our mission here is not to recover the largest amount of money from the greatest number of corporations; our job is to seek accountability from those who break our laws and victimize our citizens.  It’s the only way to truly deter corporate wrongdoing. 



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