Certification of Compliance Among Biggest Changes to PhRMA Code

The updates to the Pharmaceutical Research and Manufacturers of America's Code on Interactions with Healthcare Professionals contain some significant changes for the pharmaceutical industry, according to Linda Pissott Reig, a principal with Porzio, Bromberg, & Newman in New Jersey.

They also reflect a natural development of the sales model for pharmaceutical companies, according to Dan Kracov, a partner with Arnold & Porter in Washington, DC.

"This is a very positive development, but it will require a not insignificant effort for companies to make sure they adopt the changes in the Code and meet the recordkeeping requirements," Kracov says.

While state disclosure regulations and the pending Physician Payments Sunshine Act currently in Congress played a role in the new guidelines, Kracov and Reig says they weren't the only factors.

"The updates are a direct response to the criticism and skepticism from all sources," Reig says. "It's an effort to demonstrate the industry wants to be considered to be taking the high road and conducting itself appropriately."

Kracov considers the new guidelines as a general tightening up of the standards, but believes the public and lawmakers may remain critical of some of their interactions between pharmaceutical companies and physicians, including speaker programs. The Code requires companies to track how much money they pay each speaker and set an annual limit on how much they spend. However, the Code does not specify the amount of the dollar limit.

Revisions in a nutshell
The revised Code, which takes effect in January 2009:

• Prohibits distribution of non-educational items, such as pens, mugs, and other "reminder" objects typically adorned with a company or product logo, to healthcare providers and their staff
• Prohibits company sales representatives from providing restaurant meals to healthcare professionals, but allows them to provide occasional meals in healthcare professionals' offices in conjunction with informational presentations
• Includes new provisions that require companies to ensure that their representatives are sufficiently trained about applicable laws, regulations and industry Codes of practice - including the Code - that govern interactions with healthcare professionals
• Provides that each company will state its intentions to abide by the Code and that company CEOs and Compliance Officers will certify each year that they have processes in place to comply
• Includes more detailed standards regarding the independence of continuing medical education (CME)
• Provides additional guidance for speaking and consulting arrangements with healthcare professionals

One of the most significant changes requires Chief Operating Officers and Chief Compliance Officers (CCO) to certify annually that their company complies with the PhRMA Code and posting contact information for the CCO, Reig says. PhRMA will take on an increased prominence as a central place where employees, physicians, pharmacists, and the public can report suspicious conduct.

Companies are more likely to comply with the code if they have to certify their compliance and everyone can report suspected violations, Reig added. Companies will also have the opportunity to correct misconduct in the field.

The Code also now requires pharmaceutical companies to force physicians who serve as consultants and also as members of a formulary committee to disclose their work for the pharmaceutical company to the formulary committee. In the past, the physicians were responsible for making sure they disclosed the relationship.

Under the revised Code, sales representatives and their managers will only be allowed to bring food into a physician's office as part of an informational presentation. Sales representatives and managers will no longer be permitted to take physicians out to dinner. Reig considers this as a significant change and also as an area that may need to be further clarified.

"The Code is currently silent on how a rep who attends a scientific conference would be able to have an information presentation with a physician or whether that is not going to happen," Reig says. "I think that's going to have to be addressed as we go forward."

Complications for complaining with new Code
Companies will face two major challenges when trying to comply with the new regulations - training and tracking aggregate spend.

Some pharmaceutical employees have deeply ingrained habits, so companies will need to retrain them and track compliance with the new regulations, Kracov says.

"There's a lot of work to be done in terms of the development of policies and training and the responding to the particular questions that arise," Reig says.

Sales representatives and pharmaceutical employees are not the only ones who will need training, Reig says. Healthcare practitioners will also need to understand the new guidelines.

Accurately capturing the aggregate spending across the organization will be a difficult undertaking at least initially, Kracov says. Companies have different systems in place to track spending in various departments of the company and they need to find a way to consolidate the systems and get a real-time sense of how much money is going to individuals and institutions from these parts of the companies.

"Some companies do not have sufficient control over aggregate spend," Karcov says. "It will take a lot of effort and evolution."

Companies have been working on systems to track aggregate spending because of the various state disclosure laws, but met with varying levels of success.

Benefits of the new Code
Kracov believes the changes to the Code will benefit some companies by helping them save money on traditional marketing efforts.

Another benefit to the updates to the Code, Kracov says, is the chance for pharmaceutical companies to rebuild its public's image.

"It's critical that the whole debate over pharmaceuticals and the marketing of pharmaceuticals get on a more rational basis because the industry has been under attack for so long and has been such a moving target," Kracov says. "This should be used as a way to move towards more of an equilibrium and understanding what's appropriate and what's not in dealing with physicians."

The industry will change, not only as a result of the new guidelines, but as part of a broader evolution of the sales model, Kracov says. Those changes public policy, formularies, contracting, and more reliance on evidence-based medicine than in the past.

"The Code is part of an overall evolution in public policy and healthcare economics," Kracov says. "It's an important development. . It's not the beginning or end."

"I think this is a substantial development just like the 2002 Code was a significant development.," Reig says. "There's a substantial amount that is new here and I think that as a result it's going to change how business gets done in the industry, but hopefully will also have the expected change of responding to the criticism."