Extended Sunshine Act deadline provides extra time to track and report physician payments

Six Tips to Help Build the Ideal Thought Leader Database

As the industry awaits the release of the delayed Sunshine Act guidelines, pharmaceutical and medical device companies are benefiting from the extra time by reviewing current physician payment reporting structures and tightening their documentation procedures. “Every company, no matter how large or small, needs a tracking and reporting system capable of handling all of the Sunshine Act’s requirements now,” said Elio Evangelista, director of research at Cutting Edge Information. “The largest companiesare ahead of the pack. Most already have sophisticated databases in place, as well as the IT infrastructure and personnel to support the documentation requirements.”

Cutting Edge Information’s report, “KOL Fair-Market Value and Aggregate Spend,” serves as a guidebook to companies working to comply with the reporting requirements of the Physician Payment Sunshine Act while meeting the needs of physicians and internal stakeholders. Based on interviews conducted with medical affairs executives across the industry, Cutting Edge Information recommends the following fundamentals when constructing a KOL database:

  1. Include fields for all information required by the Sunshine Act – Each entry must have fields to enter name, company, Medicare billing number, service provided, physician compensation and other reimbursed expenses (including travel, hotel, and food).
  2. Design strong report-building capabilities – The more sophisticated the database’s query building and report-generating capabilities are, the less work companies will have to do on the back end.
  3. Establish a centralized location – Centrally located databases are more reliable for preventing duplicated efforts and data loss.
  4. Create multiple access points with differing levels of clearance – Some employees may need the ability to enter new information into the database, but not everyone needs to alter information.
  5. Create a built-in system to verify data – It is always easier to handle mistakes internally than to have external agencies point them out.
  6. Include links to, or archive, thought leader deliverables – An easily traceable copy of the thought leader’s deliverable provides undisputable proof that a service has been rendered.

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Preliminary Work and Travel Costs Take Center Stage in FMV Calculations

New study provides process for calculating compliant fair-market value payments

Although 100 percent of drug companies compensate key opinion leaders (KOLs) for their method of travel, only 60 percent do so for any preliminary work. And as mandatory public reporting of thought leader compensation approaches with the launch of the Sunshine Act, questions remain surrounding both travel and pre-work compensation. Continue reading

Drug and Device Companies Still Waiting For Sunshine Act Guidelines

By Elio Evangelista,
Director of Research

In about five weeks, pharmaceutical, biotechnology and medical device companies will have to start compiling and aggregating data on their physician expenditures to meet the requirements spelled out in the Physician Payments Sunshine Provision of the Patient Protection and Affordable Care Act. There’s a fairly significant problem, however – the U.S. government has yet to provide Continue reading

Physician’s Conflict of Interest in Spotlight Again after BMJ Study Published

By Ryan McGuire,
Senior Research Analyst

A study published in the British Medical Journal has received a lot of attention lately. It highlighted the prevalence of financial conflicts of interest (COI) for researchers sitting on 14 specific guideline-setting panels in the United States and Canada between the years 2000 and 2010. Our colleague Ed Silverman of Pharmalot discussed it. And both the Wall Street Journal and Continue reading

Sunshine Act Presents Uncertainty for Clinical Development

The sunshine provision of the landmark U.S. healthcare law passed in 2010 requires that drug and device manufacturers report all gifts and payments exceeding $10 in value. While the law seems clear for consulting fees, it becomes quite murky when discussing clinical investigator payments, which reimburse costs incurred during the clinical trial process. This is causing concern among pharmaceutical companies and CROs alike, and the Association of Clinical Research Organizations (ACRO) has recently expressed its frustrations with the law. Continue reading

Hard Limits on Thought Leader Compensation Employed Less Often by Pharma

As compliance and medical affairs teams prepare for the Sunshine Act, they are relying less on exact compensation limits for key opinion leaders.  “KOL Fair-Market Value and Aggregate Spend: Documentation, Tracking and the Sunshine Act” found that only 35 percent of all companies surveyed have established compensation limits for individual thought leaders – down from 45 percent in 2008.  When data are broken down by company size, 29 percent of large companies use compensation limits, while almost no medium-sized participating in the study have annual limits on individual key opinion leader (KOL) compensation.  However, some companies did report setting compensation limits for specific KOL activities. Continue reading

What Pharma and Biotech Companies Are Currently Paying European Key Opinion Leaders

Cutting Edge Information’s new research on European fair-market value benchmarks found that drug manufacturers spend between €153 and €283 for a typical key opinion leader (KOL) engagement. Payments vary by company size; biotechnology companies pay European thought leaders between €50 and €250 per hour, at an average rate of €153. By contrast, large pharmaceutical companies’ payments range between €75 and €600 per hour, at an average rate of €283. Continue reading

Key Opinion Leader Payments Drop by 50%

Average physician fee schedules for hourly payments to KOLs have fallen each year since 2006, finds Cutting Edge Information

Drug and device manufacturers have responded to criticism over physician payments by decreasing their average level of compensation by 50 percent, according to our new study of fair-market value benchmarks. In 2006, the average hourly rate for a top-tier opinion leader – an experienced physician often considered a national- or global-level thought leader – was $604. Since then, drug and device manufacturers have faced public criticism about conflicts of interest, as well as state and federal legislation to regulate physician payments. Cutting Edge Information’s latest thought leader study finds that in 2011, the average hourly rate for medical and scientific activities has dropped to $299, or roughly 50% of what it was in 2006.

According to the study, the largest drop in hourly rates came between 2007, when the average rate was just under $600 per hour, and 2008, when the rate fell to less than $400 per hour. Senator Charles Grassley (R-Iowa) first introduced the Sunshine Act legislation in Congress in September 2007. “Although there is no direct causation between the introduction of Sunshine Act legislation and the decrease in rates, there is certainly a strong correlation,” said Elio Evangelista, director of research at Cutting Edge Information. “And as companies have continued to implement new processes and increased structure around fair-market value determination, physician payment rates have continued to drop.”

The new study, “KOL Fair-Market Value and Aggregate Spend: Documentation, Tracking and the Sunshine Act,” analyzes the fair-market value (FMV) data of more than 30 drug and device manufacturers to benchmark physician fee schedules. The findings include thousands of FMV benchmarks for cardiologists, neurologists, oncologists, primary care physicians and more. A growing number of drug and device companies, such as Pfizer, Medtronic and Johnson and Johnson, have voluntarily disclosed their physician fee schedules over the last two years. Cutting Edge Information’s study found that these voluntary disclosures have impacted the level of compensation that key opinion leaders receive. Many thought leaders are choosing to lower their rates or opting out of working with the industry altogether.

KOL Fair-Market Value and Aggregate Spend: Documentation, Tracking and the Sunshine Act” is available at http://www.cuttingedgeinfo.com/research/medical-affairs/thought-leader-fmv/ .


Drug Companies Embrace Proactive Approach to Transparency

Cutting Edge Information Declares Series of New Disclosure Laws Not Yet Over

The wave of pharmaceutical transparency laws has not yet crested, according to research from Cutting Edge Information, and drug companies are responding with steps to reveal their compensation to physicians. Cutting Edge Information’s recent study “Pharmaceutical Speaker Programs: Measuring ROI and Communicating Value” finds that states have continued to pursue better transparency guidelines for relationships between drug companies and doctors. Continue reading