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Driving in tandem

Companies should pursue compliance and marketing effectiveness as mutually compatible goals

two-person-bicyle In today's highly competitive environment, new and increasing compliance requirements are adding cost, risk and complexity to sales and marketing efforts. However, this should not hamper the effectiveness of marketing programmes. Rather, the two should be regarded as mutually compatible goals.

There can be many different types of interaction between the sales and marketing functions and an individual healthcare professional (HCP). Companies will generally make use of a combination of traditional channels such as detailing products through the salesforce, marketing and sales promotional meeting programmes, issuing product samples, and the distribution of promotional materials, and newer channels, such as product websites dedicated to HCPs, and video detailing of sales calls.

All of these interactions are subject to commercial compliance requirements.

Cost of non-compliance
The diversity and extent of interactions with HCPs, and the intense public and media scrutiny of the pharmaceutical industry, are related issues for marketing departments. Non-compliance has proved to be extremely expensive – based on recent lawsuits and settlements, not to mention the additional costs that unwelcome publicity brings.

The cost of non-compliance is a very real concern for pharma companies at a time when they are experiencing significant cost pressures from the impending loss of blockbuster exclusivity, competition from generics, the escalating price of new drug development, and public concern about the increasing costs of healthcare provision.

Potential conflict?
In addition to the challenges presented by regulatory requirements, there is an increasing focus on effectiveness. Marketing budgets are under scrutiny as a consequence of cost pressures, and companies need to ensure that marketing provides an acceptable return on investment (RoI).

Many companies are only now getting to grips with having to look holistically at various channels to get information that will help them make informed decisions on resource (people and money) allocation.

Because of the complexity of marketing initiatives and the increasing stringency of regulatory requirements, compliance can appear to be prohibitively expensive and demanding. Some marketing departments may feel they have no option but to simplify or rein in their initiatives. Rather than addressing the need to improve RoI, this has the potential to compromise the effectiveness of an initiative.

A single solution
Companies can ensure compliance controls within the emerging regulatory landscape without compromising marketing effectiveness. This requires a new kind of operational model; one that is both process and metrics-driven. The model should be compliance-based, but results orientated, and should give marketers  a 'single view' of the customer. This single view allows analysis of prescribing behaviours, which makes it possible to tailor marketing interventions better. It also requires an integrated model of processes, metrics and data.

The model helps marketing understand how its efforts combine with those of other parts of the company to influence its overall success. Techniques such as systems dynamics can clarify this complex web of influence, recording – in detail as it does – all the company's dealings with the HCP. The same model that supplies the single view can, if properly designed, also satisfy compliance requirements. For example, the model makes it possible to report all interactions with HCPs, including gifts and payments to them, and in so doing, meets regulatory requirements.

An integrated model
A single integrated operating model can meet both marketing effectiveness and compliance needs. PA has identified a four-step approach to implementing such a model, and the supporting systems and processes.

The first step is to determine what you want to achieve in terms of both compliance and effectiveness. This means understanding how changes to the compliance landscape impact on your programmes, now and in the future. It is also necessary to determine the intended outcomes for each marketing programme.

The second step is to design processes that will align compliance controls and the desired marketing outcomes through standardisation and automation. These processes should make it easy both to measure and control marketing activity. For example, consulting fees can be determined automatically with reference to a 'fair market value' database, rather than set by individuals on a case-by-case basis. The actual payments can then be tracked automatically, simultaneously meeting statutory reporting requirements and generating data to feed management information systems. These systems can compare the costs and benefits of various initiatives.

The third step is to implement the necessary organisational and technological changes, and to initiate the training and communication measures needed to entrench the changes within the organisation and make the net benefits sustainable.

The fourth and final step is to put procedures and systems in place that continually measure the effectiveness of improvements with reference to past performance, and also compare the impact of current initiatives.

The framework in action
A major pharmaceutical company engaged PA to help it overhaul the processes and systems that supported its relationships with HCPs, in order to ensure compliance with the current and emerging regulatory environment in the US. The project originated in response to a failed internal audit.

Over a 10-month period, PA supported the design and implementation of enhanced processes and controls to manage contracting and payment of HCPs by the marketing and medical function. First, PA helped the client develop procedures for organising these interactions and the payment for services, documenting these procedures in a user manual. A joint PA-client team created a "fair market value" database to ensure that fee rates for HCPs were set at an appropriate level. In addition, the team developed training and communications materials, and new or revised forms and contracts to facilitate the enhanced process. It also designed an IT roadmap for progressive automation of the process.

As a result of this assignment, the client now has an audit-compliant process for marketing and medical driven interactions, including payment. There are better financial controls, including accurate tracking of HCP payments for the purposes of state and federal reporting. The company can be confident that the rates it pays to HCPs will be acceptable to regulators, as well as being uniform across all of its departments.

Lessons learnt
Several important lessons emerged from the assignment. For example, since in a typical company many departments engage with HCPs, it is important to involve all relevant stakeholders in the process. The programme team should also work proactively with the internal audit team to ensure the new process reflects the latter's concerns. Significant communications and training activities are required before staff can appreciate the need for compliance and make the necessary changes to their working methods. Appropriate metrics must be put in place to ensure continued compliance after the new process is initiated.

Mutually compatible goals
Rather than preventing companies from optimising the allocation of their marketing effort, compliance – if approached correctly – can turn out to be the other side of the same coin.

The approach described above allows companies to make rational choices about the way in which they allocate their marketing budgets. They can be secure in the knowledge that what they do will meet compliance requirements and address public concerns, as well as enable them to maximise marketing RoI.

The Authors
Richard McIntyre, Natalia Misciattelli, and Ashley Forrester, PA Consulting Group
To comment on this article, email pm@pmlive.com

1st April 2009

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