Global Key Opinion Leader Compensation 2016 (FMV101)

CEI’s Annual Review of Fair Market Value
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Published 2016
75 Pages
500+ Metrics
30 Charts and Diagrams

Get Precise Physician Compensation Benchmarks and Accurate KOL Tiering

Paying physicians above fair market value to engage in advisory or consulting services places life science companies at risk for non-compliance. To avoid over- or underpaying healthcare providers (HCPs), compliance and legal teams should arm themselves with up-to-date benchmarks of HCP payments. This report provides a clear overview of FMV compensation trends in key therapeutic markets across the industry. The study contains year-over-year data comparisons in FMV compensation rates and highlights emerging trends.

For the first time ever, a syndicated research study of FMV rates uses Cutting Edge Information’s patent pending methodology for analyzing and calculating FMV rates. The methodology is one of the most advanced in the industry, working from a robust statistical foundation and lengthy FMV experience. Furthermore, applying Cutting Edge Information’s FMV methodology will strengthen your FMV calculation processes and make them more defensible.

 

Key Questions That This Study Answers

  1. What are the most relevant factors to consider when determining FMV compensation?
  2. Are my company’s FMV payments for specialists and non-MDs defensible and clear?
  3. How do our rates compare to other companies’ compensation?
  4. How do subspecialists fit into companies’ FMV determination processes?
  5. What criteria should companies weigh when segmenting/tiering KOLs?
  6. What factors should companies take into account when formalizing their payments?
  7. What are the advantages of a statistical approach to FMV that considers the interaction between several factors versus one focused on salary and GDP? How might these different approaches to FMV calculation impact physician compensation rates?
  8. How are physician compensation rates changing in major therapeutic areas year to year in specific markets?
  9. How has implementation of the US Physician Payment Sunshine Act influenced transparency regulations and requirements in other countries worldwide?

 

Top Reasons to Read Global Key Opinion Leader Compensation 2016:

Base FMV Rates on Sound Methodology and Industry Experience: A salary-driven methodology undercuts the value of US physicians. Companies using this model would face push-back from physicians who will choose to work with other companies offering more reasonable rates. Rates in other countries face the opposite problem. The GDP+ Salary model highly overvalues every specialty, opening companies to significant scrutiny by regulators and the public. Instead, stay competitive and compliant with a methodology and rates that are generated via a three-step data analytic process that encompasses regression, outlier compression and balancing sample data with regression results through Bayes Theorem.

Understand Thought Leader Tiers and Industry Trends: In 2016, the average pharmaceutical company signed contracts with Exceptional-level thought leaders 28.8% of time, an increase of 2.1 percentage points from 2015. This highest tier of KOL is typically reserved for specialists with memberships in elite-level medical societies and extensive experience in conducting global-scale clinical trials. Meanwhile, the usage of Tier 3 thought leaders declined. There are several possible explanations for this upward shift, including the possibility that some companies are attempting to circumvent internal guidelines for tier compensation limits. In addition to reviewing shifts in industry trends, this report discusses how companies are determining thought leader tiers. While factors such as speaking experience and a background in clinical research still shape what types of activities KOLs are engaged in, the primary factor driving tiering is the KOL’s professional background. The potential scope of influence of a thought leader is more directly related to their career history than other indicators.

 

Global Key Opinion Leader Compensation 2016

 

Chapter 1: Examining Cutting Edge Information’s FMV Methodology and Results

Chapter Benefits:

  • Build FMV rates on a methodology that incorporates multiple factors in determining FMV rates
  • The regression behind the CEI methodology delivers a predictive power of 47%
  • The CEI methodology delivers significantly more accurate rates than a simple regression that only accounts for salary and GDP

Chapter Metrics:
8 charts showing compensation rates for Tier 2 (regional-level) key opinion leaders from specific therapeutic areas in US, Germany and Brazil.

  • Tier 2 compensation rates, by activity, in the following therapeutic areas:
    • Adult cardiology
    • Pedriatic cardiology
    • Oncology
    • Neurology
    • Rheumatology
    • Surgery
  • Tier 2 compensation rates in the US, Brazil and Germany that compare the simple regression approach and the CEI methodology

 

Chapter 2: Understanding Trends in FMV Data And Regulatory Enforcement

Chapter Benefits:

  • US FMV rates are largely steady across multiple therapeutic areas
  • Decrease in German rates bucks trend of other EU Big 5 countries (UK, Germany, France, Italy, Spain)

Chapter Metrics:

13 charts detailing year-to-year changes in FMV rates for specialists in specific therapeutic areas in the US, Germany and Brazil (as well as other regions) and key opinion leader (KOL) tiers.

  • 2015 to 2016 changes in FMV rates for specialists, by therapeutic area for Tier 1, Tier 2, and Tier 3 specialists in:
    • Cardiology
    • Endocrinology
    • Gastroenterology
    • Hematology
    • Neurology
    • OB-GYN
    • Oncology
    • Psychology
    • Rheumatology
    • Surgery
    • Urology
  • Average multipliers for FMV rates, by activity: 2015 and 2016:
    • Chair, advisory board
    • Participant, advisory board
    • Commercial consulting
    • Clinical consulting
    • Promotional speech
    • Scientific speech

 

Chapter 3: KOL Selection Criteria Drive Companies’ Tiering and FMV Strategies

Chapter Benefits:

  • Professional history and recognition is primary factor in tier determination for large majority of surveyed companies
  • Utilization of Exceptional tier thought leaders has increased since 2015
  • Large companies engage with Tier 3 thought leaders more than small companies

Chapter Metrics:

8 charts detail key opinion leader (KOL) characteristics that factor into companies’ KOL tiering and utilization strategies. 

  • Most important characteristic for tier determination, all companies: 2015 to 2016
    • Professional history and recognition
    • Research experience
    • Publications
    • Speaking experience
    • Leadership positions
    • History of working with the company
    • Most important characteristic for tier determination, by company revenue, company type and region
  • Thought leader tier utilization, all companies: 2015 to 2016. In this context, “tier utilization” breaks down KOLs by tier:
    • Exceptional (global-level)
    • Tier 1 (national-level)
    • Tier 2 (regional-level)
    • Tier 3 (local-level)
  • Thought leader tier utilization, by company revenue, company type and by region

 

Sample Content From "Global Key Opinion Leader Compensation 2016"

The following excerpt is from Chapter 1, “Examining Cutting Edge Information’s FMV Methodology and Results.”

ACTIVITY TYPE INFLUENCES FMV RATES ACROSS SPECIALTIES AND COUNTRIES

Companies can contract physicians for many different activities for both the scientific and promotional sides of the business. The most common of these activities have been presented in all six of the preceding figures [not shown] — consulting, speaking (including training), advisory boards and market research. Nearly any contracted engagement with a KOL will fall under one of these categories; for any that fall outside, companies will often apply the base hourly rate as the fairest measure.

In the same way that the specialties and countries showed specific trends, the activities follow suit. While most of the rates hover within a few percentage points of the base hourly rate, a couple do not. The highest compensated activity on an hourly basis is nearly always chairing/moderating an advisory board. This activity asks for additional preparation and leadership from the KOL than from the average participant on the advisory board.

On the other hand, participating in market research surveys yields the least hourly pay on average. Since most companies conduct 30-minute surveys, the KOL pay per survey is actually half the number shown on the figures. But this lower pay reflects the lower difficulty associated with the task. These usually online and opinion-based surveys do not require the same hours of research preparation or training that go along with nearly every other pharma-KOL collaboration. In addition, a much larger number of physicians may interact with a company via these surveys than will ever get the opportunity to speak or consult with them.

Physician Fee Schedules Report Sample

The following excerpt is taken from Chapter 5, “Analysis of Aggregate FMV Payment Data.” The full chapter examines the aggregated FMV benchmarks for Top 25, Top 50 and Top 100 drug manufacturers, as well as device and diagnostic companies. It details average, median, minimum and maximum hourly rates and flat fees paid for consulting, advisory and speaking services.

Hourly Rates for KOL Activities

The values in this excerpt have been intentionally blinded. The full study provides detailed FMV benchmark analysis.

Although a smaller percentage of companies pay their KOLs by hourly rate, those that do tend to be Top 25 or Top 50 drug manufacturers. These companies develop products in across a number of specialty areas — a fact that leads to a significant amount of hourly rate data. When aggregated, the data show a familiar pattern: the more experience and specialization that a KOL has, the higher the mean payment and compensation range.

The data show that specialists earn an average base hourly rate of $XXX; those specialists with a subspecialty earn XX% more at $XXX per hour. Among survey respondent companies, the maximum hourly rate for both of these KOL categories is $XX per hour, though the subspecialist range starts at $XXX per hour rather than $XXX for specialists.

The ranges for primary care physicians, mid-level providers and allied health professionals are much smaller compared to those of specialists and subspecialists. The hourly rate range for primary care physicians, for example, is $XXX to $XXX, with an average payment of $XXX per hour. From that point, the ranges drop: mid-level providers receive an average payment of $XXX per hour in a range between $XXX and $XXX per hour; and allied health professionals are paid in a range between $XXX and $XXX, with a mean payment of $XXX per hour.

 

The following excerpt is taken from Chapter 1, “Trends Impacting KOL Compensation.” The full chapter examines the impact of the Sunshine Act and other regulatory and policy changes. Italso includes data that illustrates the extent of the shrinking KOL pool. Other topics explored in this chapter include the increasing restrictions placed on KOLs by academic institutions and medical publications, as well as KOLs’ reactions to greater transparency and regulations.

Specialist Relationships on the Decline

Cutting Edge Information’s research shows that the shrinking KOL pool is a consistent trend over the past five years. The environment is changing for both companies and KOLs. The pharmaceutical industry is working to address compliance concerns in the face of expanded government regulations. For their part, physicians are also dealing with restrictions from their employing academic and research institutions. Because each party is coping with change, both sides look to strengthen the relationships that are already in place.

Pharmaceutical companies cannot offer the lucrative honoraria they had in the past, forced to draw the line at fair-market value. Meanwhile, academic physicians are only able to work a pre-specified number of industry events. Surveyed pharmaceutical executives do not refute that times have changed; they simply reject the notion that thought leader management is more difficult because of it.

For thought leader management teams, any roadblocks to working with physicians decrease the overall opinion leader pool. Pharmaceutical companies unfortunately bear the consequences of a smaller thought leader pool. Companies struggling to launch novel medicines now face the prospect of filing for approval without advice from the most expert medical professionals. As more KOLs decline to work with pharmaceutical companies, clinical and marketing teams inevitably will lack knowledge of specific patient needs and other information that help develop a better product. Furthermore, the smaller thought leader pool creates a political nightmare for thought leader management executives whose goals are based on the successful relationships that they develop. It also causes development teams to turn repeatedly to those relationships already established, exacerbating the very situation causing the current problem.

Data show the rapid decline in specialist relationships with the average pharmaceutical company. Between 2006 and 2011, the number of specialist relationships has fallen by 76%. 2011 is the first year of in which Cutting Edge Information’s research found that none of the companies surveyed reported more than 1,000 specialist relationships. In 2006 and 2007, four companies reported relationships with over 1,000 specialists.

Many of the executives interviewed for this study agreed that the public reporting of physician payments is having an effect on the available pool of KOLs. The general consensus is that physicians are not excited about having their names appear on list after list of industry ties.