Benchmark Your FMV Payments, Physician Fee Schedules and Compensation Ranges
Establish and maintain a compliant fair-market value (FMV) physician fee schedule and prepare for imminent regulatory changes. This study showcases processes and strategies for determining FMV compensation — and it provides step-by-step guidance for implementing a world-class documentation system for aggregate spend tracking.
Comprehensive, easy-to-read tables and charts show the actual hourly rates and flat fees paid to KOLs for their services. Examine current FMV benchmark data for specialists, subspecialists, primary care physicians, mid-level providers and allied health professionals. Use accompanying content to understand changes that companies have implemented in their FMV development processes.
Cutting Edge Information is the industry leader in fair-market value benchmarking. Since 2006, we have pioneered the study of physician fee schedules, with a special focus on legislative and policy changes. Our extensive knowledge base allows us to pinpoint the effects of past policy changes and make strategic recommendations that will help prepare teams for the future of thought leader development.
Prepare for The Sunshine Act
Since Cutting Edge Information’s 2009 study on KOL fair-market value compensation, the United States has passed legislation to regulate all payments made by life sciences companies to physicians. The impact of the Sunshine Act is already being felt as pharmaceutical, biotechnology and medical device companies invest millions of dollars to implement aggregate spend tracking systems. These systems are critical components in remaining compliant and meeting the requirements laid out in the Sunshine Act. Our study reveals the most sought-after characteristics of a top-notch documentation system and the best practices for implementing one that will stand up to regulatory scrutiny.
Over the past few years, other changes have altered the KOL landscape. KOLs themselves are beginning to push back against the increased scrutiny surrounding their industry relationships. In addition, legislation resulting in increased transparency has caused the overall KOL pool to shrink. These factors raise new challenges:
How are companies navigating these regulatory hurdles?
What are they doing to find and cultivate successful KOL relationships?
What are the most effective activities for which to utilize KOLs?
Our report answers these questions and more, with detailed case studies and best practices to augment our data and recommendations.
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.