KOL Fair-Market Value and Aggregate Spend (PH155)

Documentation, Tracking and the Sunshine Act
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  • 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.

     

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  • Companies Included in Physician Fee Schedules Research

    • Seven Top 25 Pharmaceutical and Biotechnology Companies
    • Seven Top 26 to Top 50 Pharmaceutical and Biotechnology Companies
    • Twelve Top 51 to Top 100 Pharmaceutical and Biotechnology Companies
    • Eight Medical Device, Medical Technology and Diagnostic Companies

     

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  • Physician Fee Schedules Metrics

    Chapter 1: Trends Impacting KOL Compensation

    Chapter Benefits:

    • Prepare for the Sunshine Act’s requirements by understanding how your FMV compensation strategy will be impacted.
    • Implement tracking systems to meet Sunshine Act requirements
    • Navigate the regulatory changes with succinct analysis.
    • Organize and centralize your KOL compensation efforts.
    • Learn how disclosure requirements (both federal- and state-level) will impact your KOL relationships.
    • Approach rising star thought leaders with different strategies than established KOLs to attract their services.
    • Understand how KOLs are reacting to disclosure/transparency requirements and pushing back on life sciences companies.
    • Understand how companies are managing the restrictions placed on KOLs by academic institutions and medical publications.
    • Segment your KOLs appropriately to avoid conflicts of interest with external restrictions, such as at certain hospitals.
    • Learn how to maintain valuable KOL relationships in a rapidly shrinking KOL pool.
    • Compete for top KOLs’ services by offering attractive scientific opportunities.

    Chapter Metrics:

    15 charts primarily showing data on the benchmarks for the number of thought leader relationships per company:

    • Total number of primary care physician relationships per company
    • Total number of mid-level provider relationships per company
    • Total number of allied health professional relationships per company
    • Average hourly rates for top-tier KOLs by year
    • Average number of specialist relationships per company per year
    • Number of companies with more than 1,000 KOL relationships per year
    • Total number of specialist relationships per company
    • Average primary care physician relationships per company

     

    Chapter 2: Calculating Fair-Market Value

    Chapter Benefits:

    • The FMV process is not set in stone. Learn the best practices companies have implemented to arrive at fair-market value for services.
    • Understand how legal and compliance teams fit into the process and how they should influence the FMV process.
    • Build flexibility around FMV levels to attract top KOLs while continuing to remain compliant.
    • Provide executives with tools to negotiate KOL compensation and resolve FMV conflicts.
    • Avoid over-analyzing fair-market value and arrive at a reasonable physician fee schedule.
    • Establish a system to identify and segment KOL targets that includes.
    • Establish criteria to define KOLs.
    • Target different KOLs based on company size and specific activity.

    Chapter Metrics:

    5 charts focused on the types of KOLs that companies target:

    • Percentage of companies that target each KOL type to build a relationship:
    • Percentage of Top 25 companies that target each KOL type
    • Percentage of Top 50 companies that target each KOL type
    • Percentage of Top 100 companies that target each KOL type
    • Percentage of Device and Diagnostic companies that target each KOL type

     

    Chapter 3: Documenting Thought Leader Compensation

    Chapter Benefits:

    • Understand the detailed requirements outlined in the Sunshine Act.
    • Create a database for storing and tracking records of KOL payments.
    • Implement best practices for documentation, which is an emerging and key trend in KOL compensation compliance.
    • Establish procedures for documentation as they will be more important to compliance than actual FMV payments.
    • Understand corporate integrity agreements and their implications to avoid pitfalls.
    • Coordinate KOL compensation practices across the board to ensure compliance
    • Build an FMV database using the steps outlined in this chapter.
    • Learn how to make your FMV database useful to the key functions across the organization.
    • Centralize fair-market value compensation information and setup appropriate access points to it.
    • Manage compensation limits
    • Learn how to compensate for travel expenses.

    Chapter Metrics:

    24 charts focused on compensation limits, the types of activities that companies pay for and travel compensation:

    • Top 50 pharmaceutical companies with corporate integrity agreements in place
    • Percentage of companies with annual caps on KOL compensation by company size:
      • Top 25 companies
      • Top 50 companies
      • Top 100 companies
      • Device and Diagnostic companies
    • Actual annual compensation limits for individual thought leaders
    • Percentage of companies whose annual caps cover specific activities:
      • Commercial/marketing
      • Research and development
      • Medical publications
      • Speaker programs/medical education events
      • Thought leader development
    • Percentage of companies that cover associated costs:
      • Preliminary work
      • Accommodations during travel
      • Travel method
    • Percentage of companies that pay for travel separate from payment for services (by company size)
    • Method of payment for KOLs’ travel expenses
    • Average flat rates for travel time (when applicable)
    • Method companies use to calculate KOLs' travel time (when applicable)
    • Percentage of companies that pay for KOLs' out-of-pocket expenses while traveling (when applicable)
    • Percentage of companies that pay premiums for KOLs' international travel (when applicable)

     

    Chapter 4: KOL Compensation for Clinical Development 

    Chapter Benefits:

    • Recruit and manage clinical KOL relationships.
    • Understand why clinical consulting and advisory services will be equally scrutinized compared to commercial/promotional activities and, therefore, subject to FMV procedures.
    • Benchmark duration of clinical and commercial activities.
    • Benchmark clinical compensation (flat and hourly rates).
    • Learn how companies identify appropriate KOLs for clinical work.
    • Implement best practices to invest in interpersonal networking to reach more clinical KOLs
    • Learn how to manage clinical KOLs
    • Identify additional KOLs through existing clinical relationships.
    • Attract KOLs by offering top-notch scientific opportunities.

    Chapter Metrics:

    23 charts focused on the differences in compensation for clinical vs. commercial activities:

    • Average duration of clinical and commercial activities
    • Average hourly rates and flat fees for clinical activities by provider type:
      • Specialists
      • Subspecialists
      • Primary care physicians
      • Mid-level providers
      • Allied health professionals
    • Premium increase for top-tier clinical KOLs
    • Percentage of companies that rely on experts/KOLs from various academic institutions:
      • Harvard
      • California system
      • UPenn
      • Tufts
      • Columbia
      • Stanford
      • Wash. Seattle
      • Dana-Farber
      • Wash. St. Louis
      • MD Anderson
      • Princeton
      • Yale
      • Duke
      • Michigan
      • MIT
      • Purdue
      • Vanderbilt

     

    Chapter 5: Analysis of Aggregate FMV Payment Data

    Chapter Benefits:

    • Benchmark fair-market value rates:
      • By KOL type
      • By company size
      • By activity
    • Benchmark both hourly rate and flat fee payments.
    • Understand the compensation tendencies and trends of different companies in different situations.
    • Learn how to compensate different KOLs at fair-market value.
    • Adjust your physician fee schedule based on the decreases in FMV compensation benchmarked by Cutting Edge Information.
    • Analyze FMV payments by KOL type, by company size and by activity.

    Chapter Metrics:

    44 charts focused on actual FMV payment benchmarks:

    • Average duration of clinical and commercial activities
    • Method of payment for KOL services by company type:
    • Average duration of KOL activities:
      • Participating in an advisory panel
      • Leading an advisory panel
      • Delivering a promotional speech
      • Delivering an educational speech
      • Commercial consulting engagements
      • Clinical consulting engagements
    • Average base hourly and base flat rates
      • by KOL Type:
      • By Company Size
      • By Activity

     

    Appendices: Fair-Market Value Benchmarks

    Chapter Benefits:

    • Average hourly rates and flat fees
    • Median hourly rates and flat fees
    • Minimum hourly rates and flat fees
    • Maximum hourly rates and flat fees

     

    Furthermore, the data are broken down by:

    • Company size
      • Top 25
      • Top 50
      • Top 100
      • Device and diagnostic companies
    • KOL type
      • Specialists and subspecialists
        • Cardiologists
        • Endocrinologists
        • Hematologists
        • Neurologists
        • Oncologists
        • Surgeons
      • Primary care physicians
        • Family/general practitioners
        • Internists/hospitalists
        • Pediatricians
        • Preventive medicine providers
      • Mid-level providers
        • Nurse practitioners
        • Physician assistants
      • Allied health providers
        • Nurses
        • Pharmacists
      • Activity
        • Clinical consulting engagements
        • Commercial consulting engagements
        • Delivering a promotional speech
        • Delivering an educational speech
        • Leading an advisory board
        • Participating in an advisory board
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  • 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.

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