Pharmaceutical Company

For pharmaceutical companies doing business in the United States, the regulatory compliance landscape has become more difficult to navigate. The Physicians Payments Sunshine Act of 2010 adds hundreds of new business rules for reporting payments to physicians and certain other healthcare providers by creating a uniform standard of reporting over the existing patchwork of state regulations.

Approximately 20 states have legislation enacted or in various stages of development, including California, Maine, Minnesota, Vermont, West Virginia, Massachusetts, New York, New Jersey, Connecticut, Iowa and Washington, D.C. Now, however, pharmaceutical companies and other life sciences manufacturers¹ are required to report their aggregate spend for all 50 states, distributed by healthcare provider, activity and expense type. The reporting will be available on the Internet to members of the general public.

To further complicate the reporting requirement, companies often have multiple reporting systems for logging promotional expenses (e.g., customer relationship management [CRM], general ledger, expenses, grants, clinical trials, samples). These system files must be verified, transformed and normalized into a single database, or else a method for extracting from multiple or federated files must be implemented. Since preexisting state laws remain, companies must deal with various standards of reporting concurrently. For example, some states may consider samples to be part of the promotional spend while others may not.

In 2006, a major pharmaceutical company turned to IBM® WebSphere® ILOG® JRules business rules management system (BRMS) and IBM services to develop an automated rule-based system that would extract data for state reporting, determine what data must be reported and upload that data for report generation. IBM provided training for the company’s compliance managers so that they could effectively and efficiently create rules for new state legislation moving forward.

The sales people file their expenses, and the application connects to the expense data file in the pharmaceutical company’s information system. The JRules BRMS takes data from all the company’s information systems and consolidates them into one data mart. The rules go through the data in a nightly batch process and generate a report.

100,000-fold faster reporting

Prior to the availability of the JRules BRMS, compliance managers spent more than a year to prepare a report for each year. They had to review every expense item to determine whether it was valid and then in which category it belonged. It was a tedious, time-consuming and manual process. Today, employees must examine certain exceptions; but aside from this, reporting is an automated process that takes just minutes.

With the JRules BRMS, compliance managers can create rules for new states and changes in the laws over time. Policies and practices are expressed as natural language business rules instead of computer code. Compliance managers use powerful editing tools to manage, track and change rules.

More efficient management of promotional spend

With its comprehensive reporting system based on JRules BRMS, once the pharmaceutical company has input its business rules and cleansed its database, it can use the system as a management information system that forms the basis of a sales force automation effort. The sales force has the ability to proactively manage its promotional spending so that it does not exceed its limits and risk noncompliance.

On a near real-time basis, sales people can see how much they have spent on a certain physician or other covered healthcare provider and can determine how to use the remaining balance of budgeted funds most effectively for the year. With the addition of optimization tools, the sales force can identify specific types of spend (e.g., office parties, grants or samples) that will provide the best return on the dollars they spend.

Pharmaceutical companies typically collect data about which prescriptions doctors are writing as well as the demographic profiles for each doctor’s practice area. This data, combined with JRules BRMS, can help sales people determine whether or not to target a certain doctor to promote a particular drug. For instance, if a doctor is working in an inner city that has an elderly population and is writing prescriptions for a drug on the Medicare formulary, it is probable that the patients are Medicare recipients. It would be a waste to spend time and money targeting that physician for a drug not on the Medicare formulary. In this case, the more efficient plan is to target a physician that has a different demographic profile and is not prescribing a Medicare-approved drug.

Avoiding $1 million fines

Given the continually evolving healthcare regulatory environment, any aggregate spend solution must be able to quickly respond to changes in reporting requirements. Penalties for noncompliance can reach $1 million.

Another benefit of the JRules BRMS solution is the ability to develop “what-if” scenarios to determine, for instance, what would result if pending new rules were to go into effect in a given state. The simulation shows how compliance would affect all expenses that have to do with providers in that state and how compliance efforts would be affected.

IBM Global Business Services is now including JRules BRMS in its Promotional Spend Compliance solution, together with IBM WebSphere Lombardi® Edition unified business process management (BPM) environment for collaborative process improvement, to help companies manage their compliance with the Physician Payments Sunshine Act of 2010.

By externalizing business rules and providing tools to manage them, JRules BRMS allows compliance managers to define and maintain the decisions and rules that apply to the Act, reducing the amount of time and effort required to update systems, and improving the organization’s ability to respond to changes in the business environment.

For more information

Contact your IBM sales representative or IBM Business Partner, or visit us at: ibm.com/brms

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