Stop Making Sense: Aggregate Spend Reporting

Guest Author: Jeff Gaus, Prolifiq

Disclosure: Prolifiq is a sponsor of

I spent two days in Chicago at the Q1 Productions Pharmaceutical & Medical Device Sales & Marketing Compliance seminar; approximately 80 senior executives of the who’s who in life sciences regulatory compliance participated.

My biggest take away from the professional industry presentations has to do with Aggregate Spend Reporting. This Federal legislation, while well-intentioned and clearly designed to remove “commercial incentives” from influencing clinical decisions made by physicians and healthcare organizations, has created mind-boggling requirements on the entire life sciences industry.

The relationship between life sciences companies and healthcare providers is complex. Healthcare providers can simultaneously be development collaborators, agents, and customers.
These roles can place the healthcare provider in situations where “conflict of interest”, or the appearance of conflict of interest, will occur. Leading industry trade associations have codes of ethics to specifically address this issue (see: PhRMA code of ethics and AdvaMed code of ethics).

The Sunshine Act and Aggregate Spend Reporting are intended to publicly expose these conflicts. The industry is required to begin reporting all elements of “economic value” provided to physicians and healthcare organizations on a name by name and dollar amount basis by January 2012. In almost all cases, this legislation has created the need for workflows and information systems that do, or did, not previously exist. This is problematic.

IT automation processes are most successful and effective when automating an existing process and/or paper-based systems. These conditions clearly do not exist in this case; yet the requirements stand as Federal statutes — with penalties that can, and will, amount to $1,000,000 per occurrence for willful violation.

When factoring in the IT systems, management consultants, and internal personnel costs, this reporting requirement is forcing companies to spend hundreds of dollars to track tens of dollars. And, to what end — to publicly report that a healthcare provider shared a meal with a life sciences employee? These types of activities are normal, reasonable, and customary activities in all aspects of business — worldwide.

Additionally, publicly disclosing a collaborative relationship between a healthcare provider and industry may inappropriately, and inaccurately, besmirch providers’ professional reputations and reduce or restrict the very collaborative relationships which have made our healthcare industry so innovative, dynamic, and delivered the life saving therapies and devices upon which we depend.

I acknowledge there have been egregious violations and outrageous behavior by some household names in the industry. Punishing the many because of the sins of the few is contrary to the basic tenets of our society. Requiring all companies to publicly disclose all activities and expenditures is complete nonsense and does not add productive activity to our economy. This is the equivalent of asking companies and individuals to publicly and consistently prove they are doing nothing wrong. It is impossible to prove a negative.

This is yet another example of how well-intentioned, yet poorly executed, government regulation burdens industry, adds cost, and impairs global competitiveness.

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5 responses to “Stop Making Sense: Aggregate Spend Reporting

  1. Pingback: Medical Device Marketing: The Upside of Physician Payment Disclosures | Good Promotional Practices

  2. Pingback: Stop Making Sense: Aggregate Spend Reporting | Good Promotional Practices

  3. Pingback: Stop Making Sense: Aggregate Spend Reporting | Good Promotional Practices

  4. Pingback: Stop Making Sense: Aggregate Spend Reporting | Good Promotional Practices

  5. Pingback: Stop Making Sense: Aggregate Spend Reporting | Good Promotional Practices

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