Many companies today have handled regulatory requirements by leveraging a business process management (BPM) tool to help them understand and improve their processes. At the same time, some companies believe they’re solving their regulatory compliance problems by using an enterprise content management (ECM) tool to help them capture, manage and store highly valuable documents.

While both of these tools are helpful in managing specific components of regulatory burdens, the power of marrying the capabilities of BPM and ECM can help your organization ensure compliance on both existing and new regulatory requirements. By using BPM and ECM, you can design your process improvements to be integrated with critical content that can be accessed by users anywhere in your enterprise. You can imbed content directly into a process, ensuring all documents are up-to-date and in the correct place for users to obtain. With access directly into process and content, it is easier to monitor, track and provide audit trails to meet regulatory requirements. Systematic alerts allow you to stop relying on individuals to manually initiate next steps, such as knowing when clinical data is available for medical writing to complete a submission. By combining these two powerful technologies, you can ensure processes are completed as efficiently as possible, while also maintaining the content in the validated document management application and having a consolidated Part 11-compliant audit trail documenting every step.

The integration of process and content isn’t easy, but when viewed holistically it can put your company ahead of the curve and allow you to successfully answer any new regulatory pressures on the horizon. Our conversation around this topic doesn’t end here. Let’s continue the conversation. Join us this Thursday, July 28^th at 11:00 a.m. EST for our live webinar, Compliance for Life Sciences: Improving business process and content management to deliver results.

Related posts:

1. Webinar: Countdown to Life Sciences Aggregate Spend Compliance Attention Life Sciences organizations! Check out this webinar, Countdown to...
2. Life Sciences corporations and BPM With healthcare efficiency in the spotlight, one pharmaceutical company that’s...
3. A Bumpy Ride for Life Sciences in 2011? As 2011 gets into full swing, I can’t help but...

Related posts brought to you by Yet Another Related Posts Plugin.

• “By 2012, a major pharmaceutical company that downsized without transforming processes and technology will experience a major failure of control.”
• “By 2012, a life science company will pay a $1 billion-plus fine for noncompliance with government contracting/rebating rules.”

What is most striking to me about the 2011 predictions is the disastrous nature of the consequences that Gartner cites – all of which can be tied back to a lack of focus on process.  Over the past year, I have become concerned about the rapid pace at which companies in the industry have been consolidating. How does a company fully understand the value of a potential merger or acquisition – let alone realize its true value when events are happening this quickly? I agree with Gartner on this one. Without significant investment in technology to document, harmonize and optimize processes, a merger or acquisition is bound to fail.

What’s especially frustrating for me in particular is that software, services and industry expertise exist (from companies like Metastorm) to help in these situations, and far too often we find organizations either are not able or willing to listen and invest. Rather than ignoring the problem, what organizations should do, as Gartner clearly states, is “consider business process management tools to create agility and the rapid deployment of reorganized processes” and “evaluate processes together.” Not surprisingly, the analysts recommend strongly examining compliance and governance functions to “ensure scarce resources are focused on ‘material’ risks.”

In today’s era of heightened regulatory scrutiny and fines it is shocking that compliance seems to be both overlooked and understaffed.  In addition to overall process improvement, solving compliance burdens is an area in which Metastorm has a long track record of client success.

Metastorm recommends that Life Sciences companies take a 3 pronged approach to process understanding and improvement:

1. Involve all key stakeholders up front by using cloud-based collaborative modeling and process discovery tools.  Virtually anyone can access the tool and groups can work online together to come to consensus on goals, organizational roles, business rules and process flows. 
2. Establish a central repository to house business models, strategy roadmaps and “as is” and “to be” models of the business so that all stakeholders have visibility and stay on the same page. An enterprise business architecture tool is best equipped to provide this along with critical process analysis capabilities.  
3. Leverage process automation and business process management software to enforce and track behaviors for consistent process execution that meets business guidelines and supports business objectives.  People will actually welcome an environment that takes the guesswork out of adhering to complex compliance regulations and that gives that instant access to the information they need to make better business decisions. It also serves to automate the documentation of and reporting on key processes and metrics.  

Business processes not only drive company operations, but they also are a key element of compliance. Back to Gartner’s 2011 Predicts report – the other prediction I find almost equally compelling (given the hard dollars associated with it) is that, “By 2012, a life science company will pay a $1 billion-plus fine for noncompliance with government contracting/rebating rules.”  I can’t tell you how often clients ask me for Return on Investment (ROI) models to justify process analysis and business process management software – while almost every day news headlines cite yet another pharmaceutical company paying a massive fine.  There is the ROI right there – often hundreds of millions of dollars.  

The numbers are no longer trivial in terms of fines, and the negative publicity can be even more damaging in a market that is becoming increasingly competitive.

The other side of this is pretty simple as well – fines are a source of income for the government. I don’t think that requires further explanation, but suffice it to say the industry is going to pay one way or another. I addressed the government contracting and rebating rules component of this prediction, in a blog post last year.

I don’t know any other area of Life Sciences where such complex, yet bottom-line-impacting processes, activities and controls are so far behind the curve. I understand this is a highly complicated process and area of regulation. My response (similar to Gartner’s recommendation) is simple – the impact is huge (to the tune of an $11B a year loss for the industry) so– this is where you should be investing heavily in controls, processes, and technology to ensure you are compliant and also agile enough to adapt to on-going changes. I also recommend taking it a step further, which some of our most mature clients have done, and layer process controls and automation through Metastorm BPM on top of the core infrastructure of revenue management. We have multiple clients who have taken this approach and literally saved millions of dollars on an annual basis – providing more than adequate ROI justification and case study proof points to get your organization moving.

I think it’s clear that things are going to get much worse for some Life Sciences companies, with potentially disastrous consequences.  While those that do take the time now to develop process visibility, understanding, optimization and control will be poised to not only survive this industry storm, but emerge as the market leaders. The best approach to survival in 2011 and to prepare for the future is for Life Science companies to invest in a strong, flexible software suite that allows them to fully understand their organizational capabilities, while providing features allowing them to track and manage change.  The question is – are you ready to step up and make this investment now or are you going to wait and risk the fallout?

Related posts:

1. Webinar: Countdown to Life Sciences Aggregate Spend Compliance Attention Life Sciences organizations! Check out this webinar, Countdown to...
2. Life Sciences corporations and BPM With healthcare efficiency in the spotlight, one pharmaceutical company that’s...
3. BPM & BOTOX: How Allergan Battled Compliance Burdens Last September, as you probably remember, Allergan reached a $600M...

Related posts brought to you by Yet Another Related Posts Plugin.

• “Allergan to Pay $600 Million to Settle Botox Probe” –ABC News
• “Allergan Settles Charges It Went Too Far Marketing Botox”  –NPR News
• “Allergan Will Pay Fine, Plead Guilty to Misdemeanor” –Bloomberg
• “Botox Whistleblower Case Settles for $600 Million” –Trading Markets
• “Feds Wrest $600 Million Settlement from Botox Maker” –Consumer Affairs

Clearly there is a very strong negative sentiment regarding this issue. The last headline above is one all pharma companies should be worried about – because the same risk could be looming for other companies in the space. The notion of the U.S. Federal government wringing money from a corporation in the name of protecting consumers is a strong driving force behind the recently passed Federal Physician Payments Sunshine Act, as well as numerous state laws that are already in force and several that are currently being debated.  The new mantra is transparency – under the banner of promoting safety, consumer protection and ethical business practices.  

From my point of view as an industry consultant, pharma companies (and biotech and medical devices too) need to hear loud and clear the underlying message in the Allergan incident and in recent legislation, and take decisive action to prepare for the onslaught of potential inquiries and investigations they may face.    Most importantly, companies need to take immediate steps toward defining and implementing a compliance and governance foundation, along with a set of agile controls, to manage within the guidelines of current regulations and have the flexibility to adapt to future changes and extensions.

Unfortunately, what you won’t find in any of the 300+ articles referenced above – apart from one –  is any mention of the proactive steps that Allergan has taken to address not only this specific instance but to implement go-forward controls and systems to enhance transparency, better enforce compliant business practices, and ensure they are prepared for future regulatory change.   In addition to developing a formal compliance program subject to regular reviews, Allergan “further enhanced its compliance program by developing additional comprehensive policies and procedures, supported by significant technology investments, including its state-of-the-art Business Execution Automated Compliance Navigator (BEACON) compliance system.”[ii] This seemingly minor, yet crucial omission in the media coverage of this event should not go overlooked by industry peers.

Every Life Sciences company can and should learn from what happened to Allergan and how it handled the resolution of these serious issues.  The BEACON application referenced was envisioned to provide both compliance process controls as well as flexibility to support future changes. It is built on the Metastorm Business Process Management (BPM) software platform to provide the controls, rules and documentation necessary for resolving the current situation as well as preventing future incidents.

Recently, the area of payments and promotions has exploded in both regulatory and public scrutiny. Most Life Sciences companies are now actively thinking about or looking for process controls and technology capabilities to prevent these costly events from occurring.

Leveraging our experience in helping pharmaceutical companies implement flexible, unique compliance systems that conform and adapt to changing regulations – with business process management and improvement at the heart of the platform, Metastorm has developed an Aggregate Spend Management solution that addresses the two fundamental aspects of the business problem. The first component is the management and reporting of expense data that must be reported to multiple state governments and soon the federal government as well. Secondly, and more importantly in my view, the business processes that are invoked to request/approve/execute/reconcile spend are critical to ensuring the spend data is not only accurate, but also compliant with various jurisdictional regulations and policies. In contrast to legacy vendors who focus solely on data aggregation for reports, Metastorm delivers both simplification of the state reporting in addition to automated, web-based processes and forms for spend request, review, approval, execution, reconciliation and documentation. This distinction is critical because, ultimately, Life Sciences companies will have to demonstrate to regulators, investigators and the public the ability to immediately generate justification for each reported expense, prove each expense’s business value and cite who provided the advanced authorization of the expenditure before it was released.

As evidenced in Allergan’s own press release on the settlement, Metastorm’s Aggregate Spend Management solution and its underlying BPM software platform have been a major component of Allergan’s approach to resolving the systemic issue by approaching it holistically and proactively. Watching a 6-minute demo of the solution is a good first step to help Life Sciences companies understand what is needed to put a solid compliance and governance solution in place now – to avoid potentially disastrous issues later.

_______________________________
[i]  2009 Total Revenue as reported in Allergan’s 2009 Annual Report
[ii] “Allergan Resolves United States Government Investigation of Past Sales and Marketing Practices Relating to Certain Therapeutic Uses of BOTOX(R)”  official company press release dated September 1, 2010

Related posts:

1. Webinar: Countdown to Life Sciences Aggregate Spend Compliance Attention Life Sciences organizations! Check out this webinar, Countdown to...
2. The BPM approach to Aggregate Spend compliance In today’s Life Sciences world everything is becoming increasingly more...
3. Financial compliance at the process level In the new presidential administration, it is intended that new...

Related posts brought to you by Yet Another Related Posts Plugin.

The inclusion of the Physician Payments Sunshine Act in the sweeping healthcare reform is not only a vehicle for transparency, but also for financing the overall cost of healthcare in the US. In my humble opinion, given the sufficient “advanced warning” provided – the bill passed on March 23, 2010, and physician payments tracking is required starting  January 1, 2012 – we are going to see the federal government hand out hefty fines for violations (up to $1M) on a regular basis.

Unfortunately for the Life Sciences industry, there is little sympathy given for large (or even small) payments – “transfers of value” as the government calls them – to doctors and other healthcare providers and organizations (known as HCPs and HCOs respectively). While it may be difficult to defend the clinical usefulness of sending a doctor to a conference in an exotic location, there is a true need for a healthy relationship between clinicians and Life Sciences organizations, and that need isn’t going away.

After all, doctors and other prescribers ultimately put new products to use when they come to market, and therefore represent a key customer segment. The industry also relies on clinician participation in current and future clinical trials of new medicines and medical devices. The challenge is how to maintain healthy interactions with HCPs and HCOs without creating a conflict of interest or the appearance of impropriety.

There are already a host of state regulations in place aimed at this problem; and more are on the way – making it increasingly difficult to navigate this delicate space and stay on the correct side of the law. Add to this the complexities of operating in and around major metropolitan areas that straddle state borders (New York, Boston, Chicago, Washington, D.C., Philadelphia), and the effort to identify and track every HCP’s state of licensure versus their state of residence and the problem of just knowing which provider is which quickly mushrooms.

Clearly a technology solution is needed.

For compliance, there are two main components required – data and process. While most large and even medium-sized Life Sciences companies have a customer master data solution in place, the quality of the data is a problem – “Garbage in, garbage out” – as the saying goes. In order to ensure quality data, the process by which said data is captured and entered into the master data solution is critical. Business Process Management (BPM) can solve this problem in two fundamental ways.

First, from the compliance standpoint, having standard processes that are controlled and enforced ensures that every payment has been approved following corporate compliance policies as well as all state and federal regulations. Furthermore, the flexibility that BPM provides allows companies to develop the processes required today knowing that these and the business rules that drive them can be easily adapted as the regulations and reporting requirements evolve.

Second, from a master data perspective these process controls also ensure that records of payment are added to the primary data source only after they have been officially approved. Each payment amount is confirmed and reconciled after the event takes place and an actual payment is made. This ensures that all of the data kept within the master source is accurate and was properly approved based on the rules at that point in time.

Taking a BPM approach addresses both sides of the compliance problem. It also provides the quality data and recorded approvals that, as part of the Physician Payments Sunshine Act, the US government now requires beginning January 1, 2012. The challenge and opportunity now becomes ensuring that the solution is in place in time to start tracking, and provide the organization an opportunity to review 2011 spending trends prior to compliance issues “going on your permanent record” with the Department of Health and Human Services in 2012.

This approach will allow the organization to ensure all compliance guidelines are being followed, HCPs/HCOs are not being overexposed for spend and provide time to modify compliance policies and the Aggregate Spend application itself before federal tracking begins. Additionally, to follow the new regulations, all Life Sciences manufactures whose products are reimbursed by any government program (Medicare, Medicaid, SCHIP) must have an Aggregate Spend Management solution rolled out and ready for use by the end of this year.

In order to roll it out by that time, you really should be starting to design and build it yesterday.

But fear not – Metastorm has already successfully deployed its Aggregate Spend Management solution for a number of our top Life Sciences clients, and our dedicated Life Sciences practice has the experience and tools to help your organization assess your process, data, applications, compliance and organization to quickly scope a solution. If you start now, end of year is completely feasible and your executives can rest easy knowing that their organization will be tracking all physician spend, will have the quality data available for review, and will still have time to make changes prior to the first federal reporting period.

For more information, please review Metastorm’s Aggregate Spend Management Solution brief or join us at any of our upcoming events. We’re here to help.

===========================

Ethan Smith is the Director of Life Sciences Solutions at Metastorm where he oversees business and account development and solution creation for Metastorm’s global life sciences customers, partners and prospects.

Ethan has extensive experience in business process consulting in the life sciences industry. His areas of expertise include enterprise BPM strategies as well as the utilization of Metastorm BPM® and Metastorm ProVision® to establish Process Centers of Excellence. He has driven process initiatives across research and development, sales operations, incentive compensation, physician spend management and compliance functions. Prior to Metastorm, Ethan spent over 10 years in process consulting for the life sciences and insurance industries.

Related posts:

1. Webinar: Countdown to Life Sciences Aggregate Spend Compliance Attention Life Sciences organizations! Check out this webinar, Countdown to...
2. Financial compliance at the process level In the new presidential administration, it is intended that new...
3. Solving pharma’s 11 billion dollar revenue leakage problem In lieu of the recent eye-opening study from IDC regarding...

Related posts brought to you by Yet Another Related Posts Plugin.

First of all, the revenue leakage problem is purely an operational issue – the drugs have already been discovered, approved, marketed and sold so most of the ‘hard part’ has been done. Unfortunately, in this space pricing is not simple. Almost all healthcare products are ultimately paid for by someone other than the end customer – the patient. This of course results in a complex web of regulations, government pricing, managed care formularies and tiers and wholesale distributors – just to name a few.

To that end, Metastorm has experience working with and developing process solutions for all of the players involved (including the United States government), and can help your organization too. Our technology has the ability to solve your organization’s revenue leakage problem, and more importantly, the fundamental issue plaguing the industry as a whole.

According to IDC, 4.4% of all pharma revenue, which equates to $11 billion annually, is lost to revenue leakage. This is a staggering figure considering that only the top 15 companies in the entire life sciences space generate that level of total revenue. Just think of what that number is relative to your company’s business!

To eliminate this unnecessary cost burden, pharma manufacturers need to automate the processes by which they communicate pricing information to their wholesaler trading partners. While many companies have an electronic data interchange (EDI) solution in place to address the issue, the IDC numbers tell a different story.

Most companies have found clever ways to use statistics to make it appear that the revenue leakage problem doesn’t exist in their organization. For example, many commercial contracting departments cite 98-99% success/accuracy rates for pricing. While those are impressive numbers, and should be commended, the flipside tells a different story – one of unnecessary profit loss in need of a solution.

Consider the same statistic another way: a 99% accuracy rate means that minimally 1% of total revenue is in dispute (i.e. chargebacks), or written off because of other operational and reconciliation issues. Any manager/director would love to lead a project that could reasonably promise to deliver 1% of existing revenue back to the bottom line. For any company with over $1 billion in total revenue, that’s a minimum return of $10,000,000 per year!

Sound too good to be true? It isn’t, and Metastorm has the experience and customer successes to prove it.

Our business process management (BPM) suite of software tools has been used by multiple companies in the space to deliver these types of results to their organizations. With Metastorm BPM you can automate these processes to submit and update pricing between a manufacturer and wholesalers, then provide both trading partners with a combined audit trail to ensure that pricing information is sent immediately, and that both parties have complete visibility (at a line item level) into every price and pricing/eligibility change.

These capabilities first ensure prices are updated prior to the contract effective date (eliminating chargebacks related to the timeliness of information), and second that when discrepancies do occur that both companies’ representatives have the same view of the same information for each transaction (minimizing the time required to resolve the issue). Both of these benefits seriously increase your bottom line by eliminating dollars going out the door unnecessarily while also providing the added benefit of reduced processing time, which frees up resources for more value-adding activities.

But don’t just take my word for it. I invite you to review our customer testimonials and other solution information to see for yourself how Metastorm has, and can solve the pharmaceutical revenue leakage problem and can improve the financial health of your organization.

Want to know more? Check out our life sciences solution page, and read this article about how Metastorm helped two major pharma’s collaborate on chargeback management. 

===========================

Ethan Smith is the Director of Life Sciences Solutions at Metastorm where he oversees business and account development and solution creation for Metastorm’s global life sciences customers, partners and prospects.

Ethan has extensive experience in business process consulting in the life sciences industry. His areas of expertise include enterprise BPM strategies as well as the utilization of Metastorm BPM® and Metastorm ProVision® to establish Process Centers of Excellence. He has driven process initiatives across research and development, sales operations, incentive compensation, physician spend management and compliance functions. Prior to Metastorm, Ethan spent over 10 years in process consulting for the life sciences and insurance industries.

Related posts:

1. IDC: serious problem for pharmaceuticals – revenue leakage A recent study from IDC shows that pharmaceutical manufacturers will...
2. Life Sciences corporations and BPM With healthcare efficiency in the spotlight, one pharmaceutical company that’s...
3. Use BPM to Standardize Best Practices Globally This PharmaManufacturing.com article discusses how one pharmaceutical organization used Metastorm...

Related posts brought to you by Yet Another Related Posts Plugin.