Aggregate Spend Pre-Disclosure, Certification, and Disputes Management Survey Results April 3 , 2014

1. Aggregate Spend Pre-Disclosure, Certification, and Disputes Management Survey ResultsApril 3, 2014

2. Introduction Today’s Speakers • LEANNE DIDOMENICO I Philadelphia, PA • Manager with 13 years of experience working with global life sciences companies • Current focus is assisting companies to address behavioral change across their organization and the supporting tactics needed to make a business transformation successful, including a special focus on transformation required from regulations and compliance driven initiatives • Recent accomplishments include developing and executing a comprehensive change management strategy for a global pharmaceutical company with several affiliate businesses; aligned businesses, vendors and employees to a single process for accurate spend data capture; included development of a disciplinary model • JOSEPH MORRELL I Washington DC • Manager with 10 years of experience working with global life sciences companies • Current focus is working with pharmaceutical and medical device clients to identify and address compliance issues related to state and federal aggregate spend reporting, off-label monitoring, & government-mandated needs assessments • Recent accomplishments include assisting a top 5 global manufacturer with operational issues related to clinical data transparency; including implementing systems and processes to create greater efficiencies across the organization

3. Agenda Today, we hope to provide insights into Huron’s 2014 Aggregate Spend Pre-Disclosure, Certification, and HCP Dispute Survey. Specifically, the agenda is comprised of the following: Closing remarks: Long Term Strategies To Mitigate Risk And Improve Operations Survey OVERVIEW & METHODOLOGY REPORTING OPERATIONS INTERNAL CERTIFICATIONS PRE-DISCLOSURE PRACTICES PREPARING FOR INQUIRIES & DISPUTES

4. Why Survey Now? Benchmarking Drivers: #1 factor was to respond to client demand; through our own experience working with clients we were seeing common struggles and themes Our intent was to provide real insights and data to support our clients when they make decisions across the industry as they prepare for Open Payments disclosure Our goal is to continue to provide “quick” benchmarking as a service

5. Survey Overview and Methodology

6. Survey Overview and Methodology • Huron Life Sciences surveyed 38 life science companies in the first quarter of 2014. • We asked respondents to answer questions about their aggregate spend program across five primary areas: • Company Revenue / Industry • Reporting Operations: Organization, Personnel, Expected Volume • Internal Certification: Frequency and Methodology • Pre-Disclosure • Dispute Readiness: System, Process, and Sales Involvement

7. Survey Overview and Methodology • Responses were received from 38 companies; respondents crossed both pharmaceutical and medical device manufacturers and were of a variety of sizes:

8. Discussion of Detailed Results

9. Detailed Results: Reporting Operations The number of Covered Recipients (CRs) each company expects to report on increases dramatically with company size.

10. Detailed Results: Reporting Operations The number of employees dedicated to reporting increases with size. There is a great deal of variation within each size group and no direct correlation with expected number of covered recipients.

11. Detailed Results: Reporting Operations Responsibility for transparency reporting continues to typically reside with Compliance:

12. Detailed Results: Internal Certification 73% of respondents indicated that business units outside of the core aggregate spend function will review data prior to reporting. Of those conducting an internal review, only 5 (out of 22) were required to do so by CIA obligations.

13. Considerations: Internal Certification When setting up a program for internal certifications, companies need to consider: • If employees from the core reporting functions will be assigned to be “relationship owners” with certain business areas. • Whether or not a live review will be conducted with senior business leadership. • The scope of transactions that will be reviewed (e.g. if T&E transactions have already been reviewed by line management, do they need to be re-reviewed?) • Dashboard-style trend reporting that may be useful for senior leadership.

14. Detailed Results: Internal Certification Four out of five respondents rely on a manual process to complete their internal certification. Typically, only one level of review is completed. Over 40% of respondents complete at least a second level of review beyond that.

15. Detailed Results: Pre-Disclosure Practices Only 30% of respondents currently have firm plans to pre-disclose transparency data; another third have plans not to pre-disclose, and the remainder are still undecided.

16. Considerations: Pre-Disclosure Practices For those companies undecided on their approach to pre-disclosure, consider… • Would business or R&D functions support a limited pre-disclosure to customers with a higher volume of transactions, or total transactions over a certain dollar amount? • Will pre-disclosure potentially reduce the workload on your team during the CMS inquiry and dispute period? • How will the company respond to requests that may be received from teaching hospitals for a comprehensive pre-disclosure report? The additional time now available before the line-item report is due to CMS may offer your company an opportunity to “pressure test” its dispute systems and processes prior to the formal CMS dispute window.

17. Detailed Results: Preparing for Inquiries & Disputes Only 12% of respondents have fully implemented a technological solution for managing HCP inquiries and disputes However, around half of all respondents have a documented process in place

18. Considerations: Preparing for Inquiries & Disputes When preparing for inquiries & disputes, consider… • Have all potential sources of inquiries (call centers, adverse event reporting area, sales representative help desk) been identified? Are they equipped to at least document inquiries or disputes that may come in outside of the CMS framework? Where will incoming calls from the media, lawyers, the public, and other sources be routed to? • Have FAQs or key talking points been developed and approved? • Should HCPs that dispute a transaction this year automatically be added to your company’s pre-disclosure list for next year? • How can you track and identify potential “dispute themes” (research related, regional, etc.)? • How will the company manage inquiries for transactions that may not have detailed documentation (educational items, meals, etc.)?

19. Detailed Results: Preparing for Inquiries & Disputes Respondents have typically allocated one or two resources to manage HCP inquiries & disputes and typically expect less than 5% of transactions to be disputed.

20. Detailed Results: Preparing for Inquiries & Disputes Most respondents have indicated they expect relatively little involvement from the sales force in resolving HCP disputes.

21. Long Term Strategies To Mitigate Risk & Improve Operations

22. Steps You Can Take Today - Assess High Risk Areas • Aggregate spend data, combined with other internal data sources, can help identify areas of risk across different parts of your company’s operations, for example:

23. Implement Monitoring Tools For Real Time Risk Tracking HCP Not Contracted Prior to Services Meals Above per HCP Meal Limit Policy Limit ($) Timeliness HCP Spend ($) δ “Rep A reported over HCP meal limit ($7)” Inappropriate HCP Spend (e.g., entertainment) Irreconcilable Sampling Inventories Track Sampling Outliers Spending Patterns Grants Travel Entertainment

24. Leveraging Open Payments Data to Add ValueBuilding Sustainable Compliance Operations How can your team leverage available data to bring value to the rest of the company? With Procurement: Identify total company-wide spend per vendor With Sales Operations: Establish total spending on, for example, meals compared to competitor spending levels With Clinical Ops: Compare per-subject spending with per-subject spending of peer companies (based on Aggregate Spend and ClinicalTrials.gov data) With Sales Leadership: In conjunction with other publically available data, identify other key opinion leaders that may not have been considered by your company before

25. Challenges Facing Our Industry Today & Future Surveying SHORT TERM HURDLES: Setting up sustainable processes to capture external vendor’s spend data Research Payments Data Verification and Proactive Risk Mitigation • LONG TERM HURDLES: • Alignment of compliance and transparency processes across continents to meet the demands of a global healthcare and regulatory environment. • Maintaining valuable KOL relationships to support research and innovation. We want to hear from you! Submit your benchmarking ideas to transparency@huronconsultinggroup.com by April 30 to be considered for our next benchmarking analysis.

26. Thank You and Contact Us Thank you to all the organizations who participated in Huron’s Benchmarking Survey. Your input is greatly valued, and provides critical benchmarking data for establishing best practices in an ever-changing regulatory landscape. Please feel free to reach out to us if you have questions about the survey or if you have additional items you would like to see in 2014. Speaker Contact Information: Joseph Morrell, Manager Phone: 312.731.7469 Email: jmorrell@huronconsultinggroup.com For Consultation Services Contact: Manny Tzavlakis, Managing Director Phone: 312.532.1504 Email: mtzavlakis@huronconsultinggroup.com Leanne DiDomenico, Manager Phone: 267.250.9434 Email: ldidomenico@huronconsulting.com