Guidance Summary for the Valuation of Medical Product Gifts -In-Kind :

1. Guidance Summary for the Valuation of Medical Product Gifts -In-Kind: A Framework for Rational Decision Making

2. Health Companies Humanitarian NGOs Alcon Abbott Laboratories Fund Baxter BD Boehringer Ingelheim Cares Foundation Bristol-Myers Squibb Co. Eli Lilly and Company Genzyme GlaxoSmithKline Hospira, Inc. Johnson & Johnson Merck & Co., Inc. Pfizer, Inc. sanofi-aventis US AmeriCares Catholic Medical Mission Board Direct Relief International Heart to Heart International International Aid, Inc. Map International Mercy Medical Corps Mercy Ships National Cancer Coalition Medical Teams International Project HOPE U.S. Fund for UNICEF Tulipe World Vision

3. 10,164 Shipments in 2008

4. PQMD Standards and Guidelines • Assessment • Appropriateness • Quality & Quantity • Packaging • Transportation • Human Resources • Evaluation Why add medical product valuation? Seven Components

5. GIK Advisory Group There are many legitimate approaches to valuation that are socially relevant and ensure compliance with required financial accounting standards. The project is an effort to find common ground among often disparate opinions. Goal to create a white paper or standards. But first, there are three major challenges to address……

7. Challenge #2: Difficult Content • Exit price notion, from market participant perspective (ASC 820-10-30-2) • The transaction to sell the asset occurs in the principal market (i.e. provides the greatest volume and level of activity for the asset) or the most advantageous market (i.e. maximizes the amount received from a sale) if a principal market is not available (ASC 820-10-35-5) • They should not be adjusted for transaction costs (ASC 820-10-35-7). • They assume the highest and best use of the asset by market participants (i.e. maximizes the value of the assets) (ASC 820-10-35-10).

8. Challenge #3: AvoidingUnintended Consequences Real Change Takes Time

9. Guided by:ANSI Principles & Due Process Due process means that any person (organization, company, government agency, individual, etc.) with a direct and material interest has a right to participate by: • a) expressing a position and its basis, • b) having that position considered, and • c) having the right to appeal. Due process allows for equity and fair play. The following constitute the minimum acceptable due process requirements for the development of consensus.

10. Our Process

11. Project’s Proposed Outcomes Principles Standards or guidelines White paper Examples Tools: a decision tree It is not meant as a replacement for any NPO’s professional financial review and interpretation of GAAP.

12. GIK Valuation Principles Developed to inform the valuation process used by non-profits to assign a financial value to medical product donations. Also provides a foundation for standards. • Transparency • Compliance • Relevance • Proper documentation • Patient centered donations

13. Transparency There should be a clear and transparent donation valuation framework that complies with all applicable external accounting requirements.

14. Compliance Valuation frameworks must be GAAP compliant, subject to accounting interpretation within the law, but consistent in application.

15. Relevance The valuation framework should reflect the wide range of products, sources, markets and recipients.

16. Proper documentation The valuation process should be documented through written procedures and practices and published as part of an organization’s financial statements.

17. Patient centered donations. Primary focus should remain on the recipients; the community, the receiving institution, and the patient. Where there is a conflict between valuation and service to this population, we will make decisions that first do no harm to the recipients, within the law.

18. Next Steps • Expansion of Principles into Guidelines/Standards • Public Comment Period • Survey on PQMD.org and email • Revisions and Final Comment Period • Publication

19. Contact: lwarrens@pqmd.org Thank you!