Fair Market Value (FMV) and KOL Tiering
Global governing bodies have robust regulations and enforcement actions that address payments from manufacturers for consulting activities performed by healthcare professionals (HCPs) and non-HCPs (e.g. reimbursement specialists). The governments' focus has been on detecting and preventing bribes or corrupt payments to HCPs which could be seen as an inducement to prescribe products.
Globally, payments made outside of FMV can trigger a violation of the Foreign Corrupt Practices Act (U.S.), Bribery Act (U.K.), Clean Companies Act (Brazil), Sapin II (France), Malaysian Anti-Corruption Act, and The Preventions of Corruption Act (Singapore) among others. In the APAC region, in particular, there are also a number of industry codes that stipulate specific rules for the compensation of HCPs including specific FMV caps in markets such as South Korea, Taiwan, etc.
Baker Tilly’s life sciences and healthcare practice delivers proven methodologies, based on objective survey data, to develop FMV rates and related tiers for compensating HCPs and non-HCPs while also taking into account any specific in-country rules related to FMV. Our solution is flexible and global, and our documented methodology is defensible to any inquiring regulatory body.
Baker Tilly Methodology
Baker Tilly works with clients to mitigate their risk and protect their value through the development of FMV rates to compensate for consulting services. Our methodology is based on three equally important elements:
- FMV hourly rates – Baker Tilly gathers salary data using a diversified set of country-specific, objective physician and non-physician income sources.
- Tiering model – Baker Tilly creates an effective process for evaluating physician expertise level to determine “Thought Leader” status, including recommended controls to ensure this process is applied consistently.
- Activity fees – FMV as a risk control is also strengthened if companies pay similar fees for similar activities based on standard service level expectations. Baker Tilly creates a standard activity model for common activities (e.g., speaker programs, advisory boards).
In addition to providing HCP FMV rates, our team will document the methodology used.
KOL Tiering
It is appropriate to compensate certain individuals at a higher FMV rate than others based on an objective assessment of individual expertise. Categories of expertise to be evaluated can include, but may not be limited to:
- Employment experience
- Publications
- Involvement in clinical trials
- Speaking and advisory engagements
- Association and journal affiliations
Depending on the level of expertise in each category, an individual can be assigned as an International Thought Leader, Regional Thought Leader, or Local Thought Leader. This process is important to the overall methodology and in mitigating risk as it ensures that FMV rates are correctly applied across the thought leadership tiers. For example, if a regional thought leader is assigned the FMV rate for an international thought leader, this could result in an overpayment of more than 100% depending on the specific specialty and country.
Find out more about Baker Tilly's fmvNOW™, a self-service portal for FMV hourly rates across KOL tiers here.
Read this article to find out how traditional KOL tiering processes have failed and how innovation may solve this quandary.
