Hard Limits on Thought Leader Compensation Employed Less Often by Pharma

RESEARCH TRIANGLE PARK, NC and BOSTON, MA--(Marketwire - Jul 21, 2011) - As compliance and medical affairs teams prepare for the Sunshine Act, they are relying less on exact compensation limits for key opinion leaders, according to a new study by benchmarking firm Cutting Edge Information.

"KOL Fair-Market Value and Aggregate Spend: Documentation, Tracking and the Sunshine Act" found that only 35 percent of all companies surveyed have established compensation limits for individual thought leaders -- down from 45 percent in 2008. When data are broken down by company size, 29 percent of large companies use compensation limits, while almost no medium-sized participating in the study have annual limits on individual key opinion leader (KOL) compensation. However, some companies did report setting compensation limits for specific KOL activities.

"Compensation limits provided a simple way to ensure regulatory compliance," said Adam Bianchi, chief operating officer for Cutting Edge Information. "But companies have developed other ways to maintain compliance now that federal mandates have become clearer and corporate integrity agreements more widespread."

Because the Physician Payments Sunshine Act does not explicitly require compensation limits, many companies have chosen to discontinue the practice to reduce the complexity of aggregate spend tracking. For those companies that do implement limits, there seems to be a general consensus emerging about where the ceiling should be set. Companies reported paying individual thought leaders between $20,000 and $100,000 -- less than the amounts reported in 2008, which ranged as high as $200,000.

"With the heightened scrutiny over payments, companies must be especially careful in documenting KOL compensation," said Bianchi. "Communication and defined processes will help to eliminate mistakes, such as overpaying."

Cutting Edge Information (http://www.cuttingedgeinfo.com) has conducted global surveys of KOL fair-market values annually since 2006. The latest study provides updated benchmarks for fair-market value across company sizes and thought leader type. It includes an analysis of the latest trends that impact physician compensation:

• Detailed FMV compensation ranges.
• Evolving KOL compensation strategies that are competitive and compliant.
• Best-in-class systems to measure KOL aggregate spend, track payment data and document KOL activity.
• Best practices for developing and updating FMV spending targets.
• Fine-tuning key opinion leader relationship management strategies for clinical and commercial experts.