© 2005, Genentech

October 17, 2007

Brand Auditingand Audit Planning

Raymond Furey, Genentech, Inc.Steve Payne, Sidley Austin LLP

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© 2005, Genentech

Disclaimers

• This discussion does not necessarily reflect the views of Genentech, Inc. or Sidley Austin LLP and does not constitute legal advice.

• There are multiple methods used to conduct brand audits, and the appropriate size, scope, frequency, and methods depend on a variety of factors specific to your organization that may not be reflected in the examples used in this presentation.

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Agenda

• Approach to Conducting a Brand Audit

• Areas of Focus

• Conducting Interviews and Document Collection

• Attorney-Client Privilege

• Developing a Long-Term Audit Plan

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What Is A Brand Audit?• Commercialized product – often with active clinical development and

post-marketing activities

• Commercial activities, including sales and marketing, speaker programs, market planning, sales operations, customer support

• Medical Affairs/Development activities, including investigator initiated trials, registries, medical liaisons, and medical communication/information

• Other activities: advisory boards, publications, medical education, grants/payments, reimbursement support activities

• Resource intensive and broad in application

• Focus on relevant risks to the particular brandØ Potential for off-label, safety issues, reimbursement, payments/anti-kickback

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The Audit Cycle• Annual Risk Assessment

• Workplan Development and Approval

• Discovery Phase Document Review and Gap AnalysisØ Audit Scoping

• Compliance TestingØ Audit Interviews and Documentation RequestsØ Analysis and Draft Report

• Observations and Recommendations Ø Legal ReviewØ Business Review

• Corrective Action Process

• Audit Trends and Observations – Inputs to Annual Risk Assessment

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Annual Risk Assessment Process

• Audit areas identified by Compliance with business and Legal input and external inputsØCompliance Surveys, OIG Workplan, Prior-Year Monitoring and

Auditing, Recent Litigation, CIAs

• Audit plan documented in the Compliance workplan and reviewed annually with management (depending on size of operations, might include multiple brand audits per year)

• Industry risk areasØ Formularies, speaker programs, consultant payments, other things of

value to HCPs, grants, medical education, development of treatment algorithms/practice guidelines, sales promotion, drug safety, commercial vs. clinical roles, pricing

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Audit Planning Phase

• Audit objectives identified with input from Legal and senior commercial leadership

• Privileged review? To what extent will legal advice be required?

Ø Substantive, transactional reviews vs. process, policy audits

Ø Risk-based

Ø Is the audit really an internal investigation of reported issues or litigation matters?

Ø Has the area been audited before?

Ø Are the policies/guidances being reviewed well-established on the basis of previous legal advice?

Ø Will the company need to use the results of the audit in ways that require them not to be privileged?

• Use of consultants

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Audit Planning Phase

• Map out with basic brand documentsØ Organizational charts, product inserts, brand plans

• FocusØ What are the risks for the particular brand?

– Reimbursement, off-label, safety, sampling, payments/anti-kickback or other promotion

– May be driven by disease state, competitive landscape, clinical or standard of care, place in product lifecycle, product cost

• Planning sessionsØ Input from brand and development attorneysØ Government activity Ø Monitoring and prior audits Ø Outside counsel

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Audit Planning Phase

• Sources to considerØ PhRMA Code on Interactions with Health Care ProfessionalsØ HHS Office of Inspector General’s Compliance Program Guidance for

Pharmaceutical ManufacturersØ Relevant Corporate Integrity Agreements and Consent DecreesØ Anti-Kickback Statute, False Claims Act, Food Drug & Cosmetic ActØ Guidance relating to the dissemination of off-label information by

manufacturers

• Identify review areas, scope, approach and timelines in audit scope document

• Communication to key business owner and business function personnel directly involved in review (pre-kickoff communication)

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Audit Kick-Off Meeting

• Kick-off meetingØ Goal

– Communicate scope and timelines and obtain buy-in– Not a working session to scope audit– Explain requirements of privilege, if applicable

Ø Who should attend? – Senior leaders: Franchise Unit head, National Sales Director, Lead

Clinical Scientist, Marketing Director, Medical Affairs Director, Legal Counsel (if privileged, counsel directs)

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Document Collection & Review– Commercial• Organizational charts

• Meeting agendas and minutes

• Committee charters

• General Ledger transaction dataØ Benchmark against internal groupsØ Where did the brand spend moneyØ Are they hitting their targets

• T&E expenses reportsØ Benchmark against other brands

• Product labeling

• Product distribution reports

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Document Collection & Review– Marketing/Sales• Brand PlansØ Strategic goalsØ TacticsØ Financial targetsØ SWOT analysis

• Sales Representative Field Contact Reports

• Field Sales Call Notes

• Sales Representative Business Account Plans

• Field Direction Memos

• Sales Representative Training Modules

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Document Collection & Review– Other

• Annual advisory board plans and other advisory board planning documents and reports

• Publication plans

• Sales aids and sales aid fulfillment reports

• Approaches to emails

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Document Collection & Review– Medical Affairs/Development

• Clinical planning documentsØ IST focus areas Ø Registries/observations studiesØ Commercial role with respect to clinical planning decisions

• Transaction data from Medical Communication/Information databasesØ Geographic patterns, volume of requests, who submitted the

requests

• Letter responses from Medical Communications/InformationØ Focused, balanced, limitations explained?

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Document Collection & Review– Medical Affairs/Development

• IST and Registry Policies and ProceduresØ Who approves them? What information is required? Role of

Commercial? Payments?

• Tracking Study ReportsØ Are studies getting done?

• Registry Study contracts and protocolsØ Site caps, payments

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Interviews• Top down or bottom up?

Ø Perhaps meetings with senior management first – usually franchise head, marketing, national sales director and clinical scientist

Ø Then field sales and other home staff; back to senior management for additional interviews if necessary

Ø Flexibility depending on observations

• Number of interviews depends on appropriate sample for size of operationsØ Geographic coverage, tenure, rural and urban, region coverage

• Field-based personnel including field sales, medical liaisons, reimbursement specialists, field managed care Ø Need to be in person (not over phone)Ø Interviews usually conducted in the field (attempt to use opportunities when

groups will otherwise be together to save cost)

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Interviews

• Corporate “Miranda” Advisements and PrivilegeØ If privileged, counsel explains representation issuesØ Confidentiality, privilege, and company’s right to discloseØ Record in notes that disclosures were discussedØ Explain disclosures rather than just read them verbatim

• Other Interview SuggestionsØ If interviewee not identified for particular reason, explain just part of

audit process that he/she was selectedØ Discuss the purpose, process and CAP follow-upØ Ask for their help – IMPORTANTØ Try to get interviewee to relax (background questions initially) –

interview introduction is critical phase of interviewØ Use a question framework rather than list of questions

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Interviews: What Questions?

• Field SalesØ What tactics used to meet sales targets?Ø Are they familiar with policy and activity level guidances ?Ø Messaging from management around targetsØ Sales call interactions (content) with health care professionalsØ Use of reprintsØ Involvement with speaker programsØ Disease state awareness programs; interactions with clinical personnelØ Any involvement with advisory boardsØ Handling of unsolicited requests for medical informationØ Reimbursement support referralsØ Compliance concerns – where do they see risk?Ø Set expectation for follow-up

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Interviews: What Questions?

• Marketing Ø What are the strategic goals, tactics, challenges and opportunitiesØ Where spending budget?Ø Interactions with vendors, clinical personnelØ Discuss specific risk areas for the brand and get their perspective

• Medical AffairsØ What involvement, if any, with field sales/other commercial groups?

Following policy regarding unsolicited requests for information? Are roles clear? How are objectives set and measured?

Ø Communication of scientific informationØ Any involvement with funding, e.g., clinical studies, educational

programs?Ø Any involvement with Ad Boards and other programs

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Develop Corrective Action Plan

• Within a reasonable time of the audit observations, develop a Corrective Action Plan (CAP) plan with the responsible business function

• Compliance should work closely with the business and Legal during the development of the CAPØ Compliance and the business function should discuss observations and

recommendations in detailØ Each observation should have a corresponding recommendation and a

management responseØ Draft management responses should be documented by Compliance along

with timelines and accountable individuals/partiesØ A final report which includes management response should be documented

by Compliance and shared with managementØ Although tracked and monitored by Compliance, the business should own the

follow-up on the CAP

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Develop Corrective Action Plan

“Detected but uncorrected misconduct can endanger the reputation and legal status of the company…Upon receipt of indications of suspected noncompliance….take decisive steps to correct the problem.”

OIG Compliance Program Guidance for Pharmaceutical Manufacturers, April 2003

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Working Under Attorney-Client Privilege• Attorney-client privilege applies to confidential communications

for the purpose of legal advice

Ø Outside counsel, in-house counsel, consultants, internal/external experts, and other agents

• Meant to encourage candid communications between attorneys and their clients

Ø Importance of interview “advisements”

• Audit/investigation activities conducted at direction of counsel for legal advice – can’t be “window dressing”

• Attorney work-product doctrine protects materials prepared by an attorney or at attorney’s direction in anticipation of litigation

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Working Under Attorney-Client Privilege– Practicalities

• Develop protocol for communications, marking & segregating documents

• Maintaining confidentiality & privilege while communicating results and implementing the corrective action plan

• Dealing with privileged Legal involvement even if review not conducted at direction of counsel

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Long-Term Audit Planning• Identify RisksØ Identify risk areas for various functions using industry trends, OIG

work plan, government enforcement activity and internal businessintelligence

• Rank the riskØBased on likelihood (frequency, timing and probability) and impact

(potential liability, dollars, PR and operations)

• Prioritize the risk (High, Medium or Low)

• Map the risk against the functional areas

• Plan the scheduleØDevelop a 3-year plan to address various risk areas

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© 2005, Genentech

Contact Information

Raymond Furey, Genentech, Inc.650.225.6592

Steve Payne, Sidley Austin LLP202.736.8068