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Ensuring Compliance in Pharma: Mastering Bona Fide Service Fees with CPNavigator
John Moose, MBA, ABV - Principal at IQVIA
Frank Spender, Managing Principal, Global Compliance Advisory Services, IQVIA
Feb 27, 2024

In the rapidly evolving pharmaceutical industry, the assessment and management of bona fide service fees (BFSF), as well as related assessments, are essential for maintaining compliance with various reporting requirements for Medicare and Medicaid programs and those under the Public Health Service Act and the Veterans Affairs Act. This blog reviews certain managerial issues surrounding BFSF, including the complexities of BFSF assessments and the critical consequences of mismanaging BFSFs, and introduces CPNavigator—a tool designed to streamline the process and ensure robust documentation and compliance.


Navigating BFSF issues and challenges in the pharmaceutical industry

For purposes of price reporting, funds exchanged between pharmaceutical manufacturers and entities in the distribution channel are classified into three broad categories: prices paid for the product, discounts and rebates on the product, and BFSF. Accurate reporting on each of these categories is essential to avoid overpayment by Medicare or underpayment of rebates under the Medicaid program. Inaccurate reporting can lead to millions of dollars in legal fees and corrective actions. 

Due to unclear and complex guidance, manufacturers often make significant assumptions when calculating the Average Manufacturer Price (AMP) or Best Price, with 91% of surveyed manufacturers admitting to such practices. Moreover, 10 out of 20 manufacturers indicated a lack of clear guidance, leading to disparate treatments of services among competitors, which can have further implications for pricing and reporting. The documentation of these assumptions and the safeguarding of data contemporaneous with the transactions is paramount, yet small and mid-tier pharmaceutical companies tend to take a ‘shotgun’ approach to documentation. Much supporting documentation is gathered by external parties (e.g., counsel and valuation experts) and not placed in one central location, it is not well organized, and it is easily accessible to all parties (i.e., price reporting, market access, contracting, and compliance).

The challenges faced by manufacturers in this regard underscore the importance of having a robust, centralized system for documenting and managing BFSFs and their associated documentation. Such a system can ensure compliance and mitigate the risks of government inquiries, potential investigations, and associated penalties.


Introducing CPNavigator: A robust compliance tool for pharma

CPNavigator was developed to centralize and streamline the documentation and approval of BFSF and fair market value (FMV) assessments, ensuring that all relevant information is centrally stored and easily accessed. CPNavigator provides the following features and functions:

Document repository - Centralizes information and makes it easily accessible by multiple parties. This is particularly valuable for companies operating within the pharmaceutical sector, where adherence to regulations and maintaining accurate records of approvals is paramount. Additionally, the CPNavigator tool includes a feature that enables reference to past FMVs, thus empowering informed decision making. By having historical data at the ready, companies can ensure consistency and accuracy when determining FMVs for new contracts. 

Audit features - Embedded within the tool is the ability to trace actions and decisions through a transparent record-keeping system.

Email notifications - The inclusion of email notifications ensures that users are kept abreast of necessary actions and updates, facilitating a seamless workflow.

Cloning capabilities - The tool's cloning capabilities for contract data significantly reduce manual effort, allowing for efficient reuse of previously documented information.


Conclusion
The documentation and approval of BFSF is recognized as crucial for compliance with government programs, but many companies struggle with collecting and maintaining this necessary documentation over years. CPNavigator is designed to streamline the documentation and approval processes and provide easy access to the information by all interested parties.

Webinar: Fast and Easy BFSF Assessments

Learn how IQVIA’s CPNavigator, an innovative new BFSF optimization tool, can help boost your team’s efficiency by supporting the documentation, review, and approval of bona fide service fees.
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