How automating expenses can help pharma firms stay compliant under UCMP
As per the report “Business Travel in India” by FCM Travels and KPMG, the Indian travel business is expected to more than triple from USD 30 billion in 2017 to USD 93 billion by 2030. And a majority of this growth will come from Pharmaceuticals and IT.
This is hardly surprising since pharmaceuticals as an industry is heavily invested in travel, especially MICE (Meetings, Incentives, Conventions and Exhibitions segment). The global MICE trend is taking India by storm and the pharma industry is has joined the bandwagon. In the last few years,pharmaceutical companies have organized and participated across thousands of MICE events.
But, the road ahead is not that smooth. Pharma companies face quite a few challenges when it comes to organizing MICE travel. In addition to issues around geography, demographics, backend technology management and the changing behavior of the millennial traveler, the industry will soon be facing a regulatory change known as the Uniform Code for Pharmaceutical Marketing Practices (UCPMP).
UCMP is a Government effort to curb unethical promotional practices in the pharmaceutical industry in India. It aims at increasing transparency in financial relationships between healthcare providers and pharmaceutical manufacturers as well as deterring unethical practices. In short, the code is meant to increase focus on Governance and compliance, mandating pharma companies to improve visibility and control of their marketing practices, including their travel and MICE programs. Violation of the code will call for a penalty.
For instance, According to the UCPMP, no gifts, pecuniary advantages or benefits in kind may be supplied, offered or promised to persons qualified to prescribe or supply drugs, by a pharmaceutical company or any of its agents i.e. distributors, wholesalers and retailers. Gifts for the personal benefit of healthcare professionals and family members, both immediate and extended, such as tickets to entertainment events, are also not to be offered or provided.
How will an industry based on personalized promotion train their employees and vendors to follow these new regulations?
The answer lies in more visibility and transparency of processes. And the catalyst for the change is technology and automation, as they offer fast and secure ways to detect malpractice and institute measures to prevent unethical practices. In fact, one of the biggest drivers of MICE growth is digitalization of travel payments. The MICE market is gaining an advantage with the growing digitalization in the majority of sectors including pharma. With the digitalization of payments and automated expense management, the booking and payment of travel plans has become easy as well as secure for companies.
How will automated expense and travel management help in enforcing UCMP?
• Moving from manual to automated management –MICE is mostly handled manually right now. Pharma companies need to take a leaf out of the hospitality industry book and start automating backend processes. They can create a centralized data platform that monitors as well as analyzes travel, expense and invoice data in one go, thereby bringing risks under control. This will help businesses eliminate costly mistakes, audit expenses efficiently and put controls in place to improve compliance
• Medical Representatives Compliance and training –Pharma companies have an enormous field force who travel world over to sell and promote their products. The promotions include sharing product samples, arranging meetings and attending events. All of which have been strict code of conducts attached to them and provisioned in the UCMP. Therefore, a backend technology system that automates travel, expense and invoice processes right down to individual spends will give finance teams greater visibility, keeping the processes transparent and enforcing the code optimally
• Reimbursement card/voucher and gifting program – Since there are a lot of hidden/softer aspects to MICE travel and meetings, a pre-approved voucher or a corporate card with approved limits that integrates employee T&E data, validates costs and control expenses and claims can go a long way in keeping a check on employee behavior. This limits the chances of varied receipts and expenses by chargingfrom a single entity.Additionally, since the employees know that the statements are to be reviewed, they will be more likely to be vigilant and adhere to the code of conduct.
The Indian pharma industry is on the cusp of a huge transformation andis likely to be in the top 10 global markets in value term by 2020 (PWC report). However, the growth has to be supported by new business models and innovative ideas that service the customers faster and better. Strongest compliance and governance backed by technology is the key to this growth.
By Neeraj Dotel, Managing Director, India and SAARC SAP Concur