But there are still a couple of ways that drug manufacturers can protect themselves from this economy.

One path is to look towards generics. With so many of the small-molecule drugs going off patent, generic companies are positioned for highly profitable years ahead. And while profits at these companies have been disappointing recently if your name isn't Teva, Robert Steyer at The Street points out that much of this is due to recent acquisitions that have diluted results. As these companies begin to integrate their new generics factories and streamline operations, competition for the mighty Teva may look more daunting. Novartis CEO Dan Vasella, speaking about the company's generics subsidiary Sandoz, recently stated that, "Teva is better than we are, and that's hard to take." Despite seeing strong growth in the last year, Vasella plans to look towards Teva to improve the Sandoz structure, and spoke highly of Teva's 'vertical integration.' That sounds like acquisition-speak to me.

But while a generics arm might provide a steady revenue stream in the coming years, it won't replace multi-billion dollar blockbusters. A biologic compound might, however. Biologics, for now, have the added benefit of lacking a generic application process; with rare exceptions like Omnitrope, biologics effectively have unlimited market exclusivity. And, even if they didn't, the incredibly high costs to grow and sell most biologic compounds means that generic companies lack the muscle to do it. Amgen's Epogen was approved in 1989; analysts project it to be a $2 billion dollar drug in 2012, 23 years later. Look for a continuation of the years-old trend of big pharma acquiring the rights to biologic compounds, or just buying the company outright. If a large pharmaceutical company doesn't have the compounds to replace ones lost in the next five years, it can buy them.

Of course, the traditional tactics will likely be employed to protect compounds as well: next-generation products, new formulations, patent litigation and aggressive pricing will all see plenty of use in the next five years. But if the science isn't there, Big Pharma needs a plan B.

But paying relationships between doctors and pharmaceutical companies are nothing new; and neither is the profit motive for medical professionals. A colleague of mine forwarded me an article originally published in 1888 that discusses VIP patient payments to physicians as high as $30,000 even then. So it shouldn't be a surprise that pharmaceutical companies leverage physicians' influence to promote their business.

In most cases, financial relationships between doctors and pharmaceutical companies aren't controversial at all. A company may pay a top physician to lead a high-profile clinical trial. Think of it as an outsourcing arrangement. And so what if that research then leads to a medical publication. It's now required that all clinical study results are published, or at least made available, once complete. But do people expect physicians to conduct work on behalf of a billion-dollar pharmaceutical company for free? Would you? I didn't think so.

Before we get too far ahead of ourselves, let's think about what's really going on behind these financial relationships between the industry and the medical community. Is it really a bad thing if doctors are paid to advise pharmaceutical companies?

In reality, the doctors involved in these relationships are often at the top of their field and respectable scientists. They're not out to make a buck and prescribe whatever their pharma buddies tell them to. Instead, they're interested in furthering scientific treatments in their field. Believe it or not, the pharmaceutical companies are looking to do the same thing, they just get a bad reputation because they want to make money doing it.

To demonstrate their teams' worth, most medical affairs groups use a combination of hard and soft success measures. Ranging from soft measures, such as feedback from thought leaders, to harder metrics, such as the number of medical abstracts produced over the year. However, a number of the activities medical affairs groups are tasked with are difficult to quantify with hard measures. Nonetheless, it is important for medical affairs groups to have some sort of measurement model in place in order to understand the value created by their activities as well as identify improvement areas.

Another reason medical affairs groups should make a concerted effort to measure their success is that they can leverage their value to justify additional funding or resources. In many cases, medical affairs group have to vie for limited resources against functions such as marketing and commercial operations which are able to point to definitive sale numbers in support of their success. Thus it is critical for medical affairs group to have some form of measurement that they can leverage to demonstrate their value to the organization. It is often important for senior management to have some indication of the value medical affairs brings when making resource allocation decisions.

While most therapeutic areas have seen inflation-adjusted price increases of less than 20% since 2003, and some have even been outpaced by inflation, other therapeutic areas have undergone much more significant price raises during this time interval. For example, dermatology product prices climbed by a notable 41% between 2003 and 2007. The diabetes market experienced the most dramatic increase of all therapeutic areas - on average, diabetes drug prices rose by 85% (or 64% in inflation adjusted dollars).

Multiple market factors have contributed to the steady increase in pharmaceutical prices. As long-time blockbusters near patent expiration, few up-and-coming treatments promise to fill in the gaps that those top performers will leave behind. Once-robust pipelines have become thin and slow-moving, and companies must maximize the profitability of those precious few drugs they do have on the market - which often means raising prices for new treatments as well as old ones. Complex drug development technologies translate into high development costs and ultimately result in higher prices once products reach the market. In addition, generic competitors have become increasingly aggressive and have begun challenging brand patents earlier and earlier in the product lifecycle. To help offset the losses that result from generic market entry, innovator pharmaceutical companies have begun to raise prices long before their brands' patents expire.

In addition to the data summarized here, Cutting Edge Information's full strategic pricing study, to be released later this summer, follows up on similar research conducted in 2005 to examine how the pharmaceutical industry's approach to pricing continues to evolve. The new study will delve into various aspects of companies' pricing strategies, including oversight, headcounts, costs and timelines for pricing studies. The study will also analyze pricing levels and trends by therapeutic area. To receive complementary study findings on this timely issue, please visit http://www.cuttingedgeinfo.com/studies/PH119/StrategicPricing.htm and complete a short survey.

According to a recent statistic, the FDA regulates 25 cents of every dollar spent in the United States. Over the last two decades, Congress has broadened the FDA's reach and responsibility 127 times, and, oh-so-unfortunate but typically, have not put their money where their legislation goes. Most recently, another headline emerged from China—the land everyone loves to hear connected to a scandal concerning harmful chemicals—with the Baxter/Heparin debacle. Personally, I think Baxter could see sales fall for a tangential reason: the fact that so many people now know heparin comes from pig intestines. This latest event makes the seemingly outlandish idea of establishing an FDA office in China and other countries overseas to monitor imports seem less and less ridiculous. But it also shows how out of touch the FDA's role is with the modern, globalized world.

Though a failure sure to be tied to the FDA, this latest event really indicates that the FDA passed "over-extended" about 28 extensions ago. Washington has finally come to this realization in response to a series of investigations - apparently all the crises weren't enough to solidify the fact. Luckily, the investigations do note that the FDA's lack of capability does not stem solely from a paucity of funds, but also from the need to make major reforms to the bureaucracy's structure, testing and priorities. The study distressingly found that the FDA cannot keep up with the advances of modern science and many of the regulation, statistical requirements and study guidelines by which the FDA plays no longer apply. Moreover, the FDA often does not have the correct staff to appropriately understand, evaluate and approve drugs in new, complex fields.

While depressing to hear, to me this seems to be a more acceptable reason for the low number of new drugs approved this year as opposed to the FDA being unnecessarily stringent in the face of public outcry and political pressure. Being scientifically out-of-date is far better than pandering at the expense of science. It also seems to be a more tractable problem with a more direct solution. Yet, the two problems could also be coalescing. Applying archaic standards to modern science and not having the capacity to change it, while also being pressured to step up the monitoring and safety, seems quite the recipe for squeezed bureaucrats to start worrying more about performance reviews and less about scientific advancement.

Yet, solutions will only be found if the problems are acknowledged and we all know how accustomed those on Capitol Hill are to the elephant in the living room. There has been much more discussion about the fact that the proposed increase in the budget is far too little for all the demands of the FDA, and none about the fact that FDA may have too much on its plate. Nor has there been any serious discussion about reforming the agency to reflect today's market, rather than that of the 50s when the policies were instituted. It's so much easier to conspicuously throw money at a problem rather than solve it.

I guess this is why I keep waiting for the people vying for the top job in the land to address the issue. All three of the candidates left standing have talked about reform and fixing a broken Washington. Neither dedicating more funds to the FDA, nor cutting government programs, nor raising taxes, nor lowering taxes, nor bi-partisanship in and of itself will solve this problem. It will take true reform. This side of healthcare should be discussed and potential solutions offered as part of a larger overhaul of American healthcare. But I am guessing the FDA will just have to take a ticket and get in line.

"I'm always amazed that 20% of the 47 million uninsured are eligible today for Medicaid or the Children's Health Insurance Program. They could sign up and have a relationship with a primary-care physician. About 10% of the 47 million are college and university students, very inexpensive to insure. Slightly more than 20% are not citizens but are in the country legally.

"We might find a way to link visa entry or other mechanisms with comprehensive coverage. And about 20% have household incomes above $75,000. On this we agree with many of the presidential candidates. Aetna believes there is a place for an individual coverage requirement for individuals who can afford insurance. I think reasonable people could agree that at some point there's enough income that someone should be expected to participate in the health-care system. That leaves us with about 14 million to 17 million who really need tax credits and subsidies or tax deductions."

We'll take his stats at face value for the moment, and halfway discount the Aetna commercial for government-required coverage of people earning $75,000 or more.

I'm left with three thoughts:

#1, significant parts of the uninsured issue parallel the patient compliance issue. Blaming the uninsured is a not the solution, but a good portion of those who are uninsured are either unaware that they don't have to go without insurance or unwilling to pay a manageable amount for it.

#2, the number of people who fall fully outside the system with no present way to get health care is more manageable than many people think.

#3, as a small business owner, I can tell you that many of the real problems of American health insurance are to be found in the costs for the fully insured.

And while the Chinese plant has absolutely not been established as the cause of the potentially life-threatening reactions, the fact that we may never know makes the FDA look far worse than Chinese industry, because they're absolutely at fault. The Chinese plant has never been inspected, and now that something has gone horribly wrong somewhere, the FDA plans to show up as soon as possible. In the mean time, you can bet that the manufacturers just brought in an oil tanker full of Clorox and a pressure washer, and are currently spraying every inch of the plant down three times.

While major news outlets will probably be focusing on the Chinese connection, or possibly the FDA's lack of Chinese oversight, I think this points to a larger problem at the FDA today. The organization has lost focus on what's most important to ensure consumer safety. The FDA's budget is smaller than it should be; in fact, its task is simply impossible at any budget level. But since you can't physically inspect every piece of fish sold in the local supermarket, or make sure every customer knows the trial results of the drug they're taking, you should make sure you hit the important parts.

The solutions are already being discussed by those in the industry, with the prodding of Congressional leaders. But it's unacceptable that, while the organization responsible for consumer safety deals with advertising regulations, an uninspected plant in China is making a drug which, even when extracted safely, is derived from pig intestines over a process that takes hours if not days. If it wasn't bad enough, these drugs are then shipped to the US for use in heart surgery or dialysis patients, whose bodies are already critically compromised.

Again, we don't know that the Chinese plant is responsible for the problems. But this goes beyond Chinese drug manufacturing. It remains unacceptable regardless of the questionable Herparin's point of adulteration. I wouldn't expect that plant to go uninspected even if it was US-based. It's a stretch to think anyone would disagree with that - and yet this was not an oversight, this was a routine decision at the FDA.

Regulating advertising is important. But given the FDA's limited budget, I'd prefer to know my prescriptions don't include e.coli, chemical precursors, or three times as much of the API as I'm supposed to be taking. This might be the single most important job the FDA has - beyond advertising, and possibly beyond even approval or rejection based on a drug's efficacy. Its effectiveness isn't very important, after all, if it kills you in the process.

Look for even more changes in FDA budgets and priorities in the coming years, as congressional fury rises due to cases such as this one.

Jorge Daboub, vice president for marketing and business development at Univision Television Group, presented several interesting statistics about the Hispanic market's use of the Internet. Among some of his points were:

* A 70% increase in Hispanic online web presence since 2000
* 79% of Hispanics have Internet access at home and typically spend the same amount of time as the general population
* Hispanics are 73% more likely than non-Hispanics to be receptive to online advertising, such as video, pop-up ads and email blasts

All of these statistics echo the fact that the Hispanic population can be readily accessed by leveraging strong web campaigns. However, particularly shocking is the last stat about how much more receptive Hispanics are to online advertising than other populations. This statistic is a market researcher's dream and paints an ideal picture for pharmaceutical companies trying to reach this key segment.

In addition to the compelling receptiveness of the Hispanic market to online advertising, pharmaceutical marketers should be conscientious of the vast size the Hispanic market now represents in the U.S. Currently, the Hispanic community is a relatively untapped market for many pharmaceutical companies.

Pharmaceutical marketers should understand that the Hispanic market has distinct characteristics that make it different from other populations and cultures. Therefore, to develop effective marketing campaigns companies must begin with market research and truly understand the nuances that influence this community. However, if pharmaceutical companies absorb cultural insights and design websites and web campaigns that target Hispanics, they might experience notable success in connecting with this segment of the market.

As with most markets, patient education is a great need. This is particularly true for the Hispanic market since a vast amount of educational material is not available in Spanish. Companies that tailor their materials to meet Spanish-speaking audiences will be satisfying a great unmet need.

The opportunity is there. Pharmaceutical companies are sophisticated enough to market effectively market to this segment. The question still remains whether pharmaceutical companies will choose to wholeheartedly pursue the Hispanic market.

Centralization empowers companies to better select the most strategically and scientifically interesting IITs, track those studies' progress and employ their findings in constructive ways. Most organizations still find themselves a great distance from this ideal, however. Interviewed executives reveal that many organizations still suffer from a lack of knowledge regarding the number of IITs underway, investigator identities, funding levels and, last but not least, the progress of these trials and planned uses for their findings.

Gaps in management may yield undesirable outcomes, such as IIT results that conflict with company-sponsored research, investigators competing with a company for patients and sub-par handling of adverse events and safety reporting. In worst-case scenarios, study results get published without project or brand teams ever being aware that their drugs were the subjects of outside research. To counter these issues, every survey respondent reported a need to improve IIT management. Additionally, companies face real or perceived staffing shortages in functions that contribute to the IIT process.

Centralized IIT strategy setting and process management are only out of their infancy stages. The vast majority of IIT groups must still establish SOPs, confront ongoing challenges, refine their structures and win internal respect and support for their missions.

Historically, treatment delivery channels have been little more than an afterthought for pharma. Develop a drug first, then determine an acceptable delivery channel, the process went. Now, though, realizing that dosage convenience and frequency plays a large role in the willingness of patients to stick to their treatment regimens, the industry has responded by developing products with patient compliance in mind. In the world of proteins, for example, many pharma and biotech companies - through partnerships with medical device innovators - are making the switch from traditional injections to alternative delivery methods like micro-needle patches, oral doses and nasal sprays. The idea is to improve ease of use without sacrificing a treatment's efficacy.

Many of the companies undertaking such new projects are small, but their concept would make big differences in patients' lives. Azaya Therapeutics, for one, is developing a compound using what is called Protein Stabilized Nanoparticle (PSN) technology. While I resist the urge to plug one of my favorite sci-fi movies, suffice to say that this technology aims to eliminate some of the dangerous side-effects associated with oncology drugs such as Sanofi Aventis's Taxotere (although if you're curious, the company does have an explanatory video about PSN on its website). By partnering with emerging companies like Azaya early on in product development, long-established pharma and biotech companies can position themselves to take full advantage of the newest drug delivery technologies.

Despite the exciting prospects of these new and more convenient delivery mechanisms, pharma still has a long way to go in making them palatable to patients. Pfizer's Exubera is one example of a failed attempt at a more patient-friendly delivery method. The potential was definitely there: a diabetes treatment in the form of an insulin nasal spray. No more pesky needles. Unfortunately the inhaler proved to be quite large and inconvenient to transport - some have described it as bulky. End result? The inhaler ended up being less attractive than the alternative of giving oneself a shot.

Though there are sure to be more bumps along the way, I am eager to see pharma's future efforts on the path to less painful, more convenient ways to take medication.

In the article, "R&D Innovation: Climbing Out", Patterson explained a new R&D regimen that he has implemented at AZ - Quality on Time. The core basis of this outlook is to take a hard look at each molecule and be more honest and upfront from the earliest stages of development about potential risks and benefits. The goal is to raise the quality of the molecules the company pursues which in the long run will help AZ avoid spend much less time and money on poor molecules.

The second main factor to the Quality on Time regimen is saving time - not in a way that would put patient safety at risk - but in making better go/no-go decisions early on so that the company can move forward more quickly and make investments with more calculated risks. In fact, the goal of the new R&D process is to get drugs developed and approved within eight years - a radical improvement from AZ's historic average timeline of 11 years (currently the company estimates it is running at about nine years).

AstraZeneca appears to be taking large steps in the right direction. Instead of putting more and more molecules into the development pipeline for the sake of volume, the company is concentrating on the ones that are most likely to come to fruition and provide valuable revenue streams for the company. This school of thought appears to be the right way of looking at developing new pharmaceutical treatments going forward - focus on quality not volume.

Another trend Patterson pointed out is that pharmaceutical companies are going to become more flexible in seeking new ways to acquire quality molecules - either through partnerships or buyouts. This trend is evident; Pfizer's purchase of biotech CovX underscores this strategy in play. Pharmaceutical companies have been clever enough to discover amazing, life-saving treatments so it is not surprising that companies are now adapting their organizations and processes to overcome market factors. AstraZeneca is on the right track - quality will be the key to success.

While there is a hint of movement by companies in the Canadian market to decrease mirroring and create more personalized relationships with doctors, there is not the industry-wide momentum that is starting to show in the US market.

In a Cutting Edge Information report based on the Canadian market, participating companies revealed that doctors in their top three primary care tiers will generally have more than one rep assigned to call on them. Two top 10 pharmaceutical companies that participated assign as many as five or six different reps to their top-level general practitioners.

In a similar study performed by Cutting Edge Information on the US market, sales force powerhouses reported that they have found tremendous success at gaining access to their targets by reducing the mirroring of forces. In fact, many of the larger US companies have taken a two-rep per-doctor approach. Pfizer reduced the number of reps calling on each of its targets to two. Eli Lilly and Wyeth reportedly shrank the number of reps responsible for each doctor in their forces as well.

According to interviewees, rather than seeing reductions in the percentage of US doctors that reps get to detail, these companies are seeing increases. Likewise, they are seeing increases in the amount of time reps get with doctors once they get face-to-face.

According to one participant in the US study, recent internal figures show that his company's realignment program is yielding more time with physicians and reports of increasing accessibility to doctors from reps in the 5% to 10% range. The company is also receiving overwhelmingly positive feedback from targets. With fewer reps coming to visit, the doctors actually remember their reps' names. It is also easier for doctors to know who to call for samples or information when it is needed for patients or their own education.

The program pays other dividends as well. First it vastly reduces costs. Companies can "trim the fat" and become more efficient with their calls. Additionally, it builds accountability back into sales.

When "pods" of reps call on physicians, it is difficult to discern who is making an impact and who is perhaps not pulling their weight. With only one or two reps responsible for each physician, success or failure is easy to assign.

When reps have ownership and accountability over their accounts, they are also more likely to spend time finding ways to get to doctors than they would in a pod setting. They take the time to actually work at it rather than just dropping off samples and moving on.

Again, not all the major players in the Canadian market have indicated that they intend to reduce mirrored forces as of yet. However, the reported success of many US giants might suggest that it is worth examining more closely.

Diagnostic manufacturers, however, still struggle to get their products to market, as the fight for resources creates a vicious cycle. Market-focused product development is key, since customers ultimately pass judgment on the worth of whiz-bang innovation and technological advancements. Regulators, payer organizations, healthcare providers, lab techs and patients must all agree on the value of a product before it can achieve commercial success. Designing and marketing a diagnostic with a clear picture of the market is difficult, however, thanks to slim margins and tight budgets -- market knowledge and actionable intelligence is hard to come by, especially early in development.

Our recent research on in vitro diagnostics shows that, throughout development and one or two postmarket years, many companies invest less than $5 million in each product's cumulative R&D and marketing costs. The data show a relationship between a product's peak annual returns and its marketing investment during this time. Logically, brands with relatively low peak projected sales draw on little early marketing funding. Bigger brands with annual returns in the hundreds of millions of dollars can support larger initial marketing investments.

The problem is that among teams with little budget for long-term market evaluations and sales projections, the challenge multiplies. Brands that can't show their worth don't receive early marketing funding; theirs is a constant struggle for dollars, market knowledge and customers. At launch, lack of funding forces highly focused marketing campaigns that target very specific customer groups. Ideally, increased financial support would allow these teams to reach more potential customers.

The rumor mill speculates that the first season will revolve around all the recent developments in treatment delivery, focusing on Type 2. People are already laying bets that Exubera will be the first character to return from the dead. But, to me, that seems like a pretty risky bet after the way Pfizer informed Nektar of the decision - or rather didn't inform them, depending on who you ask. This might be the first time two characters in a soap opera have broken up over the industry equivalent of Facebook.

Nektar is looking for another partner but after the slap-in-the-face, the pay-off and their statements that it was all Pfizer's fault that their relationship failed, I doubt Pfizer and Nektar will be dating anytime soon. Not to mention the fact that as far as painful memories go, the bong-like apparatus that is soon to appear in tobacco paraphernalia shops across the country must seem to Pfizer as burning then inhaling Benjamins by the truck load.

But one must wonder what Pfizer is doing to recoup and reenter the world of diabetes treatment. Something similar to Exubera may come back, from either Pfizer or Nektar, which says it has a better designed device, but it won't come back under the same name. But, then again, isn't that how it always happens in soap operas?

Don't turn the webpage; that all happened before the first commercial break. Quite a few characters have recently experienced damaged hearts due to relationships with two especially pernicious lead roles. Actos and Avandia are officially the bad boys of the show, vying to escape a harmful label (or labels) as "heart-breaker" with watchers everywhere clutching old but still-full pill bottles and booing the naughty boys' presence on screen.

How producers GSK and Takeda will work the characters back into the good graces of the audience, or if they will just kill them off, is sure to keep viewers on the edge of their seat all year.

The show did receive questionable reviews from pre-viewers for the character Injectable Insulin. Apparently the audience found her a rather bland, unsympathetic character, who did not match viewers' ideal of a diabetes treatment. She actually received a lower rating than Actos for not being convenient enough for the viewers to like.

The most interesting, if unproven, characters to date seem to be Januvia and the old entrepreneur turned crazy-scientist, Thomas E. Mann. Mann has an interesting character history. A successful investor over the years - once before in diabetic treatment: insulin pumps - who Forbes lists as having a personal fortune of $2.2 billion ($600 million less than what Pfizer spent on Exubera) admits to committing half of his estate so far to his company, MannKind Corporation, to develop an inhaled insulin product called Technosphere insulin. He believes his product far superior to Exubera and remains undeterred by the troubles in the therapeutic area.

While having a much more convenient device (about the size of a cell phone) and delivering faster-acting insulin, Mann's seeming eccentricity stems more from his personal investment against more intractable issues. First, because of the technology's novelty, no long-term study has been conducted to discover the degree of lung reduction caused by inhaling a complex protein. Second, Mann's meager resources from a corporate and pharmaceutical standpoint, does not put him in a good position to compete for ratings against giants such as Eli Lilly and Novo Nordisk (breaking update: NN appears to be pulling out of the race) who are also working on inhaled insulin products.

Possibly the brightest character on the cast, and the most serious challenge to Mann and his inhaled insulin team, is Januvia. A character making strong gains in audience popularity, this DPP-4 inhibitor seems to be avoiding the tabloids that have nabbed all other diabetic treatments that are not intravenous. Though there have been concerns raised over her effects on the kidneys and she can cause upper respiratory infection, Januvia has gotten off to a better than expected start and Jami Rubin of Morgan Stanly recently nominated her for a daytime Emmy, calling her a potential multi-billion dollar figure in an interview with Medical Marketing and Media.

The convenience of an oral treatment over needles will bring a lot of patients aboard, although an upper respiratory infection does make it difficult to conduct the other major part of the treatment's regimen: daily exercise. To head producer Merck's advantage and peace of mind, they did develop her in-house, so they are not taking a high-priced gamble bringing in an unfamiliar outsider.

This new soap opera can't help but make a big splash and I am sure all of us will be right here watching. Enjoy tonight's pharma viewing.

One message that resonated throughout the conference was that the industry is not helpless and will continue to benefit from its thought leader relationships. To do so, however, requires some insurance.

Cutting Edge Information has studied the challenges surrounding fair-market value (FMV) compensation for physician activities since 2006. And although there is no simple formulation that companies can use to determine fair-market value, several legal experts who attended the CBI conference believed that the best way for companies to protect themselves was to simply put a process - any process - in place to determine FMV. And, once that process is in place, document it.

Think of it as an insurance policy. Since there are no guidelines to determine a doctor's fair-market value, pharma executives are understandably confused as to how to calculate it. As it turns out, FMV is somewhat arbitrary and, in pharma's case, the best defense is a good offense.

The key is to arrive at a process-based outcome. If audited, a pharma company will need to explain how it arrived at its current compensation levels. Here are a few steps that pharma companies can take to put a process in place to protect themselves:

1) Establish criteria for thought leaders: Some companies use tiers, others use geographical influence or impact factors. However your company segments its thought leaders, document the criteria used to do the segmenting.

2) Define your service needs: Clearly, the industry is leveraging the expertise of thought leading physicians. To protect themselves, however, pharma companies need to outline the services that these physicians will provide. That way, upon any future audit, companies can point to these service needs as a basis for contracting with key opinion leaders.

3) Review third-party FMV benchmarks: Third-party benchmarks provide a great starting point and support for your own fee schedule. These benchmarks are independently collected and unbiased. As it happens, Cutting Edge Information tracks these benchmarks annually for 15 physician categories in 20 therapeutic areas. The most recent analysis can be found here.

4) Get a written agreement in place: When contracting with an opinion leader, remember K.I.S.S (Keep It Simple Stupid). Define the service being provided, identify the physician providing the service, include the rationale behind the compensation rate and how it will be paid (hourly rate, per diem, fixed fee, etc.) and then state the physician's compensation.

5) Document the services provided: 'Documents are your friends,' as one presenter stated at the conference. It's true, the more evidence you can provide to show that your company developed its compensation levels through a formal process, the harder it becomes for prosecutors to file suit. Just make sure the process is documented and credible. Include independent information to support your FMV fee schedule and, if possible, get information from multiple sources.

So although it's not a perfect solution to determine FMV, it's the best that the industry can hope for for now. And establishing a formal process will go a long way toward establishing the protection necessary for pharmaceutical companies to continue working with key opinion leaders.