Navigating the complexities of fair market value assessments 

Determining fair market value (FMV) for healthcare professionals (HCPs) presents unique challenges for the life sciences industry. As the regulatory landscapes shift and global engagement grows, companies must prioritize accurate, data-driven FMV assessments to uphold compliance and ensure equitable compensation. 

Compensation rates that reflect reasonable and customary payments for HCP services are essential for determining FMV. This is vital to ensure that companies meet compliance requirements, avoid regulatory scrutiny and maintain ethical standards. Errors in FMV calculations can result in potential overpayment or underpayment, impacting compliance. 

Key challenges in determining FMV 

Life sciences companies often face various challenges when navigating FMV assessments, including: 

• Limited data availability: One of the main hurdles in establishing accurate FMV is the availability and quality of data. Companies may struggle to gather comprehensive, up-to-date information on HCP qualifications and compensation benchmarks, particularly in specialized or rare disease states. 
• Manual tiering and inconsistencies: The traditional process of manually reviewing curriculum vitae (CVs) and assigning tiers to HCPs is time consuming and prone to human error. This process can lead to inconsistencies and potential biases, especially when conducted by medical or compliance professionals who may have limited resources. 
• Cross-border transactions: Different countries have diverse regulatory frameworks that dictate FMV rates, leading to potential complications in global engagements. Factors such as currency fluctuations, regional cost of living differences and local healthcare standards add to the complexity of these assessments. 

Considerations in the FMV calculation process 

Effective FMV assessments require life sciences companies to consider a range of key factors: 

• Specialization and expertise: HCPs with specialized knowledge often warrant higher rates due to their expertise. Accurately evaluating these qualifications is crucial for fair compensation. However, these experts may not always have detailed or updated CVs, posing additional challenges for tiering and FMV determination. 
• Leveraging available data: Leveraging publicly available data can transform the FMV process. By aggregating this data, life sciences companies can build more consistent and objective tiering systems, ensuring that HCPs are assessed based on verified qualifications. 
• Global variations: Certain countries have specific laws that regulate HCP payments, mandating uniform compensation without tiering. In other regions, local economic conditions and healthcare structures influence FMV rates, creating the need for adaptable methodologies that can account for these nuances. 

Best practices for FMV assessment 

To navigate these challenges effectively, life sciences companies should consider adopting best practices that focus on a comprehensive, data-driven approach: 

1. Data driven and automated tiering: Adopting automated, data-driven tiering solutions is crucial to enhancing the FMV process. These tools use algorithms to analyze qualification data, ensuring consistent, accurate tiering of HCPs. Moving away from manual CV reviews reduces human error, improves efficiency and supports compliance with industry standards, leading to more reliable and consistent FMV rate determinations. 
2. Frameworks for standardization: Establishing a robust framework for FMV determination that aligns with industry standards and compliance requirements is vital. Companies should define clear tiering criteria and ensure these are applied uniformly across various engagements. Automated systems can be calibrated to maintain consistency and adherence to set guidelines, enabling a fair and transparent process. 
3. Global adaptability: To effectively manage cross-border engagements, companies should remain informed about local regulations and global economic trends that influence FMV rates. This understanding allows them to adjust their FMV frameworks, accordingly, ensuring appropriate compensation while staying compliant. 

Advancing with data-driven FMV and KOL solutions 

As HCP engagements grow more complex, maintaining effective and defensible FMV practices is critical. A data-driven, standardized approach helps life sciences companies meet regulatory expectations, reduce risks and ensure compliant, transparent interactions. Transitioning to automated tiering processes enhances accuracy, reduces workload and optimizes resource allocation. 

Baker Tilly’s fmvNOW® tool offers direct, self-service access to FMV hourly rates across key opinion leader (KOL) tiers, serving as the delivery mechanism for fair market value rate analysis. Combined with kolNOW®, our solution for evaluating and simplifying KOL engagements, your team can seamlessly manage FMV determinations and streamline KOL interactions. By embracing these innovative solutions, you can simplify processes, enhance compliance and focus on higher value-added tasks. 

Contact us to learn more 

For more information on this topic or to learn more about our compliance and ethics solutions for life sciences companies, connect with us today.  

This article was derived from the Key considerations in determining fair market value webinar, watch the full recording below. 

Key considerations original.mp4