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Regulatory Viewpoint
Revised AdvaMed ethics code contains significant changes.
Mark Langdon
Late last year, the Advanced Medical Technology Association (AdvaMed), released its updated Code of Ethics on Interactions with Health Care Professionals. The code, which goes into effect on July 1, is significant in that it widely has been adopted by the device industry as a de facto compliance policy for interactions with physicians, and federal and state enforcement authorities strongly have encouraged compliance with the voluntary code.
Given that adherence to the code substantially can reduce a company’s compliance risks, and in light of the significant changes in the revised code, firms carefully should review existing policies and revise them, if necessary, to conform to the code, and ensure that employees and agents are appropriately trained and monitored. This is especially critical in light of the numerous investigations and enforcement actions currently ongoing with orthopedic and other device companies. This column will highlight key changes to the code and their implications.
Complying with the Code
The code encourages manufacturers to implement an effective compliance program. Firms are encouraged to have high-level management annually certify that the company has adopted the code and implemented a compliance program. AdvaMed will publish a list of manufacturers that provide certification on its Web site. Manufacturer members of AdvaMed should submit contact information for their compliance department. Non-member manufacturers are encouraged to do so as well, which also will be posted online.
Consulting Arrangements
Companies should pay close attention to the changes made to this section of the code, especially given the aggressive scrutiny by federal and state governments of the financial relationships between companies and physicians. There are several important features. First, any legitimate need for consulting services must be documented in advance. Second, it requires that a fair-market-value (FMV) analysis of the compensation be based on an arm’s length transaction for the services provided. On this point, it is recommended that objective and verifiable criteria and valuation methodology used to determine FMV be documented. Third, the code permits sales personnel to offer input about the suitability of proposed consultants, but stresses that such personnel should not control or unduly influence the decision to engage a particular healthcare professional as a consultant. Finally, royalty agreements only should be entered into where the physician is expected to make, or has made, a novel, significant or innovative contribution to the development of a product, technology, process or method, and companies should consider excluding from the calculation of royalty payments any units of product purchased, used or ordered by the healthcare professional receiving the royalty payment.
Training & Education
With respect to manufacturer-conducted product training and education, general education sessions (i.e., not specific to the company’s products) are not the type of training and education for which manufacturer-supported travel and lodging is appropriate. The code also notes that the training staff used by the manufacturer should have the proper qualifications and expertise to conduct the training (which possibly can include sales representatives). Regarding third-party educational conferences, the code clarifies the guidance about providing meals and refreshments by noting that manufacturers directly may provide meals and refreshments for physicians attending a third-party educational conference if they are provided to all healthcare professional attendees and in a manner that is consistent with the standards of the conference sponsor and the body accrediting the educational activity. Meals and refreshments must be modest in value, subordinate in time and focus to the purpose of the conference, and separate from the continuing medical education portion of the conference.
Grants & Donations
Manufacturers should adopt objective criteria for providing grants and donations, implement procedures to ensure they are not used as an unlawful inducement, and appropriately document the provision of such grants and donations. Educational grants should not be made to individual healthcare professionals. Also, charitable donations must be for bona fide charitable purposes and made only to bona fide charitable organizations. In addition, sales personnel are permitted to provide input into this process, though they cannot control or unduly influence the decision.
Reimbursement Info
The code contains detailed guidance regarding the provision of coverage, reimbursement and health economics information. For example, the code permits providing physicians with information regarding reimbursement revenue and associated cost to facilitate the “decision to buy or use” a manufacturer’s product as well as collaborating with healthcare professionals, patients and patient organizations to advocate for coverage decisions, guideline policies and adequate reimbursement. The code also permits assistance with obtaining coverage and with facilitating the appeals process. However, any assistance cannot act as an unlawful inducement. The government has demonstrated increasing enforcement interest in the provision of value-added services such as reimbursement advice. As a result, companies should be sensitive to these issues.
Gifts
Manufacturers are prohibited from giving healthcare professionals any type of non-educational branded promotional item, even if it is of minimal value and related to the healthcare professional’s work or for the benefit of patients. Pens, notepads, mugs, and other similar items with the manufacturer’s name and logo no longer may be provided. Occasional items that benefit the patient or have a genuine educational purpose may be permitted, so long as, generally, they have a fair market value of less than $100.
Meals & Entertainment
Modest meals may be provided as an occasional business courtesy when certain requirements are followed, including that the meal is: (1) incidental to a bona fide presentation of scientific, education or business information; (2) provided in a setting conducive to bona fide scientific, educational or business discussions; (3) only provided to healthcare professionals in attendance with a bona fide interest in the presentation; and (4) provided only when a representative of the manufacturer is present. Individual employees or agents of a manufacturer cannot pay for meals or refreshments where the manufacturer itself would not be permitted to pay for them.
A new section on entertainment and recreation states that a company should not provide or pay for any entertainment or recreational event or activity for any non-employee healthcare professional. Prohibited activities would include theatre, sporting events, golf, skiing, hunting, sporting equipment and leisure or vacation trips. The prohibition applies regardless of the value of the entertainment, whether the healthcare professional is engaged as a speaker or consultant, or whether the entertainment of recreation is secondary to an educational purpose. This blanket prohibition on any and all entertainment is a significant addition to the code. Companies will need to be particularly careful about this point.
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Though many companies already have robust compliance and training programs, it is prudent to periodically review and update such programs to take into account the changing enforcement landscape. Compliance with the new code will not guarantee immunity from prosecution, but it will go a long way toward reducing the overall risk of exposure, and can be viewed as a mitigating factor by an enforcement agency.
