04.23.13
At the 2013 annual meeting of the Medical Device Manufacturers Association held in Washington, D.C., this week, Jeff Layne, partner at Fulbright & Jaworski, and Richard Rew, general counsel for Arthrocare Corporation, discussed compliance strategies for medtech companies. The two outlined the mistakes smaller companies tend to make, and what emerging companies should aim to do to meet compliance regulations.
According to Layne and Rew, emerging companies do not pay enough attention to several key compliance laws that tend to pose problems for them later. For instance, the federal Stark law, which prohibits physician referrals of designated health services for Medicare and Medicaid patients if the physician (or an immediate family member) has a financial relationship with that entity, is commonly ignored. The federal anti-kickback statute and state anti-inducement laws are also typically forgotten, as well as off-label marketing rules, the foreign corrupt practices act, rules regarding distributor relationships, government agent interactions, and data privacy.
Mature, successful companies tend to develop and implement company-wide compliance programs. There are seven golden rules of an effective compliance program, said Layne, that greatly increase a company’s chance of remaining compliant and out of trouble.
“They are not laws. They’re not required, but they are in some ways becoming a standard of care in the industry,” Layne explained. “If you’re not operating within the confines of these, you may increasingly find yourself standing out.”
The seven key elements he recommended are:
Bad compliance strategies are often due to barriers to understanding compliance such as board members not having industry-specific expertise, a general lack of experience in commercial healthcare marketplace among personnel, a lack of understanding of compliance requirements, and, most troublingly, resistance from company personnel or management.
“We sometimes get pushback from sales and marketing,” said Layne of his firm’s attempt to establish compliance strategies at medtech companies. “But increasingly, they’re hearing that other people are making this move and that they are out of touch.”
Federal sunshine laws are forcing companies to focus their compliance strategies on a more micro level, said Rew. “It’s requiring people to look at the sales receipt,” he said. “It’s helping to really analyze and understand the relationship companies have with healthcare providers.”
According to Layne and Rew, emerging companies do not pay enough attention to several key compliance laws that tend to pose problems for them later. For instance, the federal Stark law, which prohibits physician referrals of designated health services for Medicare and Medicaid patients if the physician (or an immediate family member) has a financial relationship with that entity, is commonly ignored. The federal anti-kickback statute and state anti-inducement laws are also typically forgotten, as well as off-label marketing rules, the foreign corrupt practices act, rules regarding distributor relationships, government agent interactions, and data privacy.
Mature, successful companies tend to develop and implement company-wide compliance programs. There are seven golden rules of an effective compliance program, said Layne, that greatly increase a company’s chance of remaining compliant and out of trouble.
“They are not laws. They’re not required, but they are in some ways becoming a standard of care in the industry,” Layne explained. “If you’re not operating within the confines of these, you may increasingly find yourself standing out.”
The seven key elements he recommended are:
- Have a chief compliance officer and other senior personnel. If a company is small, a general counsel is acceptable but is not best practice. As a company grows, it is better off having a designated officer overseeing compliance.
- Establish a written standard of conduct.
- Implement regular, effective training and education.
- Establish a process to receive complaints and concerns.
- Practice internal monitoring and auditing.
- Respond appropriately to detected offenses and developing corrective action.
- Enforce disciplinary standards consistently.
Bad compliance strategies are often due to barriers to understanding compliance such as board members not having industry-specific expertise, a general lack of experience in commercial healthcare marketplace among personnel, a lack of understanding of compliance requirements, and, most troublingly, resistance from company personnel or management.
“We sometimes get pushback from sales and marketing,” said Layne of his firm’s attempt to establish compliance strategies at medtech companies. “But increasingly, they’re hearing that other people are making this move and that they are out of touch.”
Federal sunshine laws are forcing companies to focus their compliance strategies on a more micro level, said Rew. “It’s requiring people to look at the sales receipt,” he said. “It’s helping to really analyze and understand the relationship companies have with healthcare providers.”