AdvaMed Updates Code of Ethics

The relationships between medical device manufacturers and healthcare professionals will be subject to new restrictions beginning July 1 when AdvaMed's revised Code of Ethics on Interactions with Healthcare Professionals goes into effect.

The new Code eliminates gifts to healthcare professionals, prohibits entertainment and recreation, and provides more guidance on proper consulting and royalty arrangements. These and other restrictions are designed to help eliminate even the appearance of impropriety in medical device manufacturers' interactions with healthcare professionals. In addition, the Code recommends that companies certify their compliance with the Code and AdvaMed will post contact information for the compliance officer and company compliance hotline on its Web site.

The new Code "will lead the industry to safer ground," says Andrew Van Haute, Esq., assistant general counsel for AdvaMed. "(The changes are) really about making sure there is not an inappropriate cloud over a decision."

The revised Code provides a reference for all medical device manufacturers and gives them a sense of general practices in the industry, including safeguards that mitigate risk under the Anti-kickback Statute, says Gina M. Cavalier, Esq., a partner in Reed Smith's Washington D.C. office.

"Release of the new Code draws attention to compliance overall and presents an opportunity for companies to revisit their compliance policies and procedures, potentially update them, enhance them, and that type of exercise is always helpful," says Cavalier.

Overview of the Code
The revised AdvaMed Code:

• Prohibits providing entertainment or recreation to healthcare professionals
• Prohibit gifts of any type, including all non-educational branded promotional items
• Provides guidelines for royalty agreements between medical device manufacturers and healthcare professionals
• Sets parameters for providing demonstration and evaluation products
• Addresses the provision of objective reimbursement, coverage, and health economics information to healthcare professionals
• Includes a section under which a list of companies that certify their adoption of the Code will be available for public review on AdvaMed's Web site

Background on the Code
A large work group of people from member companies from almost every sector of the industry put together the revision, according to Van Haute. The revision process began in March 2008 and AdvaMed released the revisions on December 18.

The medical device industry has come under increasing scrutiny from federal prosecutors and government regulators in recent years. That scrutiny, including proposed legislation mandating the disclosure of payments to healthcare professionals, informed the direction AdvaMed took with the revisions and the decisions it made, according to Van Haute.

"I think the industry as a whole has a desire to demonstrate their commitment to ethical business practices," Cavalier adds. "While outside forces—and the current enforcement environment—impact this, there really is a genuine desire in the industry to showcase compliance efforts and a dedication to ensuring ethical interactions with physicians."

AdvaMed Code v. PhRMA Code
Some of the revisions echo those in the revised Pharmaceutical Research and Manufacturers of America (PhRMA) Code on Interactions with Healthcare Professionals, which went into effect this month., while others are specific to the medical device industry.

"We knew we were going to land in similar places to where PhRMA did in some of the sections," says Van Haute. "We did really think that where it was appropriate there was good reason to align with PhRMA, but we didn't take a lockstep view because there are ways that medical device companies' interactions with healthcare professionals are different from pharmaceutical interactions."

Greg Levine, Esq., a partner in Ropes and Gray's Washington D.C. office, believes some of the most important revisions are those that adopt PhRMA's position. Levine cited the ban on providing entertainment and recreational activities to healthcare professionals, as well as the prohibition on providing branded, non-educational items as two key areas taken from the PhRMA Code.

"Another area that is analogous to the changes in the PhRMA Code is the focus on not just having a paper policy, but complying with it," Levine says. "Both revised codes have provisions that try to foster compliance with the compliance programs and policies companies have established."

The ways in which medical device sales representatives interact with healthcare professionals differ from those of pharmaceutical sales representatives. AdvaMed tried to emphasize those differences in the Code's preamble, according to Van Haute. Healthcare professionals often need training on new or complex medical technologies and medical device sales representatives are often the ones providing that training.

AdvaMed also included additional information on when royalty payments are appropriate, but Levine believes this will continue to be a challenging area for device manufacturers.

"The royalty provision creates some kind of a baseline to work from, but how you actually implement them in practice, determining whether a particular royalty payment to a particular doctor for a particular service is acceptable, is something that is going to be very challenging to implement as it is today," Levine says.

AdvaMed also added a section on demonstration and evaluation products in part because of questions it received from member companies over the years, Van Haute says. The Code states allowing healthcare professionals to evaluate devices at no charge can benefit patients. Healthcare professionals can assess the appropriate use and functionality of a product and determine whether to use it. Evaluation and demonstration devices can be either single use devices or capital equipment.

"The Code section on evaluation and demonstration products is one good example of where the device industry is different from the pharmaceutical industry," Cavalier says. "This section of the AdvaMed Code recognizes what is a common industry practice and distills practical guidance for device manufacturers."

Compliance with the Code
Levine points out that the Code still contains exceptions and gray areas, which remain open to interpretation by individual companies. For example, the revised Code states that a meal provided in association with an educational or informational presentation may be provided in an office setting. The Code also describes situations in which the in-office setting may not be feasible, such as when the medical technology cannot easily be transported to the healthcare professional's place of business. Determining whether a device is easily transportable is naturally open to interpretation.

"In borderline cases, you could even come to a different conclusion based on the physical strength of the person who would be carrying the device," says Levine.

AdvaMed plans to work with member companies to provide training on the revised Code, Van Haute says. When the Code was last updated five years ago, AdvaMed produced a trifold brochure outlining all of the changes and is currently working to produce something similar.

Signing on to the Code helps companies in a number of ways, Cavalier says. Adherence to the Code lowers a company's risk under the Anti-kickback Statute. It is also a good overall ethical business practice. The Code will also help companies comply with state laws in California and Nevada. The July 1 implementation date also coincides with Massachusetts' deadline for certifying companies have a compliance program.

"When companies focus on compliance up front, it avoids potential problems down the road and we always think that is the best approach," Cavalier says.