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December 24, 2008

AdvaMed Code Of Ethics Make-Over: More Restrictions, More Guidance

Full article reprinted from "The Gray Sheet" - December 22, 2008

Find out how AdvaMed's updated industry "code" for interacting with health care professionals forbids device firms to provide entertainment, recreation and non-educational gifts of any value, including pens, mugs and notepads.

Full article reprinted from "The Gray Sheet" - December 22, 2008

AdvaMed Code Of Ethics Make-Over: More Restrictions, More Guidance

Companies can give health care professionals educational gifts valued at $100 or less, or more if the gift is a medical textbook or anatomical model, the code says.

The trade association's board of directors approved the revised "Code of Ethics on Interactions with Health Care Professionals" Dec. 18. The code, which tightens restrictions in some areas while adding new guidance in others, takes effect July 1.

The move comes as federal and state governments, physician groups and universities are clamping down on potentially unethical inducements by restricting, or at least making more transparent, industry-doctor financial relationships.

"Just as medical technology companies are naturally focused on the need for continuous improvement in their product development, our industry's Code of Ethics should also be dynamic and responsive to change," said Paul LaViolette, a senior advisor with Boston Scientific and AdvaMed board member.

Companies Should Certify Compliance Annually

In addition to cutting entertainment, recreation and gifts, the updated code adds a requirement for AdvaMed member companies to supply contact information, for public posting by AdvaMed, for compliance officers or for an anonymous hotline to facilitate reporting of possible code violations.

The revised code "strongly" encourages companies to submit to AdvaMed an annual certification of code adoption and implementation signed by the CEO and chief compliance officer. The association will post the list of certifying companies on its Web site.

The new focus on compliance certification adds an "element of rigor" to the code, said Christopher White, AdvaMed's general counsel.

White, who called the update a "dramatic expansion," also pointed out that the code targets "new arrangements, common within the medical device industry, where little or no guidance existed previously."

White was referring primarily to new sections for entering into royalty agreements with health care providers and for offering "evaluation or demonstration" products free of charge.

The code instructs firms to ensure that any recipient of royalty payments has made a "novel, significant or innovative contribution" to the development of a new product or project; that the contribution is documented; and that the payment be based on objective factors.

In the case of providing complimentary access to capital equipment to allow a doctor to evaluate a product before purchasing it, AdvaMed explains that manufacturers should set out in writing beforehand a "reasonable" evaluation period, after which the product would be returned or purchased.

Like the current version of the code, last updated in 2005, the revision addresses proper approaches to conducting company-sponsored product training and sales meetings, supporting third-party conferences, establishing consulting arrangements, offering charitable donations and providing information to health care professionals on reimbursement and health economics.

Each of these sections is expanded or at least somewhat revised in the updated code.

More detail was added in particular to the reimbursement information section. It has evolved from a general, one-paragraph guideline in the current code to an eight-bullet-point list of allowed practices: including collaborating with health care professionals and patient groups to advocate for improved government reimbursement; providing information on changes in reimbursement amounts; and assisting in obtaining patient coverage decisions from payers, as long as the assistance is not "unlawful inducement."

The trade association also points out that the new version now invites non-AdvaMed member device companies to adopt the code.

Update Comes Amid Industry Scrutiny

Device and drug firms have come under pressure in to answer charges that their financial relationships with doctors and other health care providers are unethical and not sufficiently transparent.

The Department of Justice has put significant resources into investigating these relationships. In addition, several members of Congress, most prominently Sens. Herb Kohl, D-Wis., and Chuck Grassley, R-Iowa, are doing the same (1"The Gray Sheet" Oct. 20, 2008, In Brief).

There has also been substantial activity by state governments, primarily focused on the drug industry. But recently, Massachusetts passed a law and released draft regulations establishing payment disclosure requirements and a statewide mandatory code of ethics for device and drug firms, based on AdvaMed's code, and the separate, also recently updated, code of the Pharmaceutical Research and Manufacturers of America.

The Massachusetts rules, like the updated AdvaMed code, take effect on July 1 (2"The Gray Sheet" Dec. 15, 2008, p. 3).

White says the timing is coincidental, noting that it is standard practice to provide a six-month phase-in period to allow companies to implement and train to the code.

"There is nothing in this code that is specifically responsive to Massachusetts," he maintained. That said, "Clearly there will be implications given that this is a new code effective as of that date and the Massachusetts law refers to our code, but we did not set out to essentially draft new law for the Commonwealth of Massachusetts."

Some of AdvaMed's changes do appear to move the industry closer to requirements included in the draft state regulations, including the prohibition on entertainment and recreation, and the practice of providing annual compliance certifications, which manufacturers would have to present to the Massachusetts government under the proposed rule.

According to AdvaMed, the provisions in the updated code are derived from various sources, including the federal anti-kickback statute. However, the industry code, which has been around in some form since 1991, is not meant to serve as formal legal advice, the trade association stresses.

- David Filmore

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