More “User Friendly” Code of Ethics from AdvaMed?

In January, the Advanced Medical Technology Association (AdvaMed), the U.S. medical device industry’s largest trade and lobbying group, released an updated “Code of Ethics on Interactions with U.S. Health Care Professionals” (HCPs).

The Code of Ethics originally appeared as the Health Industry Manufacturers Association Code in 1993. It was later updated and relaunched as the AdvaMed Code in 2003 and revised in 2008.

The last time AdvaMed updated its Code of Ethics was in the immediate aftermath of the U.S. Attorney deferred prosecution agreement era in 2008. Then U.S. Attorney Chris Christie most famously accused device companies of rampant abuse of payments to physicians and other healthcare providers in exchange for recommending the use of company devices in violation of the federal Anti-Kickback Statute.

Among other things, Christie cited payments for unnecessary consulting agreements, questionable payments for speaking engagements and royalty payments where surgeons contributed little, if any, intellectual property. Without admitting guilt, the major orthopedic industry players paid over$300 million in fines and entered into extensive deferred prosecution agreements requiring third-party review of industry/physician contracts.

Nearly one decade after those “bad-old-days,” AdvaMed updated Code of Ethics will go into effect on January 1, 2020.

Why update now?

Scott Whitaker, the Association’s CEO, said the updates “reflect evolving legal standards, care delivery models and best practices of the last decade.” He added the Code is designed to “ensure the Code’s continued effectiveness as a premier foundational document for ethics and compliance across the medtech industry.”

Kevin Lobo, Stryker Corporation’s chairman and CEO, is the association’s Chair-Elect. He said by helping to ensure companies continue to focus on ethical business practices, “The refreshed Code reinforces the industry’s commitment to delivering expert care and building products that make a difference for health care professionals and patients.”

What’s New?

While the Code also adds new Code values such as “Innovation; Education; Integrity’ Respect; Responsibility; & Transparency,” Matt Wetzel, AdvaMed’s vice president and deputy general, said the most important change is that the Code is now more readable, accessible, and usable for field service representatives.

We scoured the 38-page document looking for any new and significant updates or new rules guiding physician/industry relationships. The updated Code basically repackages the existing Codes and we were left wondering, “Where’s the Beef?”

What we found was that the Code does not focus on “ethics” as much as it focuses on clarifying rules that will help companies and surgeons steer clear of federal Anti-Kickback Statute violations.

The only hint of ethics is the industry association’s description of the physician and other providers’ “highest duty to act in the best interest of their patients.” Industry helps providers meet this duty “through necessary, collaborative interactions.”

Defining what is “necessary” and navigating the legal requirements governing industry and physicians’ interactions, of course, helps publicly traded companies meet their fiduciary responsibility to shareholders.

When a “Consulting” Contract is NOT a “Consulting” Contract

It all boils down to the definition of a “necessary interaction” with a physician.

According to the updated Code, a “necessary interaction” is one where “A legitimate need arises when a Company requires the services of a Health Care Professional to achieve a specific objective, such as the need to train Health Care Professionals on the technical components of safely and effectively using a product; the need for clinical expertise in conducting product research and development; or the need for a physician’s expert judgment on clinical issues associated with a product.”

“Designing or creating an arrangement to generate business or to reward referrals from the contracted Health Care Professional (or anyone affiliated with the Health Care Professional) are not legitimate needs for a consulting arrangement.”

How Much to Pay Physician Consultants?

The answer is: “fair market value.”

The Code explains, somewhat confusingly, that “fair market value” is determined when companies pay for the “necessary” services.

According to the Code, there are different ways to calculate fair market value. Or, you can hire a consultant.

“For example, many third-party vendors or other experts can assist a Company in developing an approach to assessing fair market value compensation. In all instances, a Company should use a method that incorporates objective criteria—for example, a Health Care Professional’s specialty, years and type of experience, geographic location, practice setting, the type of services performed, etc. A Company is encouraged to document its method(s) for evaluating whether compensation reflects the fair market value of the services provided.”

Also, be sure to hire physicians in high standing. Key Opinion Leaders, for example.

“Companies should pay special attention to understand possible conflict of interest of the physician. For example, in addition to his/her industry interactions, a physician could also hold a leadership role in a medical society, serve as a conference planning chair, or act as a medical journal editor. “A physician’s professional interest in advancing objective, clinical information may compete with his or her industry relationship. Companies should be aware that Health Care Professionals may have these conflicts. Companies should also be mindful of steps that may need to be taken to address these conflicts, including, for example, recusal from decisions that implicate the conflict.”

Grants, Sponsorships and Donations

In looking at third-party programs, the principles for providing grants, sponsorships, and donations remain largely unchanged.

AdvaMed consolidated the principles on those funding arrangements into one section. The updated Code also includes a checklist for reviewing educational grant requests and expands and clarifies requirements for providing independent research grants and charitable donations.

There are also new principles that address Satellite Symposia. A Satellite Symposium is defined as a “company-organized and funded program that is appended to a Third-Party Program agenda but that the Third-Party Organizer does not control.

“These programs often take place during meal breaks at the Third-Party Program and may address education and training topics that coincide with the Third-Party Program’s focus. A Satellite Symposium does not include a Company-organized meeting, training, or educational session (such as an advisory board, consultant meeting, or product education session) that (a) may be held in close physical and temporal proximity to a Third-Party Program and (b) is not appended to or included in the Third-Party Program’s official agenda.”

Joint Education and Marketing Programs

There is an update regarding jointly conducted education and marketing programs where the manufacturer promotes its product while a surgeon is highlighting his or her ability to perform the implant procedure. The Code acknowledges the benefit of these programs and provides an outline and principles that help the surgeon and manufacturer stay clear of the Anti-Kickback Statute.

The principles state that the manufacturer and HCP should serve as bona fide partners and costs should be shared equally. There must also be a bona fide and legitimate need for a manufacturer to engage in such programs for its own educational or marketing benefit. The manufactures should establish controls to help ensure that the arrangements do not result in unlawful inducements.

Travels and Lodging

Travel and lodging expense guidelines are consolidated and provide clearer guidelines on when such expenses are permitted and when they are prohibited.

Another section consolidates the guidelines regarding providing meals to HCPs. The Code encourages companies to establish meal policies accounting for costs in more expensive geographic areas.

Implementing the Code

AdvaMed is going to reinforce the code with a two-pronged strategy. The first prong is to work with AdvaMed member companies to ensure they include AdvaMed information on their in-company compliance training. The second is to reach out to medical and surgical societies to offer education for HCP members on the Code.

Companies that adopt the Code are strongly encouraged to submit to AdvaMed an annual certification stating that the company has adopted the Code and has implemented an effective compliance program.

We asked a spokesperson for the American Academy of Orthopaedic Surgeons about the updated Code. The Academy had not yet had a chance to review or comment on the Code.