The Board of Directors of the Advanced Medical Technology Association (“AdvaMed”),
an association that represents companies that develop, manufacture, and market
medical products, technologies, and related services, recently approved a
revised and updated Code of Ethics on Interactions with Health Care
Professionals (the “Revised Code”). The Revised Code provides compliance
recommendations for relationships between AdvaMed member companies and health
care professionals (“HCPs”).
Effective as of July 1, 2009, the Revised Code includes several significant
revisions to the AdvaMed Code that was adopted in 2005 (the “Current Code”).
These revisions generally further restrict actions which may be considered
“unlawful inducement” under the federal Anti-Kickback Statute (42 U.S.C.
§1320a-7b(b)). Compliance with the Revised Code is not mandatory, but AdvaMed
strongly encourages companies to adopt and adhere to the Revised Code. Those
companies that choose to adopt the Revised Code are encouraged to submit an
annual certification to AdvaMed that they have adopted the Revised Code and
implemented an effective compliance program. AdvaMed will publish a list of
companies that have submitted this certification on its website. All companies
that are AdvaMed members, regardless of whether they certify that they have
adopted the Revised Code, must provide AdvaMed with contact information
regarding their compliance department or an anonymous hotline in order for
individuals to report violations of the Revised Code.
AdvaMed members and other medical device manufacturers and distributors who
desire to follow the Revised Code’s guidelines should be aware of the following
- Definitions. AdvaMed broadened the
definition of HCPs and included a new term, “Medical Technologies”, in the
Revised Code. HCPs now include not only those individuals and entities that
purchase, lease, recommend, use, arrange for the purchase or lease of or
prescribe a medical technology product in the United States, but also all of
those involved in the provision of health care services and/or items to
patients in the United States. Thus, HCPs include both medical providers and
non-providers who are involved in the decision-making regarding the
purchase, lease or use of Medical Technologies. Medical Technologies include
medical products, technologies and related services and therapies to
diagnose, treat, monitor or manage patient conditions.
- Out-of-town Travel. The Revised Code limits situations where
companies may pay for out-of-town travel. The need for out-of-town travel to
attend company-conducted product training and education sessions must be
supported by objective reasons in order for companies to pay for HCPs
reasonable travel and modest lodging costs. The Revised Code includes
definitions of “training” and “education,” terms that are not defined in the
- Consulting Relationships. The section of the Revised Code which
discusses consulting agreements with HCPs was substantially revised and
includes a new subsection related to royalty payments. The following are the
key revisions to this section.
- Companies may pay HCPs for consulting services only if such payments
are fair market value for the services provided, are not based upon the
consultant’s past, present or anticipated business with the company, and
are not an unlawful inducement.
- Sales personnel may not control the decision to retain a HCP as a
consultant, but may provide input into such a decision.
- Royalty payments made to HCPs for novel, significant or innovative
contributions to the development of a product, technology process or
method must be appropriately documented and based on factors that
preserve the objectivity of medical decision making by the HCP.
- Entertainment. The Revised Code prohibits companies from paying
for or providing any entertainment or recreational events for non-employee
HCPs, regardless of the value or the entertainment or recreational events or
whether the individual is a speaker or consultant for the company. These
types of payments are not allowed even when the recreation or entertainment
is secondary to an educational purpose.
- Meals. The Revised Code states that companies may provide modest
meals and refreshments to HCPs in connection with interactions that involve
the presentation of scientific, educational or business information. The
meal must be provided in a setting that is conducive to business or
educational discussions and must not have the purpose of merely creating
goodwill or developing business prospects. Finally, such meals should only
be provided to those who actually attend the educational event and no meals
shall be provided to HCPs in a carry-out fashion.
- Promotional Gifts. The Revised Code entirely prohibits the
provision of non-educational, branded promotional items, such as pens or
notepads, which contain a company name or logo. Such prohibition extends to
items of minimal value, those related to the HCPs work, and those that
benefit patients. The Revised Code, however, allows a company to provide an
HCP an item with a fair market value of $100 or less to be used for
educational purposes, such as an anatomical model or a textbook.
- Reimbursement Consulting. The Revised Code allows for companies
to collaborate with HCPs to achieve commercial payor coverage decisions,
guidelines, and policies that allow patients to access medical technologies.
However, the Revised Code states that companies may not, in any case,
interfere with a HCPs independent clinical decision making, promote billing
for services that are not medically necessary or suggest a method for the
HCP to engage in fraudulent billing practices.
- Samples. The Revised Code contains a new section entitled
Evaluation and Demonstration Products, allowing for companies to provide
HCPs with a reasonable number of their products for evaluation purposes. The
HCP uses these products to determine their functionality and whether to use,
purchase, or recommend the product.
For more information about the Revised Code and its impact on the medical
device industry, please join us for a complimentary webinar,
Life Sciences Sales and
Marketing Compliance Update, on March 17, 2009.