August 7, 2019
On Jan. 9, 2019, the Advanced Medical Technology Association (AdvaMed) approved an updated version of its Code of Ethics on Interactions with U.S. Health Care Professionals. The updated code will be effective Jan. 1, 2020. AdvaMed’s original U.S. code was implemented in 1993 and was updated in 2003 and 2009.
The revised AdvaMed code includes new sections specifically addressing: (i) jointly conducted education and marketing programs, (ii) communication regarding the safe and effective use of medical technology, and (iii) the provision of technical support to healthcare professionals (HCPs) in clinical settings by medical device company personnel. Among other changes, the modified code also clarifies and expands the definition of a HCP, treats digital health and software technologies as medical technology covered by the code, and addresses consignment arrangements.
Joint Education and Marketing Programs
The code includes a new section that addresses education and co-marketing programs between companies and HCPs that are designed to highlight both a company’s products and the HCP’s expertise in the use of the product. These arrangements inherently create risk under the federal Anti-Kickback Statute (AKS) and other fraud and abuse laws, and have been subject to increased government scrutiny over the past decade. Specifically, such programs provide a benefit to the HCP, and if the HCP does not pay fair market value compensation or otherwise contribute fair market value in kind for such benefit, the government may take the position that the benefit provided by the company to the HCP constitutes unlawful remuneration under the AKS. The code recommends that companies adopt the following risk-management principles for these joint programs:
Communicating Information for the Safe and Effective Use of Medical Technology
This new section of the code provides principles that address communications regarding on- and off-label uses of a company’s products. These principles reflect some of the changes that have occurred over the last seven years to the legal standard for misbranding under the federal Food, Drug, and Cosmetic Act after the issuance of the Caronia and Amarin decisions. These principles include:
The code encourages companies to develop policies and controls that incorporate applicable guidance, including judicial decisions and FDA guidance.
Company Representatives Providing Technical Support in the Clinical Setting
This new section of the code outlines principles governing the behavior of medical device company personnel in clinical settings. The activities of such personnel in clinical settings can implicate the AKS, where, for example, such personnel provide services of value to a HCP for free — services for which the HCP would otherwise need to pay — such as nursing services provided by a company representative who is also a registered nurse. Specifically, these principles provide that company representatives should:
Clarification to the Definition of Healthcare Professionals
The code clarifies and consolidates the definition of a HCP to include any person or entity who is (1) licensed or authorized in the U.S. to provide healthcare items or services to patients, or (2) involved in the decision to purchase, prescribe, order or recommend a medical technology in the U.S. Accordingly, as used in the revised code, HCPs include nonclinical or administrative personnel involved in purchasing or ordering decisions. This change brings the code into closer alignment with the AKS, which applies not only to physicians and other healthcare professionals, but to anyone in a position to order, purchase, lease, refer, recommend or arrange for the provision of items or services reimbursable by a federal healthcare program.
The code’s section on evaluation and demonstration products now includes guidance regarding consigned products, i.e., products for which the company retains title until the product is used. The code recommends that companies enter into written consignment arrangements with HCPs, which specify the terms of the consignment, the number of products consigned, segregation requirements and storage terms. The code also recommends that companies engaging in consignment arrangements adopt appropriate controls, including taking periodic inventory of consigned products, reconciling discrepancies in inventory and removing expired product. Consignment arrangements can present a number of issues for companies, including liability for lost or damaged inventory, significant capital expenditure requirements, increased cost of insurance and potential fraud and abuse issues to the extent that capital equipment is provided without charge in the consignment kit.
Travel and Lodging
The revised code consolidates its guidelines regarding company payment of HCP travel and lodging expenses into one section and provides guidelines on when reimbursement of travel and lodging expenses is permitted. The code also provides principles for evaluating appropriate venues for meetings:
The AdvaMed code is a voluntary industry guideline. However, certain states, such as Connecticut and Nevada, require medical device manufacturers to adopt a code of conduct that is substantially similar to or that contains all of the requirements of the code. (See Conn. Gen. Stat. §21a-70e; Nevada Revised Stat. §639.570.) In addition, government enforcement agencies increasingly cite the AdvaMed code as the model for compliance program standards. Accordingly, medical device companies should carefully review their policies and procedures and arrangements with HCPs for compliance with the revised code before its Jan. 1, 2020, effective date.