AdvaMed Revises Code of Ethics on Interactions with Healthcare Professionals

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:

• There must be a bona fide, legitimate need for the company to engage in the activity for its own educational or marketing benefit.
• The company should establish controls to help ensure that any decision to participate in such an arrangement is not driven by an intent to induce or reward referrals, and the company should require HCPs to comply with company guidelines concerning the use and labeling of the company’s products and the disclosure of related health economic information.
• Marketing content should promote both the company’s products and the HCP’s services.
• The company and the HCP should equitably contribute to and share in the costs of the program.
• The arrangement should be documented in a written agreement specifying the purpose, roles, responsibilities and contributions of each party.

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:

• ensuring that only authorized personnel provide information regarding unapproved or uncleared uses;
• ensuring that company communications are truthful and non-misleading; and
• clearly identifying unapproved or uncleared uses as such.

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:

• be present in a clinical setting only at the request of and under the supervision of a HCP;
• clearly indicate that they are acting on behalf of their company in a technical support capacity;
• not interfere with a HCP’s clinical decision-making;
• comply with applicable facility policies and requirements, including patient privacy and credentialing requirements; and
• not engage in activities or otherwise provide items or services that eliminate an expense the HCP would otherwise incur.

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.

Consigned Products

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 venue should be centrally located and easily accessible when taking into account the location of the participants.
• The setting should not be selected due to its entertainment or recreational facilities.
• The setting should not be at a luxury or resort hotel or facility without an appropriate justification.

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.