Revised AdvaMed Code of Ethics Becomes Effective July 1: Are You Ready?

In December 2008, the Advanced Medical Technology Association (AdvaMed) issued a Revised and Restated Code of Ethics on Interactions with Health Care Professionals. The revised and restated code will become effective on July 1.

The code provides guidance to the medtech industry on interactions between device manufacturers and health care professionals. Although compliance with the code is not mandatory, it is expressly encouraged, and manufacturers who certify that they are in compliance with the code will be listed on the AdvaMed Web site.

New Provisions

Clarifications on meals and refreshments. Modest meals and refreshments may be provided in connection with company-sponsored training and bona fide sales, promotional and other business meetings. Company employees or agents are expressly prohibited from purchasing meals or refreshments out of their own pockets in circumstances where the company itself would be precluded from providing the meal.

Consulting services. Companies may engage health care professionals to perform bona fide consulting services to fulfill a legitimate business need as long as specific standards are met. Among other things, the arrangements require advance documentation of the need for the consulting services, fair market value compensation, limits to the role of sales personnel in choosing consultants, and that research agreements include a specific written research protocol.

Royalty arrangements. Companies may pay royalties to health care professionals who participate in the development of the company's products as long as specific standards are met. Royalties should be paid only when the health care professional makes a novel, significant or innovative contribution to the development of intellectual property. Royalty arrangements must be documented in writing in the same manner as other consulting arrangements. Royalties cannot be conditioned on a requirement that the health care professional purchase, order or recommend company products or a requirement to market the product upon commercialization.

Entertainment. Companies are prohibited from providing any entertainment or recreational event or activity for health care professionals who are not company employees. Examples of prohibited entertainment include theater, sporting events, golf, and hunting and vacation trips, regardless of their value.

Gifts. Giving gifts that benefit patients or serve a genuine educational function is permitted; however, noneducational branded promotional items are forbidden, even if their value is nominal. Manufacturers are not permitted to offer pens, notepads, mugs or similar items. Providing gifts such as wine, flowers, chocolates and gift baskets is also barred, even during the holidays or to mark a "life event" such as an individual's wedding or birthday.

Reimbursement support. Companies may provide coverage, reimbursement and health economic information to health care professionals, including coding information, reimbursement advocacy, available reimbursement levels and assistance in obtaining patient coverage decisions.

Evaluation and demonstration products. Companies may provide reasonable quantities of products—including single-use products, capital equipment and samples—to health care professionals at no charge for evaluation and demonstration purposes. Companies must document arrangements involving these free items and must ensure the demonstration or evaluation period is no longer than reasonably necessary for the health care professional to assess the product.

Publication of participating companies. Companies that commit to following the code are publicly recognized by having their names listed on AdvaMed's Web site. To be included in that listing, a company's CEO and chief compliance officer must sign an annual certification of compliance.

Conclusion

Companies that have not already done so should review the revised and restated code and determine whether they need to update their internal policies and procedures. Companies need not blindly adhere to the code, but thoughtful consideration of the revised standards is warranted.

Over time, the code is likely to set an industry norm for interactions between physicians and manufacturers. As such, to the extent that a company's business or marketing strategy significantly conflicts with the guidance in the code, the company would be well advised to have such business or marketing plans reviewed by legal counsel familiar with federal and state fraud and abuse laws