Reed Smith Client Alerts

The Advanced Medical Technology Association (AdvaMed) – the national industry association of medical technology manufacturers – recently issued a revised Code of Ethics on Interactions with Health Care Professionals (HCPs) (the AdvaMed Code or Code).

The updated Code, effective January 1, 2020, and last updated in 2009, addresses the evolving regulatory risk landscape vis-à-vis manufacturers’ interactions with the modern medical technology marketplace. To that end, a select committee of AdvaMed members, with Reed Smith’s assistance, worked to revise the Code to incorporate learning from the last decade, and to provide guidance on common, but not previously addressed, interactions and arrangements between medical technology companies and HCPs (which include practically all manufacturer customers, and sales and marketing targets). New Code sections include the following:

  • Joint Education and Marketing Programs
  • Communications about Safe & Effective Use of Products
  • Consigned Products
  • Company Representatives providing Technical Support in the Clinical Setting

The last 10 years show that investigative and enforcement entities – especially the federal Health and Human Services Office of Inspector General (OIG) and Department of Justice (DOJ) – consider the AdvaMed Code the baseline standard of acceptable marketplace behavior. In our experience, a successfully defended corporate compliance program always includes written standards of conduct that incorporate AdvaMed Code guidance.

That said, as AdvaMed Code-based corporate compliance programs have become commonplace in the industry, the risk window continues to shift. The DOJ and OIG now expect more than written standards of conduct and complex document-intensive compliance operations; they expect a company’s compliance program to evolve to meet its evolving risks. The DOJ and OIG will not hesitate to reject a “paper tiger” compliance program that fails to address and mitigate a company’s true compliance risks. Companies are therefore best served by having compliance programs that demonstrate efficient integration with business operations to detect and prevent misbehavior before it arises and that show facility with business systems and operations.

The AdvaMed Code revisions reflect the maturation of an evolving medical device marketplace. This is an opportune time for companies to assess the efficiency and efficacy of their compliance program’s implementation maturity through business process analysis and systematic forensic interrogation of compliance program standards and outputs (a service Reed Smith provides to its clients). People, process, and technology should align to drive insight and value to the business, and to provably manage organizational risk real-time.

The remainder of this client alert summarizes the new and updated concepts and clarifications introduced in the updated Code, and discusses implications of the same for medical technology manufacturers.

New sections and concepts

The updated AdvaMed Code discusses interactions and issues not previously addressed, despite being increasingly common in the modern medical technology marketplace. The Code revisions reflect AdvaMed members’ collective risk management approach and, as with the original Code, should be considered the benchmark with respect to these activities and arrangements.

Joint education and marketing programs

The updated AdvaMed Code includes a new section titled “Jointly Conducted Education and Marketing Programs” to address co-marketing programs. These are partnerships between companies and HCPs to coordinate efforts on joint education and marketing, particularly to highlight both a company’s products and the HCP’s expertise regarding the use of such products. These programs, and specifically the allocation of business risk and benefit between the co-marketing partners, implicate the Anti-Kickback Statute (AKS) and other fraud and abuse standards, and have been the subject of multiple investigative and enforcement actions over the past decade. They also can be beneficial, and so the updated AdvaMed Code offers the following key risk management principles with respect to these programs:

  • Companies must have a bona fide, legitimate need for engaging in these activities, i.e., a program must offer educational or marketing benefits to the company;
  • Programs must be balanced and promote both the company and its products, as well as the HCP’s services as they relate to relevant medical conditions; and
  • The company and the HCP should be bona fide partners, and contributions and costs related to these programs should be shared fairly and equally between the parties.

Compliance programs should be examined to test whether program outputs demonstrate consistent adherence to these principles.

Communications about safe and effective use of products

This section addresses recent Food and Drug Administration (FDA) enforcement actions and guidelines related to truthful and non-misleading information about a company’s products, and specifically off-label communications.

The updated AdvaMed Code includes the following principles related to communicating about medical and scientific information:

  • Company responses that contain information regarding unapproved or uncleared uses should be provided by authorized personnel;
  • Communications must be truthful and non-misleading; and
  • Information regarding unapproved or uncleared uses should be identified as such.

The updated Code further encourages companies to develop policies and controls consistent with the above principles and the requirements of other applicable guidance, including FDA guidance.