PricewaterhouseCoopers, King & Spalding and Compliance-Alliance release findings at Medical Device Regulatory, Reimbursement and Compliance Congress
BOSTON, March 29, 2007 – Medical device companies embrace the need to strengthen compliance activities in light of increasingly stringent government scrutiny, but they are challenged as never before to implement comprehensive sales and marketing compliance programs, according to a survey released today by PricewaterhouseCoopers LLP, King & Spalding LLP and Compliance-Alliance LLC at the Medical Device Regulatory, Reimbursement and Compliance Congress, held on the campus of Harvard University.
The new survey is a follow-up to a 2006 survey that revealed overwhelming acceptance by medical device companies to adopt the Code of Ethics on Interactions with Health Care Professionals. Advanced Medical Technology Association (AdvaMed), a trade group that represents more than 1,100 medical technology companies, developed the Code in 2004 to assure a high standard of ethical conduct by the medical technology industry.
The 2007 survey, which benchmarks the Code’s effect on firms’ internal operations and the challenges medical device companies face to fully comply with its standards, found that while companies are making good progress with implementing the Code, they are also experiencing significant challenges.
Highlights of the survey include:
- 92 percent of respondents said that implementing the AdvaMed Code had no negative impact on (82%) or actually improved (10%) their companies’ financial results.
- 83 percent of respondents said the AdvaMed Code is of high or medium relevance in shaping their company compliance policies.
- Two-thirds of respondents rated lack of clear, industry specific government guidance as one of the top challenged to implementing a comprehensive compliance program
Respondents also reported that they continue to implement the AdvaMed Code and enhance their sales and marketing compliance functions through activities such as training, monitoring, and auditing. Specifically:
- 72 percent of respondents said their companies audit for compliance with the AdvaMed Code. More than 75 percent said internal personnel handle these audits.
- 47 percent of respondents said their companies hired additional staff to implement the AdvaMed Code; 25 percent reported adding two or more full-time equivalents (FTEs) to support Code implementation.
“One of the most noteworthy survey findings is that 92 percent of respondents said that implementing the AdvaMed Code had no negative impact on their companies’ financial results and, in some cases, actually created improvements,” said Peter Claude, a partner in PricewaterhouseCoopers Pharmaceutical and Life Sciences Advisory Practice. “This has to be a relief for companies questioning whether a full-blown adoption would either over-burden their cost structure or hamper their competitiveness. On the other side, there appear to be some significant regulatory, market and internal challenges for companies to overcome before they can fully implement the Code.”
Respondents cited several specific challenges, including:
- Lack of clarity from regulatory and enforcement agencies regarding the legality of sales and marketing activities and other manufacturer-customer relationships that are specific to the medical device industry
- Continued resistance from certain physicians and institutional customers to comply with legal requirements and industry codes of conduct
- Lingering management questions regarding the impact of tightening sales and marketing policies on business, particularly when the “rules” are unclear and competition is intense
- A belief that government agencies do not give sufficient credit to companies that adopt strong compliance programs – particularly pro-active monitoring and auditing activities
“In order for device companies to successfully meet these challenges, the key stakeholders – the medical technology manufacturers, AdvaMed, physician professional societies and the regulatory and enforcement agencies – must form a meaningful partnership to create an environment that promotes and encourages ethical business behavior in a competitive environment,” Claude said. “There is a clear cry for the government to help level the playing field by providing medical device industry-specific guidance around the activities deemed non-compliant while applying equal and visible enforcement of those who solicit or accept non-compliant benefits.”
Respondents also articulated a desire for regulators to award medical device companies greater recognition and credit, not only for self-disclosure of instances of non-compliance, but also for the quality of the compliance programs companies already implemented.
The survey was conducted by PricewaterhouseCoopers in conjunction with the law firm King & Spalding LLP and Nancy Singer of Compliance-Alliance LLC.
"The results of this survey demonstrate that device companies should pursue a two-track compliance strategy," said John T. Bentivoglio, co-chair of King & Spalding's FDA/Healthcare Group. "Companies should work with AdvaMed and others to secure additional guidance from key regulatory agencies, while moving ahead on their own to address emerging sales and marketing risk areas, including educational and research funding, reimbursement support and off-label promotion."
Completed in March 2007, the survey was sent to small, medium and large medical device companies. Seventy-two individuals responded to the survey.
About PricewaterhouseCoopers Pharmaceutical and Life Sciences Industry Groups
(www.pwc.com/pharma) provides clients with audit, tax and advisory services. The firm has extensive experience in delivering solutions to a wide range of strategic, financial and operational issues. The firm has also developed industry-specific services in the areas of performance improvement, regulatory compliance, IT and financial effectiveness. The Pharmaceutical and Life Sciences Industry Groups are part of PricewaterhouseCoopers’ larger initiative for the health-related industries that brings together expertise and allows collaboration across all sectors in the health continuum.
About PricewaterhouseCoopers
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 140,000 people in 149 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
“PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
About King & Spalding LLP
King & Spalding is an international law firm with more than 800 attorneys in offices in the Unites States and around the world. More than 125 attorneys devote all or a substantial portion of their practices to assisting medical technology manufacturers on a variety of legal and strategic matters, including regulatory counselling, corporate and transactional matters, intellectual property, and litigation. The firm’s FDA/Healthcare Group is the largest integrated team of attorneys and professionals in the United States focusing on FDA and healthcare regulatory matters for FDA-regulated manufacturers. For more information about the firm’s medical technology capabilities, please contact John Bentivoglio (202-626-5591) or Mark Brown (202-626-5443).
About Compliance-Alliance LLC
Compliance-Alliance LLC is an organization that seeks to benefit people who design, manufacture, or regulate medical devices or pharmaceuticals. Compliance-Alliance works to clarify the rules by presenting the latest thinking on what it takes to achieve and maintain compliance with FDA and CMS requirements. Compliance-Alliance conducts benchmarking surveys, holds educational seminars and writes white papers on FDA regulatory requirements. For more information about the firm’s activities, contact Nancy Singer at 703-525-4159.
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