PricewaterhouseCoopers applauds new medical device code of ethics that eliminates all gifts for doctors and lays foundation for rebuilding trust in the industry

AdvaMed code of ethics expected to drive innovation via unbiased physician collaboration

New York, December 23, 2008 – PricewaterhouseCoopers LLP today applauded the medical device industry’s adoption of a new code of ethics that will eliminate all gifts and entertainment for doctors and other health care professionals. The code is a significant proactive step by the industry to promote transparency and rebuild trust, and, according to PricewaterhouseCoopers, it could drive innovation by fostering greater physician collaboration without the appearance of bias.

The new Code of Ethics on Interactions with Health Care Professionals (HCPs) was approved unanimously last week by the board of directors of the Advanced Medical Technology Association (AdvaMed), the medical device industry trade group that monitors the legal, regulatory and economic global environment. AdvaMed is the largest medical technology association in the world and its members produce nearly 90 percent of all health care technology purchased annually in the United States.

"Trust from patients, physicians and policymakers is essential to the future of the medical device industry and its ability to continue to meet unmet medical needs,” said Brian Riewerts, partner and leader of the governance, risk and compliance practice for the PricewaterhouseCoopers pharmaceutical and life sciences industry group. “The code sets the right parameters for relationships with health care professionals, and we salute AdvaMed’s members for their commitment to rebuilding trust through openness and transparency."

The new code represents a major overhaul of a previous AdvaMed ethics code by providing explicit guidelines about appropriate and inappropriate interaction with health care professionals. Significant changes include:
  • Prohibition of gifts of any type, including all non-educational branded promotional items such as pens, notepads, coffee mugs and raffles at tradeshows, regardless of value.
  • Explicit guidelines that allow for companies to enter into royalty arrangements with HCPs in exchange for substantial contributions that improve medical technologies.
  • More explicit prohibition on providing entertainment or recreation to HCPs. (Entertainment was previously allowed if modest in value).
  • A new section addressing Evaluation and Demonstration of Products, which sets forth appropriate parameters under which companies may provide products intended to educate both doctors and patients about newer or improved medical technologies.
In addition, a new code compliance section will list the member and non-member companies that certify their adoption of the code, and AdvaMed will make the list available for public review on its Web site at .

According to PricewaterhouseCoopers, the new Code of Ethics not only supports but also may better enable future physician marketing and disclosure laws for health care professionals. State and federal lawmakers as well as patient advocates, have raised concerns about the influence gifts may have on physicians. The Office of the Inspector General (OIG) provides guidance on this subject, and the state of Massachusetts has legislated (other states are projected to follow) a complex set of reporting and operating requirements surrounding physician interaction, which has increased the workload and risk for medical device companies.

"In this environment, critical business processes, namely innovation, R&D and new production adoption, which rely on physician collaboration, have been under attack because of a lack of trust in the nature of these relationships,” added Riewerts. “To protect the ability to collaborate in the future, medical device companies are thinking differently about commercial processes, sales and marketing practice and the strength of their compliance and monitoring programs. The question is whether the depth of their risk and control activities is now sufficient to stand up to risk-based analysis by enforcement agencies down the road."

Compliance Challenges
The new code introduces a number of more complicated provisions for medical device companies, including new sections that provide greater clarity and rigor in areas such as consulting agreements, company-conducted training and education for health care professionals and research and educational grants.

The new code states that consulting arrangements with HCPs should be entered into only when legitimate need and purpose for the services are identified in advance and documented. The previous code provision did not require that a legitimate need be documented in advance.

According to PricewaterhouseCoopers, many medical device companies are already completing this activity informally through written budgets that are approved through marketing or medical affairs departments. However, the new code may serve as a call to action for more specific business processes that will require advance documentation to be vetted through compliance departments in the approval of engaging an HCP as a consultant.

In addition, the new code suggests that appropriate monitoring mechanisms should be put into place. Medical device companies will need to put processes in place to monitor and audit mechanisms to govern consulting arrangement activities.

PricewaterhouseCoopers has been working closely with the industry to focus on the AdvaMed code and other regulatory compliance activities. For the past three years, it has worked collaboratively with AdvaMed to produce a leading practices compliance survey for the industry to show the implementation and adoption of the previous code’s provisions and identify emerging compliance issues that are affecting the medical device industry.

About PricewaterhouseCoopers Pharmaceutical and Life Sciences Industry Group
PricewaterhouseCoopers Pharmaceutical and Life Sciences Industry Group ( ) provides clients with audit, tax and advisory services. The firm has extensive experience in delivering solutions on a wide range of strategic, financial and operational issues. The firm has also developed industry-specific services in the areas of strategy, operations performance improvement, regulatory compliance, and IT and financial effectiveness. The Pharmaceutical and Life Sciences Industry Group is 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 ( ) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 155,000 people in 153 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.

© 2008 PricewaterhouseCoopers LLP. All rights reserved

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