Medical Device Daily

WASHINGTON — Although the word was never actually spoken, one of the second-day themes of the Medical Device Manufacturers Association (MDMA; Washington) annual meeting last week was the ethics — how medical devices are promoted and the conduct of those employees on the frontlines of marketing such products.

This is a topic that has received increasing, largely negative attention on the pharma side of the healthcare aisle, with stories of gifts, perks and financial incentives to physicians to prescribe (read, push) drugs, and a concern increasingly important for device manufacturers.

Jason Hannon, senior VP and general counsel of Nuvasive (San Diego), which makes spinal products used by surgeons, said that his company's approach to developing such a code was with the over-arching requirement that it could be used to issue to and educate customers and wasn't "static" — that is, it could be changed, if necessary.

The biggest lesson he said he learned in developing and implementing a code of conduct was the challenge to make the code "real" for all involved. Companies, he said, can't "legislate" such a code. Rather, he described this as something that must be embedded in the corporate "culture."

He posed the question of why a company should have a code of conduct in the first place. The simple answer, Hannon said, is "to make sure everyone is playing by the same rules."

In beginning to develop such a code, he said he sought buy-in from Nuvasive's senior management, because "the worst thing" a company can do is not follow its own rules.

He emphasized that to make these rules workable and successful, such a code needs to be "practical" and flexible, rather than trying to incorporate every answer to every question that may arise in the course of doing business.

He also advised placing policies in a regulatory context, because after all, ethical conduct is a government requirement with consequences for those who do not adhere to ethical behavior.

One of the biggest challenges in following such a code is determining what seems to be a simple issue – but isn't: how to define the word "customer." For example, is it a doctor or only a hospital purchasing agent?

Again going for simplicity, Hannon said Nuvasive's choice was that its code "applies to anyone who can affect a purchasing decision."

He also acknowledged that there are still "gray areas," such as when spine surgeons visit the company's San Diego headquarters to undergo training with its products. Although there is no question about the legitimacy of that training, other questions may come into play, such as paying for hotel stays and meals of spouses.

As for business dinners, he emphasized that the "point of the dinner has to be product discussion," and that even with a clearly spelled-out code, "finally, sometimes, it's difficult to get people to understand that."

The aspect of the code that "generates the most discussion," Hannon said, is the role of consultants working on behalf of the company.

He said those on his sales team contact him frequently with questions, and he has adopted a phone call-only policy.

The "last thing you want," he said, is the answers to extremely tricky questions retained on email systems for some period, because sometimes the answers aren't easily arrived at.

In the end, a company has to rely on its management team to be the "primary flag-bearers" of any code of conduct in place, he said.

Giving to charitable foundations can also be a particularly thorny issue, was the consensus of Hannon and the following speaker, Michael Bell, of counsel at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo (New York).

Bell addressed the topic of "demonstrating compliance" with a code of conduct.

The documentation supporting a company's strategy for meeting regulatory requirements for codes of conduct must be thorough and complete, Bell said, calling this a "topic of ongoing scrutiny" at the federal level. He supported this view by citing the fact that up to 100 companies are now under investigation.

Discussing the Foreign Corrupt Practices Act (FCPA) and how it relates to the sale and marketing of medical devices, Don Zarin, a partner in the Washington office of the law firm of Holland & Knight (Washington), noted that internationally, physicians are often employees of their countries' governments and not independent practitioners.

"If you pay commissions" to those doctors, a U.S. company employee may be in violation of the FCPA, Zarin said. And this includes U.S. citizens who may be employed by a subsidiary of a U.S. company abroad, he said, noting that four foreign subsidiaries have been prosecuted under this law.

An ongoing investigation also is being conducted against Siemens (Malvern, Pennsylvania) as it relates to the FCPA in the U.S. and four other countries, he said, adding that the law has "broad reach."

Zarin defined the guiding principle for inappropriate conduct as anything that falls under "quid pro quo," or "I give you something, and you give me something in return." And this doesn't have to be represented only in purely monetary terms.

For example, it could be a promise of future employment.

Also, the law doesn't apply only to current practice. "Authorities," Zarin said "are looking back three years in time."

His advice to those in the audience was: if you are suspicious that questionable practices are being followed by an individual or group of individuals, you are "accountable" and are obligated to "conduct due diligence."

And it's not only the U.S. that's taking a tougher stance in these matters. Zarin said that 36 countries now have similar legislation in place, calling the enforcement of such laws "a complete sea change."

Joe Kiani, CEO of Masimo (Irvine, California), asked the panelists what has been done to educate physicians concerning the rules of conduct in these transactions.

The simple answer from Bell was to send the following message: He who "solicits or receives" is "culpable also." He noted later that 33 states have anti-kickback legislation.

And Zarin said that as far as domestic companies doing business overseas is concerned, the recent variety and extent of these laws means that it is "hard to make the argument" that any such indiscretions are because business is being done by "na ve Americans."