Medical Device Companies Quick to Adopt Ethics Standards to
Combat Fraud and Abuse, Finds PricewaterhouseCoopers Survey
BOSTON, March 30 /PRNewswire/ -- Recognizing the need to
bolster compliance activities in an era of increasing governmental scrutiny, the
nation's largest medical device companies have proactively embraced a code of
ethics with nearly universal adoption of standards to combat fraud and abuse of
sales and marketing practices, according to a PricewaterhouseCoopers survey
released today at the Medical Device Regulatory Compliance Congress, held on the
campus of Harvard University.
The survey benchmarked how large medical device companies are
complying with fraud and abuse laws since introduction of the Code of Ethics on
Interactions with Healthcare Professionals in 2004. The voluntary code was
developed by Advanced Medical Technology Association (AdvaMed), a trade group
that represents more than 1100 medical technology companies. While medical
device firms legitimately collaborate with healthcare professionals, such as
providing expertise in how products should be designed or participating in
federally required safety studies, the AdvaMed Code distinguishes legitimate
interactions from potential abuses that might undermine the private healthcare
"Medical device firms understand that positive public
sentiment and trust are important assets they need to proactively protect," said
Peter Claude, partner in PricewaterhouseCoopers Pharmaceutical and Life Sciences
Advisory Practice. "It is clear that medical device firms have seized the
opportunity to better integrate ethical standards into their organizations. The
key will be to do this in an efficient manner and to connect their compliance
obligations with broader corporate goals to improve their performance and
Highlights of the survey include:
There is nearly a 100 percent adoption rate of the AdvaMed
Approximately two-thirds of company presidents or CEOs have
personally endorsed the AdvaMed Code in a written statement addressed to company
employees and/or customers.
Nine out of 10 companies apply the AdvaMed Code to all
professionals, regardless of title or seniority.
Three quarters of companies surveyed have posted their
program on their company website.
Virtually all respondents have linked sales force
compliance with policies and procedures in some manner.
Seven out of ten firms have put a process in place to track
meals, travel, lodging, honoraria and other items of value that might
be provided to healthcare professionals.
The survey was conducted by PricewaterhouseCoopers in
conjunction with the law firm King & Spalding LLP, and with the assistance of
Nancy Singer, principal with Compliance-Alliance, which specializes in
professional development for those employed in the drug and medical device
"We are impressed that medical device firms have embraced
standards to govern the way they interact with hospitals, physicians,
researchers and other health professionals," said John Bentivoglio, partner and
co-chair FDA/Healthcare Group, King & Spalding LLP. "The question is whether the
depth of their risk and control activities is sufficient, and whether they have
considered the total relationship a medical device company has with its
customer, which can be difficult across a large enterprise," said Bentivoglio.
"The good news is that the survey demonstrates companies are developing
innovative strategies to address these challenges."
The survey found that most large firms have instituted
controls over the engagement of healthcare professionals. These controls include
clear agreements that promote ethical behavior, and approaches for determining
the fair market value of gifts, entertainment and other remuneration of
services, and for ensuring that value is actually received for engagements of
healthcare professionals. There continues to be varied practice on how broadly
and deeply the medical device companies control these activities and the survey
results will seek to present better practices for the consideration of the
Survey respondents also indicated that the control model in
the medical device industry around the distribution, receipt, processing and
approval of grant requests is beginning to shift toward a model whereby
restrictions are placed on the involvement of the sales force related to grants.
At the same time, there is growing use of grants committees for approval of
educational/charitable grants and research grants.
"While practices are mixed across the industry, we hope that
by creating a series of compliance benchmarks, we can share 'better practices'
in hopes that they will encourage more effective implementation of compliance
across the industry," said Brian Riewerts, partner, Pharmaceutical and Life
Sciences Advisory Practice, PricewaterhouseCoopers.
The survey was completed in March 2006 and included 20
medical device firms, including the largest medical device firms in the United
States with global annual sales of greater than $1 billion.
About PricewaterhouseCoopers' Global Pharmaceutical and Life
Sciences Industry Group
PricewaterhouseCoopers' Global Pharmaceutical and Life
Sciences Industry Group (
http://www.pwc.com/pharma ) is dedicated to delivering effective solutions
to the complex business challenges facing pharmaceutical and life sciences
companies. As the global leader serving the industry, the firm has extensive
experience in working with its clients on strategic, operational and financial
issues. The firm also provides industry-tailored regulatory compliance, risk
management, and performance improvement advisory services to support clients'
processes in the areas of research and development, manufacturing, and sales and
marketing. The Global 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
provides industry-focused assurance, tax and advisory services for public and
private clients. More than 120,000 people in 139 countries connect their
thinking, experience and solutions to build public trust and enhance value for
clients and their stakeholders.
"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 LLP (
http://www.kslaw.com ) is an international law firm with more than 800
attorneys practicing in the United States and abroad. More than 100 of the
firm's attorneys are actively engaged in matters for medical device,
pharmaceutical, and other healthcare technology companies. The firm's
FDA/Healthcare Group, which specializes in regulatory issues for medical
technology companies, includes 21 attorneys and four regulatory professionals.