Survey: Government Action Would Help Code of Ethics Compliance

NEWS TRENDS

The absence of clear, industry-specific regulatory guidance is a top challenge for companies trying to implement compliance programs. This frustration is shared by 66% of the respondents to a follow-up survey on complying with AdvaMed's Code of Ethics.

The survey assessed the code's effect on companies' internal operations, challenges faced in executing compliance programs, and actions taken to promote more-effective compliance in the device industry. The results were revealed to attendees of a compliance conference at Harvard University in March. The survey was conducted by PricewaterhouseCoopers LLP (Florham Park, NJ), King & Spalding LLP (Washington, DC), and Compliance-Alliance LLC (Arlington, VA).

Although 92% of respondents said implementing the code had no negative effect on their company's financial results, the process has not been without obstacles. OEMs face a number of major hurdles, not least of which is the lack of government guidance. Inadequate resources and management time, as well as the disregard for codes of conduct among certain healthcare professionals, were also mentioned.

The survey authors recommend that the government provide guidance on promotional activities, including relationships with physicians. More than half of the survey participants said the absence of such a guidance created a barrier when implementing the code.

Competition creates an environment in which some companies engage in improper behavior, and certain device customers continue to expect it. Three-quarters of respondents said their companies received resistance from doctors during their efforts to comply with the code. Doctors need to understand the rules under which medical device companies operate, said Peter Claude, partner at PricewaterhouseCoopers.

Part of the solution may be for professional societies to explore how to help educate doctors and other healthcare professionals on these issues. Claude urged that the government level the playing field by taking enforcement actions against healthcare professionals who receive or solicit improper activities. Nearly two-thirds of survey participants agreed that government officials should take legal action against those who receive inappropriate payments from device companies. Such enforcement actions have been among the most useful ways to convince senior management of the importance of compliance.

Firms should also keep a close eye on incentive compensation to ensure a balance between sales performance and compliance requirements. “In government, prosecutors believe that incentive compensation is a good way to measure intent of a company,” warned John Bentivoglio, partner at King & Spalding LLP.

When putting a compliance code into practice, finding the time and resources hasn't been easy either. Insufficient resources and a lack of management support presented the biggest challenges in setting forth effective monitoring controls, according to 61% of respondents. For this reason, firms must get senior management to provide the necessary technical systems and personnel resources, said Claude. Putting the code into motion is not a one-person job, either—47% of the companies surveyed hired new employees to carry out the task.

Other areas of company investment include developing controls around high-risk areas, such as speaker programs and funding for education and research, and conducting staff training beyond the basic fraud and abuse rules. In addition, continuing to perform and expand compliance monitoring and auditing is necessary.

Although employing a compliance code is not simple, companies cannot use monetary reasons as an excuse for noncompliance. Claude urged attendees to go back to management at their respective companies with the ammunition that 92% of survey participants cited no negative effect on finances in adopting the code. Claude speculated that in the future, finding out how people have been able to improve their financial results would serve as a good best practice.

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