Medical device manufacturers are looking at Massachusetts very closely these days. In March, the Public Health Council for the state passed legislation to limit companies' gifts and payments to prescribers. The code of conduct is the first of its kind to focus on medical device companies.
The regulation has drawn both lauds and laments from industry. “The Massachusetts code has raised the bar by requiring manufacturers to maintain and certify elements of an effective compliance program,” says Jonathon Kellerman of PricewaterhouseCoopers. “It instills a level of accountability beyond the spend reporting that has been common in state laws.”
Kellerman, a partner with the firm's global pharmaceutical and life sciences advisory practice, says the code stresses transparency, as well as the process for adopting, training, reporting, and certification requirements. The law even requires that an OEM executive certify adoption of the code of conduct.
In most cases, the requirements set forth by the code are in line with other codes of conduct, such as the AdvaMed Code of Ethics.
However, according to Thomas Sommer, president of Massachusetts Medical Device Industry Council (MassMEDIC), there are troubling provisions in the Massachusetts code. For example, the value, nature, purpose, and recipient of any payment, subsidy, or economic benefit over $50 must be disclosed.
Most ethics codes are concerned with sales and marketing practices, but the Massachusetts law extends to R&D. Firms are required to disclose payments to doctors and hospitals for research designed to advance a particular product. “These projects are crucial and private,” Sommer explains. “We feel that exposure could stifle innovation.”
Disclosure on public Web sites is a major concern for device makers that rely on technological breakthroughs as a marketing advantage. Sommer says that information can be gleaned from those reports, such as the hospitals or practitioners that are involved, which gives competitors significant clues about a device firm's technology.
Beyond the problems of IP protection, however, is the feasibility of state-mandated ethics. “The real fear is that device makers will have to accommodate varying and perhaps contradictory requirements for 49 other states,” Sommer explains.
Sommer clarifies that the council is not opposed to OEMs having a code of ethics. He adamantly advocates that companies apply the AdvaMed code in their own practices. He also says that national requirements would be more effective than state-run policies.
Kellerman agrees that a national requirement, such as the Physician Payments Sunshine Act, would give manufacturers a common denominator, but doesn't believe the trend is going away. “The new presidential administration is touting transparency in the healthcare arena,” he says. “Any initiative that promotes transparency and keeps manufacturers accountable is likely to get significant federal support.”
Nonetheless, MassMEDIC has taken action to voice its concerns about the code. “We are deeply disappointed with the regulations that have come out,” says Sommer. “We feel they don't reflect the specific characteristics of selling and developing medical devices.”
The council is calling for its members to comment on the legislation. MassMEDIC believes that ambiguities should be clarified through guidance from Department of Public Health and that some policies require technical corrections legislation.
Kellerman's advice, in the meantime, is for OEMs to step up their game for transparency. The challenge for manufacturers is organizing spend data from disparate systems across the value chain (e.g., sales, R&D, finance, and HR). “These data not only reside in different company systems, but they also reside with third parties,” Kellerman says. Gathering those data is the first challenge, and the next is standardizing the information so that it can be sorted and analyzed to be meaningful to regulators.
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