The Association of British Healthcare Industries (ABHI), with over 250 company members, published in October 2016 significant changes to its Code of Ethical Business Practice (the ABHI Code). These changes seek to implement the new Medtech Europe Code.
In contrast with the industry-specific statutory framework for medicinal products, there exist no sector-specific advertising and promotional laws governing the med tech industry. The ABHI Code takes account of general legislation, such as general advertising laws and the Bribery Act, and non-statutory rules that have been applied in the pharmaceutical sector to guide good business behaviours particularly in interacting with healthcare professionals and healthcare organisations. While the ABHI Code represents a non-statutory scheme which is only binding upon its member companies in med tech industry, it nonetheless sets out guiding principles that are instructive in the development of corporate compliance processes and policy. For member companies these changes, when in force, will mean:
- the end of the direct sponsorship of healthcare professionals’ attendance at third-party events
- new transparency and public disclosure requirements
- stricter rules on educational grants
- the use of a conference vetting system
We set out below the key changes in the form of Questions and Answers to put the issues in a proper context.
What is the background to the latest development in the UK?
Medtech Europe is an alliance of the European Diagnostic Manufacturers Association (EDMA) and Eucomed, representing respectively the European in vitro diagnostic industry and medical devices industry.
Once EDMA and Eucomed began to collaborate, both organizations identified the need to align their codes to create greater consistency industry-wide in order to promote good business behaviour by reducing compliance risks and safeguarding the industry reputation. This prompted the decision to adopt a common and wide-reaching code. The Medtech Europe Code of Business Practice (the Medtech Code) will replace the EDMA and Eucomed codes of business practice and will become binding upon their corporate members from 1 January 2017.
The Medtech Code establishes new minimum standards by which industry members will be operating in the Medtech Europe geographical area
. These standards will affect all aspects of the industry’s relationship with healthcare professionals and healthcare organisations.
The main changes brought by the new code are:
I. The phasing out of the direct sponsorship,
II. New transparency for educational grants,
III. A common chapter on general criteria for events,
IV. A chapter on demonstration products and samples,
V. Agreed definitions, and
VI. A common independent enforcement mechanism.
The new code will also replace the current enforcement systems provided under the existing codes (i.e., the Eucomed Compliance Panel and the EDMA Executive Committee and Council) by a common independent enforcement mechanism, as a unique complaint handling system. This system will include the Conference Vetting System (which is currently part of the Eucomed procedures).
What does the ABHI Code cover?
A useful addition to the Code is a clearer description of the criteria for its applicability. The Code clarifies that member companies must comply with it as a minimum standard in all their interactions with healthcare professionals and healthcare organisations registered and practising in the UK irrespective of where the activity takes place.
The Code should also be taken into account when planning activities that take place in the Medtech Europe geographical area, irrespective of where the healthcare professionals and healthcare organisations are registered and practising.
How does the Direct Sponsorship Ban affect you?
One of the key changes being brought by the new Code is the phasing out of direct sponsorship to individual healthcare professionals. From 1 January 2019, the end of the transitional period, member companies will not be able to provide financial or in-kind support directly to individual healthcare professionals to cover the costs of their attendance at third-party organised educational events. Third-party educational events are interpreted broadly as including activities of any type planned, budgeted, managed and executed in whole (or in part) by another entity (other than the member company) to fulfil healthcare professional medical educational needs. In practice, this includes all third-party organised educational conferences such as national, regional or specialty medical association conferences, educational conferences organised by hospitals, conferences organised by professional conference organisers, by accredited continuing medical education providers and by patient organisations. There are two exceptions to this general prohibition:
I. The support provided by member companies to individual healthcare professionals for attendance at procedure training meetings organised by third parties and,
II. The support provided to individual healthcare professionals engaged by the member companies as consultants to speak at a satellite symposium.
Member companies have a one-year transitional period (“phase-out period”) to get ready to cease direct sponsorship. The Code does not prevent, however, member companies from providing support to such events in other ways that are considered appropriate, such as via educational grants or other types of funding such as grants and charitable donations. The manner in which companies may set up these alternative options is described in the Code in detail.
What are the New Transparency Requirements?
Another significant change brought by the new Code is a set of new sunshine rules that will affect the provision of educational grants. From 1 January 2018, member companies will be required to gather the data regarding the educational grants provided to healthcare organisations with a view to publicly disclosing them on 1 January 2019.
The information to be disclosed will be the aggregate amount of all the grants provided to each healthcare organisation during the previous reporting year. It is anticipated that this information will be disclosed in the Medtech public platform currently being built for this purpose.
The rules for the provision of educational grants have become stricter. Educational grants must be “restricted”. The effect is that the grant agreement between the member company and the healthcare organisation must specify the intended purpose of the grant together with the rights to enable the company to verify that the grant is in fact used for such purposes. Practical examples of appropriate educational grants include support of third-party organised educational events, support for healthcare professional participation at those events, scholarships and fellowships and grants for public awareness campaigns. All of these terms are helpfully defined in Part 4 of the new Code.
Where the educational grant is supporting an educational event, such events must comply with the Conference Vetting System.
How does the Conference Vetting System work?
The Conference Vetting System is an independent centralised system that reviews the compliance of third-party educational conferences with Eucomed Code and the Mecomed Code. It determines whether it is appropriate for companies which are members of these regional associations and members of the national associations affiliated with these industry associations to sponsor healthcare professionals to participate in such conferences.
The system is part of the Ethical Medtech platform and it is a unique initiative in the healthcare industry. It reviews international and regional third party educational events and the decisions of its Compliance Officer are binding on Mecomed and Eucomed members.
The Ethical Medtech platform publishes a conference calendar providing an overview of all online submissions made in the Conference Vetting System and their status. The status is marked as: compliant, to be reviewed, not compliant, not assessed, partially compliant.
It is the responsibility of the member companies to individually ensure compliance with this obligation. The Code indicates that member companies may submit relevant third-party organised events for vetting or may decide to include appropriate contractual obligations in the grant agreement making it a pre-condition for the educational grant that the event is submitted (for example by the grant recipient) and positively assessed by the Conference Vetting System.
How do I implement an Independent Review Process?
The Code, in line with the Medtech Europe Code, introduces a new requirement obliging member companies to implement an “independent decision-making/review process” to identify, prevent and mitigate against potential bribery and corruption risks arising in connection with the provision of a grant or a charitable donation.
This requirement contributes to the industry’s efforts to build adequate anti-bribery procedures within the organisation which, in the case of the UK companies, may contribute to provide a possible defence against the corporate offence of failure of a commercial organisation to prevent bribery set under the Bribery Act 2010. Companies are required to document any associated risks and any relevant information concerning the intended recipient of the grant or charitable contribution prior to the evaluation. The ABHI Code clarifies that in practice an “independent review process” is a process where the decision-making criteria are not primarily sales-driven and where the company’s sales function does not decide upon and/or approve a decision to provide such support.
There are no specific rules accompanying this general requirement as Medtech Europe took into account the fact that member companies are of very varied sizes and levels of resources. However, it has been clarified that this process could be led by the company’s legal, finance or compliance functions without problem, provided that they operate within a robust governance framework and according to clear and transparent criteria for review.
The aim is to ensure that there is an independent oversight, which means that there is someone not directly related to sales reviewing and confirming that the decision taken is objective and justifiable.
Where do I find the new criteria for events?
In line with the Medtech Europe Code, the ABHI Code has consolidated the general criteria applicable to educational events into one chapter. This chapter sets out all the requirements relating to the event programme, the location and venue, guests, reasonable hospitality, travel and the transparency rules.
The transparency rules, in this context, refer to the need for member companies to maintain appropriate transparency by requiring prior written notification to the hospital administration, the healthcare professional’s superior or other locally-designated competent authority, fully disclosing the purpose and scope of the interaction between the company and the healthcare professional before the activity or event takes places. This is what the Code calls Employer Notification.
Employer Notification is required whenever a member company engages a healthcare professional or whenever it makes a financial contribution towards the healthcare professional’s medical education; however, incidental interactions arising from the normal course of business such as meals associated with educational or business meetings or modest gifts related to the healthcare professional’s practice do not require such notification.
What are the Agreed Definitions?
A new Part 4 of the ABHI Code is introduced which seeks to implement the list of definitions agreed at Medtech Europe level. This is a comprehensive list defining, among others, such terms as charitable donations, company events, product and procedure training and education event, sales promotion and other business meetings, samples and scholarships and fellowships.
The agreed definition of healthcare professional is very broad and it includes individuals that might not have a clinical role, government officials, employees or representatives of government agencies or other public or private sector organisations that in the course of their professional activities may directly or indirectly purchase, lease, recommend, or determine the purchase or lease of medical technologies or related services.
What has changed in the Complaints Procedure?
Changes to the Complaints Procedure are relatively minor. That said, there is still little practical experience with the operation of this procedure as there have only been 25 complaints since 2012 when the procedure was first established. None of them have gone through the entire complaints procedure: cases are either settled through mediation or aborted before the full investigation is completed. In view of this, it is now agreed that greater transparency on all complaints (irrespective of their outcome) will be published.
From 1 January 2017, the administrative charges to be imposed as part of the complaints procedure will be determined by the Chairman of the Panel (as opposed to the current process which involves the executive committee of the ABHI and approval at the annual general meeting of the ABHI). In addition, from that date onwards, information on cases that are resolved through mediation will be published in an annual summary report although the names of the companies or the individuals involved will not be disclosed.
What are the projected timelines for implementation?
Summary of Timelines
The ABHI has decided to implement the changes brought by the Medtech Europe Code in the following staged manner:
On 1st January 2017 - The new complaints adjudication procedure comes into force.
On 1st January 2018 - Member companies must cease direct sponsorship of healthcare professionals’ attendance to third-party organised educational events.
From 1st January 2018 to 31st December 2018 - Member companies must compile information on educational grants to healthcare organisations and submit the year’s data to the Medtech Europe platform.
On 1st January 2019 The data on educational grants provided by member companies to healthcare organisations will be published.