AdvaMed member companies “are strongly encouraged” but not required to adopt the revised Code of Ethics on Interactions with Health Care Professionals and implement an effective program to establish and maintain compliance.

On December 18, 2008, the Board of Directors of the Advanced Medical Technology Association (AdvaMed), the trade association for the medical technology industry, adopted a revised Code of Ethics on Interactions with Health Care Professionals (Code) The revised Code takes formal effect July 1, 2009. AdvaMed member companies “are strongly encouraged” but not required to adopt the revised Code and implement an effective program to establish and maintain compliance with the revised Code.

The revised Code updates existing standards and establishes new standards for interactions with health care professionals addressed in the current Code. It is generally more restrictive than the current Code and prohibits interactions that were previously permissible. This is similar to the approach reflected in the revised Code on Interactions with Healthcare Professionals (PhRMA Code) that was recently adopted by the Pharmaceutical Research and Manufacturers Association of America, the trade association for pharmaceutical and biotechnology companies. (The revised PhRMA Code is available here and described in more detail in McDermott’s White Paper “PhRMA Revises Code on Interactions with Healthcare Professionals,”.)

Following is a discussion of the significant changes made by AdvaMed in the revised Code.

Definition of Health Care Professional

While the revised Code’s definition of health care professionals (HCPs) is substantially the same as the one in the current Code, AdvaMed revised the definition to clarify that the Code applies to interactions with anyone “involved in the provision of health care services and/or items to patients,” not only physicians and other practitioners. This revision reflects the scope of the federal Anti-Kickback Statute, which applies broadly to any individual or organization in a position to purchase, order or recommend items or services reimbursable by Medicare and other federal health care programs. (The PhRMA Code does not include a definition of health care professional.)

As a result, the revised Code applies to a broader scope of interactions than other industry codes and state laws. For instance, the Pharmaceutical and Medical Device Manufacturer Code of Conduct regulations proposed by the Massachusetts Department of Health under that state’s Pharmaceutical and Medical Device Disclosure Law only apply to interactions with physicians and other health care practitioners that prescribe or order drugs or devices, as well as their practice entities, employees, officers, agents and contractors, and not to others in a position to purchase, order or recommend medical technology, pharmaceuticals or biotechnology. The Massachusetts law is described in more detail in McDermott’s White Paper  “Massachusetts Enacts Pharmaceutical and Medical Device Disclosure Law,” and the proposed regulations are described in more detail in McDermott’s White Paper “Massachusetts Proposed Regulations for Pharmaceutical and Medical Device Disclosure Law Compliance”.

Limitations on Gifts

The current Code permits modest gifts to HCPs if the gifts benefit patients (e.g., educational brochures) or serve a genuine educational function, or are branded promotional items of minimal value related to the HCP’s work or for the benefit of patients. The revised Code still permits companies to provide items that benefit patients or serve a genuine educational function, provided that the value is less than $100 (except for textbooks or anatomical models used for educational purpose, which may exceed $100). However, like the revised PhRMA Code, the revised Code prohibits companies from giving non-educational, branded promotional items to HCPs even if the item is of minimal value and related to the HCP’s work or for the benefit of patients (e.g., pens, notepads and other items with the company’s name, logo or product logo). While the Stark Law permits nonmonetary gifts valued up to $355 to be given to a physician in 2009, and arguably other fraud and abuse authorities permit minimal value gifts, AdvaMed and PhRMA apparently determined that the appearance of improper influence and public and political pressure necessitated the change.

Business Courtesies


The revised Code includes a new section providing significantly more detailed guidance regarding the permissible purposes, settings, locations and participants in business meetings which include the provision of meals or refreshments. For example, the revised Code clarifies that the development of good will and business relationships should not be the primary purpose of a meal. The revised Code also prohibits “dine and dash” events and provides that companies may only provide meals to HCPs who actually attend the meeting. The setting and location must be conducive to bona fide scientific, educational or business discussions.


The revised Code adds a new section prohibiting the provision of any entertainment or recreational events or activities to non-employee HCPs. The revised PhRMA Code contains a similar prohibition. AdvaMed and PhRMA have thus both determined that the appearance of impropriety created by certain forms of entertainment and hospitality outweigh any argument that the provision of modest entertainment and hospitality to HCPs in connection with business meetings and educational programs is permissible under applicable fraud and abuse laws.

Consulting Arrangements, Royalties

The revised Code section regarding consulting arrangements, like the current version, largely reflects fairly standard requirements, such as a written agreement, fair market value compensation for documented services, and minimizing the role of sales personnel, to ensure that selection of an HCP as a consultant is based on the HCP’s qualifications as opposed to the HCP’s status as a source of business. Recognizing the role HCPs often play in the development of medical technologies, and the compliance issues raised by payment for such services, the revised Code also includes a new subsection regarding the payment of royalties to HCPs. The new subsection includes the following standards:

  • Royalty arrangements must meet the revised Code’s contracting standards for consulting agreements. For instance, compensation (including royalties) should be consistent with fair market value in an arm’s length transaction and not based on the value or volume of the HCP’s past, present or anticipated business.
  • A company should enter into a royalty arrangement with an HCP only where the HCP is expected to make or has made a novel, significant or innovative contribution to, for example, the development of a product, technology, process or method.
  • If a contribution by an individual or group is the basis for compensation, it should be appropriately documented.

The calculation of royalties payable to an HCP in exchange for intellectual property should be based on factors that preserve the objectivity of medical decision-making and avoid the potential for improper influence.

Companies are strongly encouraged to consider whether it is appropriate and practicable to exclude from the calculation of royalties the number of units purchased, used or ordered by the HCP or members of the HCP’s practice (if the HCP is a practitioner).

Evaluation and Demonstration Products

The revised Code provides new standards for providing medical technologies to HCPs at no charge to allow HCPs to assess the appropriate use and functionality of the product, and to determine whether to use, order, purchase or recommend it. The standards include the following:

  • Single-Use/Consumables/Disposables. The number of single-use products should not exceed the amount reasonably necessary for the adequate evaluation of the products.
  • Multiple Use/Capital. Multiple use products should be provided without transfer of title and should be furnished only for a period of time that is reasonable to allow an adequate evaluation. The terms of an evaluation of such multiple use products should be set in advance in writing. Companies should have a process in place for promptly removing the multiple use products from the HCP’s location at the conclusion of the evaluation period unless the HCP purchases or leases the products.
  • Demonstration. Demonstration products should typically be unsterilized single use products or mock-ups of such products that are used for HCP and patient awareness, education and training and are typically identified as not intended for patient use by such designations as “Sample” or “Not for Human Use.”

The revised Code does not provide that companies should advise HCPs not to bill Medicare and other third party payors for the use of evaluation and demonstration products provided without charge. Regulators have historically taken the position that permitting HCPs to bill for items provided without charge is inconsistent with the Anti-Kickback Statute.

Provision of Coverage, Reimbursement and Health Economics Information

The revised Code elaborates on the current Code’s standards for the provision of information regarding coverage, reimbursement and health economics relevant to company products, and provides examples of permissible information activities. Most of the examples involve the provision of accurate and objective information regarding use or coverage of the company’s medical technologies, in order to facilitate patient access to medical technologies and to demonstrate the value of the company’s medical technologies. At the same time, the revised Code prohibits any such activities that would constitute an unlawful inducement to purchase, order or use the technologies, including activities that relieve an HCP of a business overhead expense that the HCP would otherwise incur based on business prudence or necessity.

Although the expanded list of examples is helpful, there is still a subjective element to determining which activities are permitted and which involve a company performing activities that an HCP would otherwise perform to obtain third-party coverage and reimbursement for medical technologies or professional services involving the implantation or other use of such technologies. For example, the revised Code permits a company to provide information and/or training on payor policies and procedures for obtaining prior authorization, and providing sample letters and information on medical necessity and appeals of denied claims. In addition, at the request of an HCP to facilitate patient access to the company’s medical technology, the company may assist the patient by facilitating the preparation and submission of requests for coverage determinations, prior authorizations, pre-certifications and appeals of denied claims relating to a company’s own medical technology, provided that such assistance is not an unlawful inducement or inconsistent with health information privacy laws. Determining when such assistance could constitute an unlawful inducement will continue to be an area that requires case-by-case review and analysis under the Anti-Kickback Statute and other relevant law.

Grants and Donations

The revised Code provides additional detail concerning the types and standards for permissible research and educational grants and charitable donations. With respect to research grants, the revised Code prohibits “unrestricted” grants to support research without defined goals, objectives and milestones. However, the revised Code does permit sales personnel to provide input about the suitability of a grant recipient.

Third-Party Educational Conferences

The Code permits companies to support educational, scientific and policy-making conferences sponsored by third parties, such as medical associations and continuing medical education (CME) providers if certain requirements are met. For instance, the support must be consistent with the standards of the Accreditation Council for Continuing Medical Education or any other applicable accrediting body. The revised Code permits companies to fund meals and refreshments at conferences, but not entertainment or other forms of hospitality.

The revised Code also removes “grand rounds” from the list of categories of educational conferences that may be supported consistent with the Code’s requirements for third-party conferences (but the revised Code permits companies to furnish product training and education as a grand rounds program consistent with its requirements for company-sponsored product training and education). This change reflects AdvaMed’s determination that financial support for grand rounds educational programs at hospitals, which typically are a major purchaser of medical technology, could be viewed as a direct benefit to an HCP, as compared to financial support of programs conducted by medical associations and accredited CME providers. However, the revised Code still permits companies to support other programs sponsored by hospitals and compliant with the revised Code, such as CME programs sponsored by hospitals that are accredited CME providers.