05.14.13
At the 2013 annual meeting of the Medical Device Manufacturers Association held last month in Washington, D.C., Jeff Layne, partner at Fulbright & Jaworski, and Richard Rew, general counsel for Arthrocare Corporation, discussed compliance strategies for medtech companies. The two outlined the mistakes smaller companies tend to make and what emerging companies should do to meet compliance regulations.
According to Layne and Rew, emerging companies do not pay enough attention to several key compliance laws that tend to pose problems for them later. For instance, the federal Stark law, which prohibits physician referrals of designated health services for Medicare and Medicaid patients if the physician (or an immediate family member) has a financial relationship with that entity, is commonly ignored. The federal anti-kickback statute and state anti-inducement laws also are typically forgotten, as well as off-label marketing rules, the foreign corrupt practices act, rules regarding distributor relationships, government agent interactions, and data privacy.
Mature, successful companies tend to develop and implement a variety of company-wide compliance programs. Layne said there are seven golden rules of an effective compliance program that considerably increase a company’s chance of remaining compliant.
“They are not laws. They’re not required, but they are in some ways becoming a standard of care in the industry,” Layne explained. “If you’re not operating within the confines of these, you may increasingly find yourself standing out.”
The seven key elements he recommended are:
“We sometimes get pushback from sales and marketing,” said Layne of his firm’s attempt to establish compliance strategies at medtech companies. “But increasingly, they’re hearing that other people are making this move and that they are out of touch.”
Federal sunshine laws are forcing companies to focus their compliance strategies on a more micro level, said Rew. “It’s requiring people to look at the sales receipt,” he said. “It’s helping to really analyze and understand the relationship companies have with healthcare providers.”
According to Layne and Rew, emerging companies do not pay enough attention to several key compliance laws that tend to pose problems for them later. For instance, the federal Stark law, which prohibits physician referrals of designated health services for Medicare and Medicaid patients if the physician (or an immediate family member) has a financial relationship with that entity, is commonly ignored. The federal anti-kickback statute and state anti-inducement laws also are typically forgotten, as well as off-label marketing rules, the foreign corrupt practices act, rules regarding distributor relationships, government agent interactions, and data privacy.
Mature, successful companies tend to develop and implement a variety of company-wide compliance programs. Layne said there are seven golden rules of an effective compliance program that considerably increase a company’s chance of remaining compliant.
“They are not laws. They’re not required, but they are in some ways becoming a standard of care in the industry,” Layne explained. “If you’re not operating within the confines of these, you may increasingly find yourself standing out.”
The seven key elements he recommended are:
- Have a chief compliance officer and other senior personnel. If a company is small, a general counsel is acceptable but is not best practice. As a company grows, it is better off having a designated officer overseeing compliance;
- Establish a written standard of conduct;
- Implement regular, effective training and education;
- Establish a process to receive complaints and concerns;
- Practice internal monitoring and auditing;
- Respond appropriately to detected offenses and develop corrective actions; and
- Enforce disciplinary standards consistently.
“We sometimes get pushback from sales and marketing,” said Layne of his firm’s attempt to establish compliance strategies at medtech companies. “But increasingly, they’re hearing that other people are making this move and that they are out of touch.”
Federal sunshine laws are forcing companies to focus their compliance strategies on a more micro level, said Rew. “It’s requiring people to look at the sales receipt,” he said. “It’s helping to really analyze and understand the relationship companies have with healthcare providers.”