Introduction

On July 10, 2008, the Pharmaceutical Research and Manufacturers of America (PhRMA) announced publication of a revised Code on Interactions with Healthcare Professionals (Code). Initially introduced by PhRMA in 2002, the Code sets ethical standards designed to guide the pharmaceutical industry’s marketing activities. The newly revised Code goes into effect in January 2009 and contains several more stringent provisions than its predecessor, including those capping the compensation that can be paid to speakers each year, banning the distribution of “reminder” items, and prohibiting sales representatives from taking healthcare professionals to restaurants when providing informational presentations. Further, the provisions creating a PhRMA Web site to list those companies whose chief executive officers and chief compliance officers have certified that they have policies and procedures in place to foster Code compliance may be controversial, particularly since these policies and procedures are supposed to be verified independently through periodic audits.

Unlike regulatory or statutory guidance, adherence to the Code generally is voluntary, and does not fully protect a company from government investigations and enforcement actions. Nevertheless, regulators and enforcement agencies, such as the Office of Inspector General of the Department of Health and Human Services (OIG) and the Department of Justice may be more favorably disposed towards a company listed on the PhRMA Compliance Web site when deciding whether to prosecute an alleged marketing violation, the penalties to seek in such a case, and whether a corporate integrity agreement is necessary. However, the Code may create some risk that the government will seek access to the verification audits that companies listed on the PhRMA Compliance Web site are supposed to obtain.

It is also important to note that pharmaceutical and medical device companies doing business in California are required to include the Code in their statutorily mandated Comprehensive Compliance Programs and to update their existing Compliance Programs within six months to reflect the revisions PhRMA has made to the Code. A pharmaceutical manufacturer that employs sales representatives in Nevada also must adopt a marketing code of conduct and is encouraged to rely on the PhRMA code as a model program.    

Summary of Revisions to the Code

Some of the more significant changes to the Code are summarized below.

• Sales representatives may not provide restaurant meals to physicians. However, sales representatives may provide occasional meals to physicians and their staff if those meals are provided concurrently with informal educational presentations in physician offices or in hospital settings. The meals must be modest by local standards, and must not be part of an entertainment or recreational event.

• Distribution of non-educational items is prohibited. In a move to tighten prior restrictions, the Code now bans the distribution of “reminder” objects such as pens or coffee mugs that bear drug company or product logos to physicians and their staff. The Code makes it clear that noneducational items are not to be distributed at all, even if accompanied by patient or physician educational materials. Educational items that cost $100 or less, and have no value to a healthcare professional outside of his/her professional responsibilities, may be furnished on an occasional basis.

• The Code imposes stricter standards for company support for continuing medical education (CME). Companies will be expected to separate their CME grant-making functions from their sales and marketing departments, and to develop objective criteria for awarding grants (which must be given to the CME provider, not directly to a healthcare professional). Further, when underwriting CME, a company generally should not provide meals directly, nor offer financial support, directly or indirectly, for the costs of travel, lodging or other expenses of nonfaculty healthcare professionals. In addition, companies should not have control over CME content, faculty selection, materials, methods and venue. The Code further specifies that companies should not provide guidance regarding CME content or faculty, even if asked.

• The Code now imposes more stringent restrictions on the provision of entertainment and recreation. Companies may not provide any entertainment or recreational items to any healthcare professional who is not the company’s salaried employee, even if the entertainment/recreation is secondary to an educational purpose. In a further change from the prior version of the Code, resorts are no longer considered appropriate venues for consultants or speaker training programs. 

• Companies are to set annual caps on the total amount of compensation provided to each speaker. In addition, companies are expected to develop policies that address the appropriate use of speakers, including speaker utilization after training and the appropriate number of speaking engagements for any individual over time. The Code also emphasizes the difference between speaker programs and CME, noting that speakers (and their materials) should clearly identify the sponsoring company, the fact that the speaker is presenting on the company’s behalf and that the information presented is consistent with FDA promotional guidelines. Companies also are directed to monitor speaker programs periodically for compliance with FDA requirements.

• The Code now includes stronger emphasis on training for sales representatives (both employees and other company agents) on applicable laws, regulations and industry codes. Sales representatives also should be trained on general scientific and product-specific information. Companies should provide updated training, as necessary, assess their representatives periodically and take appropriate action if a sales representative fails to comply.

• Company certification of Code compliance will be posted publicly. If the CEO and chief compliance officer annually certify that they have policies and processes in place to promote compliance with the Code, PhRMA will post the company’s name on its Web site along with contact information for the compliance officer and the status of each company’s annual compliance certification. In addition, the Code calls on companies to obtain external verification that they have processes in place to ensure compliance with the Code at least once every three years.

• Other additions of note: Among other issues, the revised Code addresses principles on the responsible use of nonpatient identified prescriber data, and requirements for company speakers and consultants who are members of committees that set formularies or develop clinical practice guidelines. According to the Code, among other criteria, company speakers and consultants should be required to disclose their pharmaceutical company arrangements to the applicable committee during the course of these arrangements and for at least two years thereafter.

Applicability to Other Industries

Other industry segments have developed similar voluntary codes. For example, the medical device industry previously issued a Code of Ethics on Interactions with Health Care Professionals (AdvaMed Code). However, these previously issued Codes generally are less stringent than the newly revised PhRMA Code in various respects. As a result, device companies and other members of the health care industry, in addition to pharmaceutical companies, should be aware of the PhRMA Code and consider implementing some or all of its precepts in order to reduce the risk of exposure. Further, as noted above, device companies doing business in California are required to follow the Code pursuant to applicable state law.

Conclusion

PhRMA’s revised Code on Interactions with Healthcare Professionals indicates a significant change in the way pharmaceutical manufacturers and others will be expected to interact with healthcare professionals in the future. While there has not been any formal response from the OIG or other government agencies to the Code thus far, it is likely that the government will adopt the Code, at least informally, as the new set of applicable standards for interactions with healthcare professionals. Moreover, drug and device companies doing business in California will be legally bound by the new Code within six months. Accordingly, companies throughout the healthcare industry may want to consider incorporating Code standards into their operations. 

If you any question or comments regarding this article, please do not hesitate to contact any of the Arent Fox attorneys listed below:

Linda A. Baumann
baumann.linda@arentfox.com
202.857.6239

Larri A. Short
short.larri@arentfox.com
202.775.5786

Alana Wexler
wexler.alana@arentfox.com
202.828.3463