What’s the Difference Between AdvaMed and PhRMA Code?
From a product’s conceptualization to its commercialization, pharmaceutical and medical technology companies interact with health care professionals (HCPs) in multiple ways. Trade groups such as the Advanced Medical Technology Association (AdvaMed) and the Pharmaceutical Research and Manufacturers of America (PhRMA) have established specific codes of ethics to help ensure that the interactions between these companies and HCPs are ethical and ultimately support patient care.
While the AdvaMed Code applies to medical technologies companies and the PhRMA Code applies to pharmaceutical companies, both Codes are designed to promote ethical relationships with HCPs and to assist organizations in complying with applying with applicable laws by establishing best practices and generally recognized industry standards for such interactions, thereby facilitating ethical relationships.
Both Codes remain voluntary; however, compliance certifications are required for member companies. In addition, certain states, including California, Connecticut and Nevada have made the AdvaMed Code provisions mandatory; whereas states such as California, Nevada, Massachusetts, Connecticut, and the District of Columbia have adopted or incorporated the PhRMA Code in their statutes or regulations.
Further, non-compliance of either Code may be used as a basis for alleged misconduct and or violations of certain state and federal laws, particularly the federal Anti-Kickback Statute. Specifically, both the AdvaMed Code and the PhRMA Code are generally viewed by U.S. enforcement authorities as a baseline for ethical interactions between manufacturers and U.S. HCPs. Because each Code’s principles are derived from and intended to help ensure compliance with a variety of U.S. laws and regulations, enforcement authorities view activities inconsistent with the Codes’ principles as intent of alleged misconduct under various laws and regulations, including the Anti-Kickback Statute. As a result, many medical technologies and prescription drug manufacturers comply with the principles outlined in such Codes to demonstrate their intent to comply with such laws and regulations.
The corporate compliance attorneys at Kendall PC have substantial experience helping medical device and pharmaceutical companies incorporate evolving principles and best practices established by such Codes. We have the local knowledge and industry experience to assist our clients in all aspects of corporate compliance issues.
What Is the AdvaMed Code?
Based in Washington D.C., AdvaMed is a global trade association of companies that develop, produce, manufacture, and market medical technologies. Originally appearing as the Health Industry Manufacturers Association Code in 1993, and later updated and relaunched in 2003 as the AdvaMed Code of Ethics on Interactions with Health Care Professionals (AdvaMed Code), the Code provides medical technology companies – defined under the AdvaMed Code to generally mean medical devices and products, technologies, digital and software platforms, and related services, solutions, and therapies used to diagnose, treat, monitor, manage, and alleviate health conditions and disabilities – guidance on navigating complex rules and concerns stemming from interactions with U.S. HCPs. Since 2003, the AdvaMed Code has been revised in 2003, 2009, 2020 and 2022. The most recent version will take effect on June 1, 2022.
The AdvaMed Code covers ethical standards for 12 key topics:
- Consulting Arrangements with HCPs
- Company-Conducted Programs and Meetings with HCPs
- Educational and Research Grants, Charitable Donations, and Commercial Sponsorships
- Jointly Conducted Education and Marketing Programs
- Travel and Lodging, Venue
- Providing Modest Meals and Refreshments to HCPs
- Educational and Patient Benefit Items, Prohibition on Gifts
- Prohibition on Entertainment and Recreation
- Communicating for the Safe and Effective Use of Medical Technology
- Provision of Health Economics and Reimbursement Information
- Demonstration, Evaluation, and Consigned Products
- Company Representatives Providing Technical Support in the Clinical Setting
What Is the PhRMA Code?
Founded in 1958, PhRMA is a trade group that represents companies in the pharmaceutical industry in the U.S. The organization is headquartered in Washington D.C. Originally published in 2002, the PhRMA Code on Interactions with Health Care Professionals (PhRMA Code) was updated in 2009, 2019, and again in 2021 (effective January 1, 2022) as part of an ongoing effort to ensure that pharmaceutical company interactions with HCPs adhere to applicable legal requirements and the highest ethical standards.
The PhRMA code covers 15 topics related to pharmaceutical industry interactions with HCPs:
- Basis of Interactions
- Informational Presentations by Pharmaceutical Company Representatives and Accompanying Meals
- Prohibition on Entertainment and Recreation
- Pharmaceutical Company Support for Continuing Medical Education
- Pharmaceutical Company Support for Third-Party Educational or Professional Meetings
- Speaker Programs and Speaker Training Meetings
- Health Care Professionals Who are Members of Committees That Set Formularies or Develop Clinical Practice Guidelines
- Scholarships and Educational Funds
- Prohibition of Non-Educational and Practice Related Items
- Educational Items
- Prescriber Data
- Independence and Decision Making
- Training and Conduct of Company Representatives
- Adherence to Code
- Questions and Answers
How Do AdvaMed and PhRMA Codes Differ?
Over half a year after PhRMA announced updates to its PhRMA Code, AdvaMed followed suit issuing its own revisions to its Code. The updates to the AdvaMed Code come as no surprise considering the revisions to the PhRMA Code after the Department of Health and Human Services Office of the Inspector General’s (“OIG”) Special Fraud Alert in November 2020 (“Special Fraud Alert”). The AdvaMed Code followed suit to address some of the same key risk areas raised by the Special Fraud Alert and incorporated into the revised PhRMA Code. That said, the revisions to the AdvaMed Code do not expressly address all concerns identified in the Special Fraud Alert and in some ways do not go as far as the updated PhRMA Code. Given that the Special Fraud Alert is limited to “pharmaceutical and medical device companies,” AdvaMed may have elected to address only certain risk areas because the “medical technologies” subject to the AdvaMed Code are more expansive in scope.
Key Revisions to the PhRMA Code
The Special Fraud Alert made clear that the OIG considers alcohol to be a “suspect” feature of speaker programs. In an apparent direct response to OIG’s position, the revised PhRMA Code included an express prohibition against companies paying for or providing alcohol in connection with speaker programs.
2. Modest and Incidental Meals
The revised PhRMA Code explains that “incidental” meals may be offered to speaker program attendees based upon “local standards.” Such meals must also be “subordinate in focus to the educational presentation.”
3. Modest Venues
With respect to the location of speaker programs, such programs should occur at “modest venues” which the PhRMA Code goes on to specify that “luxury resorts, high-end restaurants, and entertainment, sporting or other recreational venues or events” are expressly prohibited. Further any such “modest venue” must be conducive to informational communication and a company representative must be physically present during the entirety of the program.
4. Speaker Selection and Compensation
The updated PhRMA Code directly incorporated language from the Special Fraud Alert concerning the selection of speakers, stating that individual HCPs should not be based on “past revenue that the speaker has generated or potential future revenue that the speaker could generate by prescribing or ordering a company’s products.” Further, any compensation provided should be based on fair market value and not account for the volume or value of past business or potential future business that could be generated. The Code clarifies that any HCP that a company engages to speak at such programs on behalf of the Company is considered a speaker for purposes of the Code requirements. Additionally, the Code provides that companies should select speakers based on defined criteria such as expertise and reputation, knowledge and experience and communication skills.
5. Appropriate Attendees
The PhRMA Code defines appropriate speaker program attendees as those who have a “bona fide educational need to receive the information presented.” This requirement extends to attendance by friends, family members, and other guests of the speaker or attendees unless such guests have an independent bona fide educational need to receive such information. The Code goes on to specify that repeat attendance by an individual on the same topic is generally not appropriate.
Key Revisions to the AdvaMed Code
Despite the OIG’s clear position regarding alcohol as a key risk area, the updated AdvaMed Code does not go as far as the PhRMA Code in prohibiting alcohol. Rather, the AdvaMed Code enables companies to develop specific policies on alcohol consumption, providing per-person drink limits, per-drink spend limits, limitations on the type of alcohol permitted, or barring alcohol at certain events and circumstances.
Consulting Arrangement Documentation
The revised AdvaMed Code includes new guidance regarding medical technologies companies’ documentation of legitimate need and fair market value analyses when engaging HCPs. Specifically, the Code states that companies “should maintain appropriate documentation which may include documentation regarding the process for determining legitimate need, fair market value compensation, and other relevant factors.”
Other Areas of Variation
In addition to the revisions directed at the risks outlined in the Special Fraud Alert, the current versions of both the PhRMA Code and AdvaMed Code differ from one another in a number of ways.
In some instances, the Codes vary in how they approach similar or the same topics. By way of example, the AdvaMed Code and PhRMA Code vary in their guidelines concerning the following issues:
Virtual Programs and Meals
In response to the COVID-19 pandemic, both Codes included new additions addressing virtual and digital interactions. The PhRMA Code included revisions to identify which areas of its guidelines apply to such interactions. In contrast, the AdvaMed Code went further, stating that medical technology companies “may wish to consider whether the legitimate need could be met via a virtually-conducted program.”
The new revisions to the AdvaMed Code FAQ #16 relating to educational grants or commercial sponsorship in support of a third-party program and assessing the venue of such program. The Code now explains that companies “may give varying weight to different factors” including venues located at luxury, resort, or “getaway” locations. In those instances, the Code suggests that the company could consider other factors about the program to determine whether the program as a whole is appropriate – e.g., a robust agenda, whether there are significant gaps in the agenda, whether entertainment or recreational activities are associated with the program, whether the third-party promotes luxury or a nature resort in its promotional materials, whether there are appropriate conference facilities, and whether the audience is mostly local physicians. In contrast, the PhRMA Code expressly states that such venues are not appropriate.
Permissible Arrangements Under the Anti-Kickback Statute
In a new addition to the AdvaMed Code, the Code now states in a response to FAQ #3 that the fact that a particular interaction with a U.S. HCP does not fit into an existing safe harbor to the federal Anti-Kickback Statute does not in and of itself mean that the interaction would necessarily be a violation of the Statute. The Code goes on to state that in such instances, companies should analyze the interaction or arrangement for compliance with the Anti-Kickback Statute based on specific facts and circumstances and the intentions of the company and particular HCP. The PhRMA Code does not take a similar position.
Additionally, the AdvaMed Code contains topics specific to U.S. interactions concerning medical technology products. In response to FAQ #1 in the revised AdvaMed Code, AdvaMed explains that it maintains a separate Code that differs from the Code governing pharmaceutical or biologics companies because drugs and biologics can often be administered without the supervision of an HCP or company representative instruction. In contrast, AdvaMed states that medical technologies require “highly dependent ‘hands on’ interactions with Health Care Professionals from beginning to end” and that the AdvaMed Code is developed to address interactions specific to its industry. Some of the industry-specific topics addressed in the AdvaMed Code include:
- Demonstration, Evaluation and Cosigned Products
- Company Representatives Providing Technical Support in the Clinical Setting
Despite their differences, the PhRMA Code and AdvaMed Code both address many of the same topics and set similar, albeit sometimes somewhat different standards for the respective companies subject to its guidelines. For companies with both pharmaceutical and medical device products, it is important to understand which expectations apply to its practices and in what circumstances. This is also true for those entities that have combination products. Although AdvaMed takes the position that its Code applies to interactions with U.S. HCPs related to combination products have a medical technology component, the Code also acknowledges that such products may also be subject to other trade association codes (e.g., the PhRMA Code).
The corporate compliance attorneys at Kendall PC offer trusted guidance to clients throughout the pharmaceutical and medical device industries to navigate the nuances of applicable requirements, including the guidelines and industry best practices established by the PhRMA and AdvaMed Codes.
To learn how Kendall PC can help your business, contact our office today online or at (484) 414-4093.