Guiding Light: How Codes of Ethics Mitigate Risk and Elevate the - - PowerPoint PPT Presentation

Guiding Light: How Codes of Ethics Mitigate Risk and Elevate the Industry

Matt Wetzel

November 16, 2018

Discussion Topics

Codes of Ethics vs. Codes of Conduct Examples of Industry Codes of Ethics How do Codes of Ethics Benefit Industry? Code Drafting Considerations

Discussion Topics

Codes of Ethics vs. Codes of Conduct Examples of Industry Codes of Ethics How do Codes of Ethics Benefit Industry? Code Drafting Considerations

Codes of Ethics vs. Conduct (cont’d)

CODE OF ETHICS Values-based ethical standards Principles to guide decision-making Typically more wide-ranging and less specific; require employee judgment Example: COE might state that employees are expected to obey the law CODE OF CONDUCT Rules-based proscriptions Outlines specific behavior that is required or prohibited Standards that require little judgment – comply or be penalized Example: COC might include several specific laws applicable to various business operations or to the industry CODE OF PROFESSIONAL ETHICS OR RESPONSIBILITY

• Adopted by a profession or
• rganization that regulates a

profession (ex: ABA, AMA)

• Considered focused on

“professional responsibility” – how should a responsible, ethical practitioner address tough questions and decisions?

• Disregard or non-compliance

could mean expulsion

Codes of Ethics vs. Conduct (cont’d)

CODE OF ETHICS CODE OF CONDUCT

Does your industry or company need a Code of Ethics? A Code of Conduct? Both? Does it matter?  Rules- or values-based guidance document containing agreed upon principles to advance or achieve organizational goals  Company – conduct?  Industry – ethics?  Depends on nature of organization and business goals, scope & impact of legal risks, and evolving industry practices

CODE OF PRACTICE SOME- THING ELSE?

Codes of Ethics vs. Conduct (cont’d)

• Codes adopted by organizations to promote

understanding the “right” and “wrong” ways to undertaking decisions

• Viewed as necessary for all organizations in

today’s society

• Violation of code can also be a violation of law

Codes of Ethics vs. Conduct

Code of Hammurabi

Law #22: If any one is committing a robbery and is caught, then he shall be put to death. Law #196: If a man destroy the eye of another man, they shall destroy his eye. If man breaks the bone of another man, they shall break his bone.

• One of the earliest written legal codes
• Babylonian King Hammurabi (1792 to 1750 BCE)
• Hammurabi expanded Babylon along the Euphrates River and united

all of southern Mesopotamia

• 282 rules for subjects’ interactions, incl. fines & penalties
• Hammurabi’s Code was carved onto a massive, finger-shaped black

stone stele (pillar) What does this tell us…?

• Time of growth & expansion  need for Code
• Description of bad behavior & specific corrective action
• Well-publicized (massive pillar)
• But in trying to address all details (282 rules), the Code

neglects similar acts that fall outside Code (i.e. what if a man only injures the eye of another man?)

Discussion Topics

Codes of Ethics vs. Codes of Conduct Examples of Industry Codes of Ethics How do Codes of Ethics Benefit Industry? Code Drafting Considerations

Examples of Codes

Examples of Codes (cont’d) – AdvaMed Code of Ethics

• Code Compliance & Certification
• Company-Conducted Training & Education

(parameters)

• Supporting Third-Party Educational Conferences
• Sales, Promotional & Other Business Meetings
• Consulting Arrangements with Health Care

Professionals

• Prohibition on Entertainment & Recreation
• Modest Meals
• Educational Items/Prohibition on Gifts
• Provision of Coverage, Reimbursement & Health

Economics Information

• Research and Educational Grants and Charitable

Donations

• Evaluation & Demonstration Products
• FAQs

Comparing the Codes – Entertainment/Recreation

AdvaMed Code Section VII – Company interactions with Health Care Professionals should be professional in nature and should facilitate the exchange of medical or scientific information that will benefit patient care. To ensure the appropriate focus on an educational and/or informational exchange and to avoid the appearance of impropriety, a Company should not provide or pay for any entertainment or creational event or activity for any non-employee Health Care Professional. Such activities include, for example, theater, sporting events, golf, skiing, hunting, sporting equipment, and leisure or vacation trips. Such entertainment or recreational events, activities, or items should not be provided, regardless of: (1) their value; (2) whether the Company engages the Health Care Professional as a speaker

• r consultant; or (3) whether

the entertainment or recreation is secondary to an educational purpose. MTAA Code Includes definition of “Entertainment” (Entertainment includes sporting events, musical and other Entertainment) Section 9.2 - Company-sponsored Training and Education, and Medical Technology Demonstrations a) The program must be conducted in a clinical, educational, conference, or other setting that is conducive to the effective transmission of knowledge and is not selected because of its Entertainment, leisure or recreational facilities. The choice of venue must be consistent with professional and public standards of ethics and good taste. Holding Company training at a well known tourist destination may well attract negative public perception and complaints, regardless of the specific venue chosen for company training…. Companies should consider both the venue and surrounding town/region when deciding whether the Training and Education will meet the Code’s requirement

• f being held in a setting that is conducive to the effective transmission of knowledge

and has not been selected because of its Entertainment, leisure or recreational facilities. Section 9.5 – Hospitality A Company’s business interactions with a Healthcare Professional may involve the presentation of scientific, educational, or commercial

• information. A Company may conduct such exchanges in conjunction with Hospitality

as an occasional courtesy provided the Hospitality: a) is incidental to the bona fide presentation of scientific, educational, or commercial information and provided in a manner that is conducive to the presentation of such information; b) does not include Entertainment.

Comparing the Codes – Charitable Donations

AdvaMed Code Section XI – A Company may make monetary or Medical Technology donations for charitable purposes, such as supporting indigent care, patient education, public education, or the sponsorship of events where the proceeds are intended for charitable purposes. Donations should be motivated by bona fide charitable purposes and should be made only to bona fide charitable organizations or, in rare instances, to individuals engaged in genuine charitable activities for the support of a bona fide charitable mission. Companies should exercise diligence to ensure the bona fide nature of the charitable organization or charitable mission. MTAA Code Section 9.9 – Charitable donations A Company may make monetary or Medical Technology donations for charitable purposes, such as supporting indigent care, patient education, public education, or the sponsorship of events where the proceeds are intended for charitable purposes. Donations should

• nly be made to organisations or, in rare instances, to

individuals engaged in genuine charitable activities for the support of a bona fide charitable mission. A Company must not make any charitable donation or philanthropic gift for the purpose of inducing a Healthcare Professional to purchase, lease, recommend, use or arrange for the purchase, lease or use of the Company’s Medical Technology. The Company must fully document every donation made by the Company.

Comparing the Codes – Advertising & Promotional

MTAA Code Four detailed pages of guidelines, focused on:

• Appropriate language to use in

advertisements directed at HCPs

• Parameters around claims and endorsements

in advertising and promotional materials

• Guidelines for comparative advertising
• Information on company-commissioned

articles and use of social media AdvaMed Code Not addressed

What Do You Notice?

• Code of Conduct vs. Code of Ethics vs. Code of Practice
• vs. Code of Interactions…
• Similar goal – develop ethical business practices and

principles for the industry

• But differing approaches to…

– Level of detail in proscriptions/rules – Adjudicating disputes – Providing guidance and template documents – Voluntary vs. mandatory certifications – Some issues addressed; others are not

Discussion Topics

Codes of Ethics vs. Codes of Conduct Examples of Industry Codes of Ethics How do Codes of Ethics Benefit Industry? Code Drafting Considerations

How do Codes Benefit Industry?

Provides companies with a foundation for individual compliance programs Consulting Arrangements with Health Care Professionals Helps level the playing field among competitors Prohibitions on Entertainment & Gifts Helps companies meet legal needs for compliance U.S. Federal Sentencing Guidelines; Sarbanes-Oxley Provides a values-based compass and foundational ethical charter for the industry to guide business practices & behavior Code Values – Integrity, Respect, Transparency Self-regulates and anchors industry behavior to common norms; demonstrates self-control & restraint, esp. in highly regulated/litigious environment Limits on Meals, Travel

How do Codes Benefit the Industry? (cont’d)

Establishes a positive public perception by demonstrating to public the industry’s commitment to good business practices Third-Party Educational Conferences, Commercial Sponsorship Serves as defensive document and highlights good practices Advertising/Promotional Parameters Serves as a bridge between individual companies, industry sectors, and industries writ large Benchmarking/Best Practices Acts as a distinguishing factor between industries or between competitors (those who adopt viewed as more credible) Code Certification & Supporter Demonstrates key industry best practices & acts as a benchmark for behavior (esp. during due diligence) Small Company Compliance Program/Code

Discussion Topics

Codes of Ethics vs. Codes of Conduct Examples of Industry Codes of Ethics How do Codes of Ethics Benefit Industry? Code Drafting Considerations

Code Drafting Considerations

Large vs. Small Company Needs Geographic Scope – Market & Cultural Distinctions Antitrust/Anti-Competitive Concerns

• Large companies may

require broader based principles and direction

• Small companies may need

more detail, guidance, and resources

• Example – Lists of

recommended questions & checklists vs. strict requirements

• Different markets accept

different legal requirements and maintain varying risk tolerance

• AdvaMed U.S. Code –

prohibits providing branded promotional items to Health Care Professionals

• AdvaMed China Code –

permits providing branded promotional items of minimal value to Health Care Professionals (notepads, pens, etc.)

• Until 1/1/2018, AdvaMed

U.S. Code prohibited direct sponsorship; AdvaMed China Code permitted

• Need to be cognizant of

unintentionally breaching antitrust restrictions

• Ex: Fair Market Value

compensation for consultants (guidelines OK; specific dollar limits are not)

• Ex: Vetting educational

grant recipients under AdvaMed China Code

Code Drafting Considerations

Foundation in Key Legal Doctrines Selection of Topical Areas Language Considerations

• Critical to understand

& define specific legal areas for Code to address

• Avoid other areas

better suited for other guidance or other

• rganizations
• Ex: AdvaMed Code 

Federal Anti-Kickback Statute, Physician Payments Sunshine Act, Food Drug & Cosmetic Act BUT NOT medical device excise tax or supplier licensure…

• What laws do you

want to address?

• What mission-critical

values direct the industry or company?

• What do other

industry association codes address?

• What is the
• rganization’s

appropriate role within the industry?

• Ex: Advertising &

Promotional (MTAA)

• vs. Silence in

AdvaMed

• Should vs. Must
• Can vs. Cannot
• May not vs. Must

not Stakeholder Outreach

• Key customers, key

business partners, government agencies and others

• Direction and

recommendations

• Socialize language

that will impact

• Ex: AdvaMed China

Code ban on direct sponsorship

Code Drafting Considerations

Conservative vs. Liberal Approach Goals & Values Development of FAQs and Other Tools Should the Code be more conservative & limiting? Should the Code take a more open & flexible approach? Does language pin industry into one legal interpretation or allow members to make reasonable judgments?

• Need to make

decisions about whether industry or company wants values-driven vs.

• bjectives-driven

Code

• AdvaMed Code

interpretive values

• Values/principles

harmonization as approach for initiating code (ex: Asia-Pacific Economic Cooperation Kuala Lumpur Principles – Medical Device Sector)

• Code language may

not squarely address arrangement

• Supplemental FAQs –

allows flexibility and

• rganic vs. static Code

document

• Other resources,

tools, & guides

• Benchmarking and

best practices data for how companies and their peers implement the Code Enforcement/Adjudication

• How should an

association address non-compliance? Competitor disputes?

• Arbiter? Witness?
• MedTech Europe –

detailed dispute resolution process, compliance panel and committee, and related complaint procedure

• AdvaMed – voluntary,

facilitate discussions, no bureaucracy

• Downstream impact –

govt enforcement, civil suits

Thank You!!

Contact Info Senior Counsel Akin Gump mwetzel@akingump.com Washington, D.C. 1 202.887.4221