Medical device business practice changes: are you ready?

Published 9 January 2018

Manufacturers of medical devices should note the changes being phased in by the Association of British Healthcare Industries ("ABHI") this year, which will align the UK approach with that of MedTech Europe by January 2019, and they should ensure their business practices are compliant.

The ABHI Code of Ethical Business Practice  (the "Code") is the self-regulated industry standard for the sector and is binding on members of the ABHI.  MedTech companies who are not members of the ABHI often follow the Code in order to guide their interactions with healthcare professionals ("HCPs") and to assist with compliance with the relevant UK anti-corruption legislation. 

1. Bribery Act compliance

While there is no anti-corruption law relating specifically to manufacturers' interactions with HCPs, such dealings are governed primarily by the Bribery Act 2010 (the "Act") and industry codes of conduct. While compliance with the Code does not guarantee compliance with UK anti-corruption legislation, it is certainly a helpful place to start and will assist in showing that a company had adequate procedures in place, in accordance with the guidance issued by the Ministry of Justice: Bribery Act 2010 Guidance: Adequate Procedures.  Where such compliance is integrated into corporate policy, it will provide a defence under section 7 of the Act which addresses the failure of commercial organisations to prevent bribery.  Having adequate policies and procedures in place will also reduce the risks of active (section 1) and passive (section 2) bribery offences.

Penalties under the Act include:

• a maximum penalty of 10 years' imprisonment and/or an unlimited fine for individuals;
• an unlimited fine for commercial organisations;
• disqualification from public procurement for up to five years in the UK; and
• disqualification as a director for up to 15 years.

International companies should review their policies and procedures to ensure they fully meet the UK regime as compliance with other EU or US anti-corruption regimes does not guarantee compliance with the Act.

Contracts should also be reviewed to ensure they contain an anti-corruption clause, which is bespoke to the risks faced by individual organisations when dealing with domestic or international businesses.

2. ABHI Code updates

Against this backdrop, members of the Code will be aware that the revised Code has come into effect in two stages:

The Complaints Procedure & Panel Constitution set out in Part 4 became binding on members from 1 January 2017. 

The remainder of the Code came into effect on 1 January 2018 and includes a transition period until 31 December 2018, by which time members must have ceased all financial or in-kind direct support to individual HCPs to attend third party organised educational conferences (subject to exceptions).

Members of the MedTech Europe Code of Ethical Business Practice should be aware that under the MedTech Europe Code, this prohibition became effective from 1 January 2018 with the transition period ending on 31 December 2017.

3. Changes from 1 January 2018

From 1 January 2018 ABHI members should be phasing out all financial or in-kind support which is provided directly to individual HCPs for third party organised educational conferences in preparation for the prohibition on this type of support from 1 January 2019.

There is an exception whereby assistance is still permitted in relation to third party organised procedure training or pursuant to a consulting agreement with a HCP engaged by a member to speak at a satellite symposium.

From 1 January 2019 members will only be permitted to support third party organised educational events through the routes prescribed in Chapter 2 and Chapter 4 of the Code.

• Third party organised educational conferences: support may be provided through grants or other types of funding such as promotional activity or satellite symposia, provided that such an event has been approved by the Conference Vetting System ("CVS").  The CVS is a centralised decision-making system which reviews the compliance of third party organised educational events with the Code and is managed independently of ABHI with the aim of encouraging transparency and consistency.  For more information see: About CVS (Ethical MedTech).
• Educational Grants: may be provided to support HCPs' attendance at third party organised education events provided that the organisation receiving the grant decides which HCP(s) attend the event.  Members must not attempt to influence which HCP(s) are to attend the event using the financial support.  Grants may also be provided to the organiser of events to assist with the organisation.  However, the member must have no influence over the content, selection of speakers, etc. attending or, if applicable, the remuneration of any speakers etc.  In both situations the terms of the grant agreement must be clear.
• Scholarships and Fellowships: this type of support is permissible only to support advancement of genuine medical education of HCPs.  Members may not provide such support upon request by HCPs and must not be involved in the selection of HCPs who benefit from such support.
• Disclosure obligations: members must ensure that disclosures are made within six months after the end of the relevant reporting period in accordance with the Code's disclosure guidelines set out in Part 2.  The first reporting period starts on 1 January 2018 and ends on 31 December 2018.

4. What should medical device manufacturers be doing?

• ABHI or MedTech Europe members should check their internal policies and procedures to ensure they are up to date with the relevant codes.
• Non-members should consider their existing policies and procedures against the codes and the Act.
• All MedTech companies should be aware of conduct issues which may arise when dealing with HCPs and train employees, as required, to mitigate risks.
• Consider your contractual arrangements and whether they provide adequate protection regarding anti-corruption.

5. More Information

For advice and guidance on this topic, please contact:

Alison McAdams, Head of Life Sciences, amcadams@dacbeachcroft.com or

Dr Anne-Marie Gregory, Solicitor, amgregory@dacbeachcroft.com