Device companies should conduct compliance audits of "high risk" marketing and promotional activities every two years, speakers suggested during a Sept. 9 AdvaMed-sponsored webinar.

"I haven't seen any official guidance on frequency of audits," said Peter Claude of PricewaterhouseCoopers during the conference.

He indicated, however, there seems to be a consensus in the industry regarding how often audits should take place. "What we do typically see is the higher-risk [audits] are ... [done] every other year, and then you might see every third year or every fourth year getting down to the lower-risk items."

Firms can identify which areas may need closer monitoring by conducting risk assessments, Claude said. Areas to scrutinize include company-conducted training and education, promotional activities, consulting arrangements and speaker programs.

AdvaMed's Medical Technology Learning Institute held the webinar a little over two months after the device trade group's revised code of ethics took effect. The voluntary code, which includes more restrictions on marketing activities, encourages companies to submit to AdvaMed an annual certification of code adoption and implementation (¹ Also see "Most Device Firms Ready To Comply With AdvaMed Ethics Code" - Medtech Insight, 6 July, 2009.).

A PwC survey of 32 device companies released in July found that 90% of firms said they had processes in place to address all of the provisions of the new code. But the survey also found that the companies were less successful in monitoring those processes.

According to data from the survey presented during the MTLI program, only 40.6% said they use compliance risk assessments to determine whether their monitoring programs are actually effective, a trend decried by the speakers.

"It's worse to have a compliance program that sits on the shelf than to not have one at all," Claude opined. "The use of a risk assessment," whether it be formal or informal, will "help to focus you on the best way to do your monitoring and any auditing that you may possibly do," he pointed out.

The survey also found that 71.9% of firms said they monitored processes for company-sponsored product training and education, and 68.8% said they monitored processes for sales and promotional meetings.

Survey Finds Lax Reimbursement Monitoring

Of the 32 survey respondents, just under half said they have monitoring processes in place to comply with the provision of reimbursement and other economic information to health care practitioners.

"It's interesting given the number of recent [corporate integrity agreements] that affect reimbursement guidance that that is not a commonly audited subject matter area," Claude commented.

Following a qui tam lawsuit affecting five cardiac ablation device makers, in July, Endoscopic Technologies settled civil allegations of Medicare fraud related to its Cobra ablation products and agreed to enter into a CIA with the HHS Office of Inspector General (² Also see "DoJ Targets Five Cardiac Ablation Device Makers In False Claims Probe" - Medtech Insight, 20 July, 2009.). The other firms - Boston Scientific, Medtronic, St. Jude and AtriCure - also were charged with Medicare fraud.

Earlier this year, NeuroMetrix entered into a CIA to settle allegations of illegal kickbacks and Medicare fraud relating to its NC-stat neuropathy diagnostic system (³ Also see "NeuroMetrix Settles Kickback Charges Related To Device Marketing" - Medtech Insight, 16 February, 2009.). Also, in May 2008, Medtronic settled Medicare fraud claims against its Kyphon subsidiary by entering a CIA with the Department of Justice (⁴ Also see "Medtronic Spine Settles Medicare Fraud Claim, Accepts $75 Million Fine" - Medtech Insight, 26 May, 2008.).

Regardless of self-policing efforts by industry, companies should continue to expect government scrutiny of their marketing programs, the presenters agreed.

"It's uncertain whether we'll get a health care [reform] bill, but what is certain is that whatever will come from it will include increased funding for enforcement over the Medicare and Medicaid trust fund," said McGuireWoods attorney Kristian Werling.

The costs of compliance failures in recent years have been mounting, he added, citing Pfizer's record $2.3 billion settlement with the Department of Justice, announced Sept. 2. The settlement, which included a five year CIA, resolved allegations of off-label marketing and kickbacks to health care providers.

- Brooke McManus ( ⁵ b.mcmanus@elsevier.com )

How Often To Audit Marketing/Promo Activities? It Depends On Risk

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