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All things Pharma

Taking care of business

The Association of British Healthcare Industries (ABHI) Code of Business Practice came into force in 2008. Chris Hodges explains why the medical technologies sector needs a strong code of practice, how the code will operate and how compliance will be achieved.

The ABHI Code of Business Practice (CoBP) came into force last year, requiring all ABHI members to comply with certain ethical standards. Membership of the code and adherence to it are likely to become prerequisites of doing business with NHS bodies and other purchasers of medical technologies in the UK.

Setting a standard

Adherence to ethical standards is now expected of all businesses, and the medical devices industry is no exception. In many other countries, government has stepped in and imposed anti-corruption laws specific to this sector. However, the UK government encourages selfregulation by industry. Felicity Harvey, Head of Medicines, Pharmacy and Industry at the Department of Health, said:

“I very much welcomed the launch in November 2008 of the new ABHI Code of Practice. This marks an important step forward in developing common standards across the medical technology sector and sends a very positive message to companies. ABHI has put itself and member companies at the centre of a more open and ethical commercial culture. It will, I am sure, help foster constructive relationships with all ABHI’s stakeholders, in particular with Government and with NHS healthcare professionals, at a time when collaboration to improve health and social care services for patients is increasing in importance”.

As well as publicising the code to the Government, the ABHI has also been promoting the code to the Royal Colleges in the hope of building strong, open, transparent and beneficial relationships with clinician groups.

The CoBP will only be fully effective if the majority of the healthcare industry signs up to it. Plans are being developed to accommodate non-ABHI members in the not too distant future.

Playing by the rules

Why is a code of practice needed at all? Arguably, if industry fails to put in place an effective code of practice then government regulation will be imposed that may lead to a worse environment for business than one achievable under a self-regulatory approach. Self-enforcement of codes of business practice is a strong feature of the UK approach to regulation.

Government policy is to encourage industry self-regulation where possible, in view of its advantages: saving public funds (internalisation of costs to the regulated sector has lower costs than a public or court-based system), speed and flexibility. By putting in place a code, the medtech sector is responding to the need to formalise and spread standards of practice – notably in relation to what is acceptable in terms of promotion of devices to potential customers.

The overriding objective is to develop a system that prevents the industry being held in disrepute. A second objective is to standardise practice, and thus reduce expenditure and improve the competitiveness of the sector. It is all too easy for over-enthusiastic promotion to lead to allegations of bribery and corruption. The inevitable result of such scandals – as has occurred in Germany and France – is for governments to respond by introducing legislation, backed by criminal penalties.

Thus a code of practice can limit activities and expenditure to modest levels, and reduce the legal and reputational risks. In short, an important function of having an effective code is for the industry to prevent the imposition of legislation by putting its house voluntarily in order.

Having a code is crucial for industry relations with customers. A formalised awareness of what is acceptable when dealing with medical professionals is crucial for industry. The stronger the code, the easier companies will find it to build strong and productive relationships with clinicians.

5 reasons why you need the CoBP

1. Being seen to follow a code of conduct will provide an ethical platform for relationships with end users, thus increasing your company’s opportunities for product development and innovation in the longer term.
2. The dialogue between suppliers and healthcare professionals needs to be full, frank and open, focused on technical and business matters, and not contaminated by any bad practices. The code provides guidance to help companies achieve this.
3. The code ensures that high professional standards are maintained without any need for restrictive intervention by Government.
4. The code sets a standard for best practice in sales and marketing, thus helping to establish customer trust.
5. The propagation of the code’s message plays a part in strengthening the reputation of the medtech industry.

An independent view

In 2001 the Office of Fair Trading published guidelines on consumer codes of practice. In particular, to maintain confidence in the system, it is necessary for the decision-making and sanctioning functions to involve structures and individuals who are independent of industry.

A recent illustration of this is the UK Government’s requirements for future regulation of all healthcare professions, which stress the need for independence and impartiality, and require that decision-making professional conduct panels must comprise at least 50% lay membership (Department of Health, 2007). The need for independence is clearly underlined in modern academic writing on regulatory systems. Thus when the research-based (i.e. not generic) British pharmaceutical industry introduced a code in 1993, they created a new self-regulatory authority, the Prescription Medicines Code of Practice Authority (PMCPA), which was separated from the industry’s trade association (ABPI).

The aim is not just to demonstrate that the code authority’s decisions are not biased in the industry’s favour, but also to enable the industry to see itself as it is seen from the outside.

When a complaint is received against a company, the functions that need to be undertaken are:
• origin of complaint
• fact-finding
• decision
• sanction.

In this case there will be a Code of Business Practice Complaints Panel that comprises healthcare professionals, lay (non-healthcare or non-industry) individuals and the Chief Executive of ABHI (or his nominee as an observer).

Complaints are made to the Chairman of the Panel. The complaint may come from a competitor, or from an independent person such as a physician or a member of the public. The question may arise whether the trade association or decision-making authority should itself start the process. It would probably put the trade association in an invidious conflict position to raise a complaint against a member (or a non-member), but there would be no such impediment to an independent chair’s raising a complaint.

However, if a company had done something blatantly outrageous, there would be a strong rationale for the industry to be able to register its public view. Failure to do so might expose the industry to criticism, and the ability of an independent chair to raise issues spontaneously solves this problem.

It is important that the decision-making authority should be capable of understanding (a) the sector and its prevailing practices and (b) the local and sub-sectoral practices, which may differ between European states. Thus it might be argued that industry personnel should take part in the decisions, as long as they are not in the majority and have no conflict of interest. Alternatively, if an independent chair with sufficient local knowledge cannot be found, local practice could be adequately represented through evidence produced by those parties in dispute. Second to this, the tribunal panel could contain healthcare professionals not directly involved with industry.

‘Name and shame’

What kind of sanctions might be appropriate for companies that break the code? Both modern experience and regulation theory suggest that a range of possible sanctions would be required – but also that, in many cases, the imposition of relatively light sanctions may be entirely sufficient to found confidence in the system and to encourage compliance and appropriate disapproval of non-compliance.

A risk-based or ‘responsive’ approach to enforcement is currently being adopted by most public authorities in the UK. The essence of this approach is that a public regulator should possess extensive enforcement powers, but should only need to use a ‘light touch’ to gain behavioural change and compliance from responsible industry – whereas more aggressive tactics should be used on ‘rogue’ companies.

Thus the experience of the UK, which is recognised internationally as being in the vanguard of self-regulatory systems, is consistently that publication of a decision and the name of the guilty company are usually sufficient measures where responsible businesses are concerned. In most cases, this is all that the PMCPA does for the pharmaceutical industry, or the Advertising Standards Authority does for press or general advertising. The media often publish the decisions of these bodies, and this constitutes sufficient publicity of the fact that the code has been broken or has been clarified in relation to a particular practice. The PMCPA does also have the power to suspend a company from membership of the ABPI, but it has exercised this power only rarely in 15 years.

If necessary, the transgressor’s readmission is made subject to audit (of systems and sales staff activities that have led to consistent breaches). The key point, however, is that the more serious sanctions that might be associated with a public court or administrative regulatory system, such as fining or imprisonment, are not necessary within a self-regulatory system.

Spelling out the code

A fundamental aspect of the CoBP is the mechanism for deciding what conduct is or is not compliant with the code. That mechanism requires a decision-making function, not a sanctioning function. It can be assumed that compliance will follow publication of the decision in the vast majority of cases. The sanctions are aimed at ensuring compliance through adherence to mandated behaviour. Fines would almost always not be appropriate, since there is extensive evidence that they do little to affect behaviour and may be seen as creating a conflict for the imposing body.

There are clear advantages in attempting to resolve issues that arise between companies by an informal procedure, whether through facilitated conciliation or directly between the companies, before invoking a formal complaints procedure. This approach may delay resolution if the issues cannot be settled, but provides obvious benefit if they can be settled or at least reduced in importance. It is still necessary for there to be a formal procedure to deal with complaints received from outside the industry.

Having a code is crucial for industry relations with customers. A formalised awareness of what is acceptable when dealing with medical professionals is crucial for industry. The stronger the code, the easier companies will fi nd it to build strong and productive relationships with clinicians.

The ABPI has instituted a conciliation procedure from 2006 onward that involves independent, neutral conciliators. As with ADR (alternative dispute resolution) in litigation, this comes at a cost. However, the chairs of some ABHI committees might provide an efficient conciliation function, especially if they are legally qualified.

Where healthcare is concerned, there are also more specific codes in operation. One of these is the code governing access for company personnel to operating theatres: the so-called ‘Theatre Access Code’. In addition, a particular product sector has developed its own code: the ABHI Orthopaedics Special Interest Section agreed its code in early 2007. This document is essentially a more specific and detailed version of the Eucomed Code, taking account of issues particular to the orthopaedics industry.

A guiding hand

ABHI is the leading industry association for the UK medical technology sector. Its aim is to promote the rapid adoption of medical technologies in order to ensure optimum patient outcomes throughout the UK and in key global markets. ABHI has around 200 member companies, whose annual output is about 80% of the industry’s total.

To sum up: the ABHI Code of Business Conduct is a major asset both to companies that subscribe to it and to the UK medtech industry as a whole. It establishes a formal and visible set of rules for industry self-regulation that allows any issues to be resolved with minimal cost to the company’s operation and reputation, and without any need for official restrictions.

From a sales and marketing point of view, a company subscribing to the code will find it easier both to win the trust of customers and to maintain a productive working relationship with them, as the code provides not just a ‘seal of approval’ but a set of positive guidelines. It’s good for medtech companies, for healthcare providers, and ultimately for public health.

Dr Christopher Hodges is Head of the CMS Research Programme on Civil Justice Systems at the University of Oxford, and is former chair of the ABHI and Eucomed Legal Affairs Committees.

This article has been updated and amended by Dan Jones, Public Affairs Officer, ABHI.


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