Life Sciences

Recent settlements show how companies can respond to investigations

Device Regulation Alert: Safety, Compliance and Reimbursement News, October 22, 2007

Editor's note: This is the second in a two-part series on the recent settlement between the federal government and five companies that market hip and knee replacements. The first part appeared in the October 15, 2007 issue of Device Regulation Alert.

If a company finds itself under scrutiny by the government, cooperation, corrective action, and increased compliance efforts can prevent criminal prosecution and potential exclusion from federal healthcare programs.

Following a recent government investigation into consulting arrangements between surgeons and companies marketing hip and knee surgical implants, Zimmer, Inc., DePuy Orthopaedics, Inc., Biomet, Inc., and Smith & Nephew, Inc entered into deferred prosecution agreements. Stryker Orthopedics, Inc entered into a non-prosecution agreement.

In a press release announcing the agreement, the government said the "complete cooperation of Smith & Nephew's managemen with government investigators made the government confident that the company's management is committed to compliance. The government also praised Zimmer's new Corporate Compliance Program.

According to the DOJ press release, Biomet's deferred prosecution was due partly to its demonstrated company-wide commitment to improving compliance procedures and controls and efforts to change prior practices. Finally, the government lauded DePuy's efforts even before the investigation to provide "comprehensive healthcare compliance training for its employees and independent sales force."

So a company that commits to similar compliance efforts can gain more favorable treatment by the government in the event of a compliance problem.

New compliance initiatives

Device companies can also learn from the compliance measures imposed on these companies under their deferred prosecution and non-prosecution agreements.

According to the deferred prosecution agreements, the companies will conduct needs assessments for consulting agreements to ensure a valid purpose for the arrangements exists.

The companies are also committed to following AdvaMed's Code of Ethics on Interactions with Health Care Professionals.

Depuy has also established a committee to review consulting agreements, research grants, charitable donations, and royalty payments. Biomet expanded its compliance department and is developing policies and procedures to address educational grants, charitable donations, consultants, and compliance training programs.

Every company can implement similar measures to improve compliance.

Click here to review the press release and the agreements on the DOJ's Web site.

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