So, There’s Really No Free Lunch?

Issue Number: 
Volume 3 Issue 5 - September/October 2009
Marcia Nusgart, R.Ph, Dot Weir, RN, CWON, CWS

Our readers may remember fondly (or perhaps not so fondly) the days when there were frequent requests from all forms of DME suppliers, home health agencies, infusion providers, and product manufacturers to visit our clinics. This is usually during the lunch hour to provide lunch and talk to the staff about their products or services, or simply to say “thank-you” for the business. Along with the lunch, left behind were piles of pens, pads, mouse pads, can drink covers, and other “reminders”. Additionally there were the boxes of donuts, bagels, and candy passed through the front window with the company logo on a sticker proudly letting the recipients know who brought them. In more distant years there were trips, golf games, sporting events and all sorts of “perks” that came with close relationships to coveted vendors whose products were used frequently and with whom a close relationship had developed.

For many, our hospitals may have placed limits on the free goods, especially meals, unless there was legitimate education being presented during work hours. But there certainly seemed no harm in a few pens and pads.

But then with the arrival of January 2009, it all seemed to come to a screeching halt. Most of our vendors gave us a heads up that it was coming, that the rules were changing, and apologetically announced that even the wall calendar that they had always provided would be no more.
Note: (Check out the December 2009 issue of Ostomy Wound Management for a free wall calendar provided by HMP Communications.)

Most just accepted the changes, as “somebody’s” rules, but this issue of Today’s Wound Clinic seemed the obvious forum for providing the details.
Many state and national medical device and pharmaceutical associations have developed over the years codes of ethics—the ones we will address in this article were conceived and written by two national associations who represent—the Advanced Medical Technology Association (AdvaMed) and the Pharmaceutical Researcher and Manufacturers of America (PhRMA). AdvaMed ( is the world’s largest association representing manufacturers of medical devices, diagnostic products, and medical information systems. AdvaMed members and subsidiaries manufacture nearly 90 percent of the healthcare technology products purchased annually in the United States and more than 50 percent of the healthcare technologies purchased annually around the world. PhRMA ( represents the country’s leading pharmaceutical research and biotechnology companies. AdvaMed originally published its Code of Ethics on Interactions with Health Care Professionals in 2003, with an update in 2005. The ‘Code of Ethics’ was revised in 2008 and implemented in July 2009 but many companies began implementing the provisions at the beginning of this year. The goal of the new Code was to find a balance between productive interactions with healthcare professionals and ethical behavior consistent with fraud and abuse authorities.

Although many of us are not familiar with the medical device and pharmaceutical trade associations, we are appreciative that there are organizations that place a ‘Code of Ethics’ at the forefront of their industry. To help us understand the position of AdvaMed and PhRMA, the effect on our industry and clinics, and the role that we in the clinics can play in assuring compliance with the guidelines, TWC solicited the help of Marcia Nusgart, R.Ph, Nusgart is the executive director of the Alliance of Wound Care Stakeholders, a multidisciplinary consortium of over 15 physician, clinician, provider, manufacturer and patient organizations that addresses regulatory and legislative issues impacting wound care. She also serves as executive director for the Coalition of Wound Care Manufacturers and President of Nusgart Consulting, LLC. She previously served as associate vice president, Home Care for the Advanced Medical Technology Association (AdvaMed). The authors also solicited the help of Lynn Shapiro Snyder and Ben Martin, health lawyers from the national health law firm, Epstein, Becker & Green, P.C. (EBG). The law firm has one of the largest health industry law practices in the United States. For more information about EBG, visit their website at

Set forth below are questions and answers related to the purpose of the Codes, the evolution of the changes, and what our role should be in connection with industry compliance.

Q: Isn’t the restriction of pads and pens extreme? If I’m making a treatment decision, I don’t look down at my pen for guidance.
A: Both Codes were revised to prohibit the provision of branded items, including those of nominal value, such as pads and pens. This eliminated one of those “gray areas” mentioned above. The government enforcement community has been particularly vocal about its concerns that a vendor’s provision of branded items can improperly influence a prescriber’s choice of product, especially when the branded items have no relationship to patient care or patient education. These items are considered by the enforcement community to be a form of subsidization of a prescriber’s overhead. This would include not only pads and pens, but also coffee mugs, clocks, calendars, and novelty items. Of course, pharmaceutical and medical device manufacturers may still provide truthful and non-misleading information about their products to prescribers (in compliance with FDA requirements).

Q: Is there an example of when it is acceptable and appropriate for a sales representative to provide lunch and an in-service for our staff?
A: The days of ‘dine and dash’ - when a vendor provides a courtesy meal for a prescriber’s staff - are over. However, both Codes allow vendors to provide ‘modest’ meals in conjunction with some type of healthcare product education attended by the prescriber and other persons from the prescriber’s staff who have a bona fide professional interest in the information being shared by the vendor. These meals should be limited to in-office or in-clinic settings.

Q: Is there a standard for gift cards, books, baby shower gifts, holiday gifts, and other items outside of an educational forum?
A: No. None of these items is permitted when there is a professional relationship.

Q: Can hospital-owned outpatient wound care departments take samples of wound care dressings, drugs, and bioactive dermal substitute products just to try on patients?
A: The federal Anti-Kickback Statute is very broad in what could fall within the key term of prohibited “remuneration”. These products have value so providing them for “free” could suggest a form of subsidy to a person in a position to purchase or recommend these products. The AdvaMed Code allows manufacturers to provide such items for free to allow for their evaluation, but the number provided should not exceed the amount reasonable necessary to perform that evaluation. However, clinics should not bill for any items they receives for free, as that may potentially expose them to liability risk under the federal False Claims Act.In addition, a product manufacturer may provide demonstration products that are not used with actual patients.

Q: Is it still acceptable to refer patients to the manufacturers’ indigent or charity programs and to assist them in completing enrollment forms?
A: Yes, it is still acceptable for clinic personnel to refer patients to the various websites and toll-free numbers of manufacturers’ indigent, charity or patient assistance programs and to assist them in completing enrollment forms.

Q: There are frequently dinners held in our area by different companies where they bring in a guest speaker to talk about their products. Is that still OK?
A: Meals may be provided but only if they are modest and ancillary to educational or product training activities. The setting also must be conducive to effective scientific and medical exchanges. It may not be an entertainment or recreational event. The PhRMA code does not consider a restaurant setting to be appropriate.

Q: If I’m at an out of town meeting, are small social group dinners put on by the sales organizations still OK?
A: Similar to the question above, the answer is no. The questions and answers section of the PhRMA Code expressly states that a field sales representative may not conduct an informational presentation accompanied by a meal for a healthcare professional in a restaurant down the street from the hospital.

Q: What guidelines should be followed for company sponsored trips to corporate offices, manufacturing facilities, etc?
A: Only the AdvaMed Code has any reference to permitting a subsidized trip to a manufacturer’s facilities and only in very limited circumstances. These limited circumstances are when the product requires special training. In particular, the AdvaMed Code states as follows: “Where there are objective reasons to support the need for out-of-town travel to efficiently deliver Training and Education on Medical Technologies, Companies may pay for reasonable travel and modest lodging costs of the attending Health Care Professionals.“

Q: Can manufacturers offer free services that are normally provided by the hospital, such as insurance verification, prior authorization/pre-determination, denied claims appeal, etc.?
A: The revised AdvaMed Code states that: Permissible activities involving the provision of coverage, reimbursement and health economic information may include, but are not limited to … facilitating patient access to the Company's Medical Technologies by providing Healthcare Professionals with assistance in obtaining patient coverage decisions from payors. This assistance may include providing information and/or training on payor policies and procedures for obtaining prior authorization, and providing sample letters and information on medical necessity and appeals of denied claims. In addition, as the request of a Health Care Professional to facilitate patient access to the Company's Medical Technology, and subject to appropriate privacy safeguards, the Company may assist the patient by facilitating the preparation and submission of requests for coverage determinations, prior authorizations, pre-certifications and appeals of denied claims, relating to a Company's own Medical Technology; however such assistance should not be provided as an unlawful inducement.
As stated, manufacturers should not provide reimbursement-related assistance as an unlawful inducement or in the context of an improper promotional activity. The OIG industry guidance to manufacturers and two OIG Advisory Opinions, all of which predate the revised AdvaMed Code, addressed the potential implications of providing reimbursement-related information and services to customers in certain contexts. See OIG, "Compliance Program Guidance for Pharmaceutical Manufacturers", 68 Fed. Reg. 23,731, 23,735 (May 5, 2003) (OIG stated in this guidance that it also applied to medical device manufacturers); see also OIG, Adv. Op. 06-16, at 4-5 (Oct. 3, 2006); OIG, Adv. Op. 00-10, at 7 (Dec. 15, 2000). Providers therefore should consult their internal compliance function before requesting or accepting such services from manufacturers.

Q: Do all of the manufacturers in the wound care industry have to follow these guidelines? What if they aren’t a member of AdvaMed or PhRMA?
A: Although compliance with the PhRMA and AdvaMed Codes is voluntary, each trade association has posted on its website the list of trade association member companies that have agreed to abide by the trade association’s respective Code. Other companies may be abiding by other codes of national or state trade associations of which they are manufacturers, such as the Medical Device Manufacturers Association.
Of course, a manufacturer that is not a member of any trade association still may elect to adopt and comply with any of the various Codes and could notify its customers of that voluntary decision; however, PhRMA or AdvaMed only post on their websites a list of the actual members of each trade association that agree to comply with the respective Code. Finally, whether or not a manufacturer is a member of a trade association or follows its Code, all manufacturers must comply with applicable federal and state laws, which in some cases may be more restrictive than any of the Codes.

Q: If a clinic encounters an individual who suggests activities outside of the guidelines, what should they do?
A: Of course, the answer to this question depends upon various facts and circumstances. If your clinic’s corporate compliance program includes protocols for this type of circumstance, you should follow that protocol. In the absence of that, then, at a minimum, you may consider educating the company representative that he or she is not following industry guidelines, as you understand them to be. The company representative is then put on notice as to the potential infraction. The company representative now has the opportunity either to explain why the conduct is still permitted or whether the conduct should be stopped. Also, each company often has a compliance hotline or compliance officer available for the filing of concerns related to the behavior of its sales representatives. You may want to reach out to the company in that context as well. n

Marcia Nusgart, R.Ph, is the Executive Director of the Alliance of Wound Care Stakeholders, Executive Director for the Coalition of Wound Care Manufacturers and President of Nusgart Consulting, LLC.
Dot Weir, RN, CWON, CWS s the co-editor of TWC. She can be reached at
Benjamin S. Martin is an Associate in the Health Care and Life Sciences Practice in the Epstein Becker & Green, P.C. Washington, DC office, where he practices in the Pharmaceutical Industry Health Regulatory Group.
Lynn Shapiro Snyder is a Senior Member of Epstein Becker & Green, P.C. in the Health Care and Life Sciences and Litigation Practices in the firm's Washington, DC office and she is Strategic Counsel with EBG Advisors, Inc.