Life Science Compliance Update

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23 posts from December 2008

December 29, 2008

Health Care Reform: McKinsey Report - Where is all the Money Going

There is great debate around the causes of why healthcare is so expensive and why the cost increases every year regardless of the economy.  

There are major questions about why the U.S.spends (approximately $650 billion) more than the rest of the world for healthcare.  We spend twice as much on healthcare than we do on food and more than the entire country of China spends on all goods and services (that is a lot of consumption).

The gurus at McKinsey and Company (the largest consulting company in the world), recently updated their January, 2007 report to give more insight into the rising cost of healthcare.

They account for this difference, largely due to the elasticity of demand, whereas the supply for healthcare increases so does the demand, and this is primarily so, because most Americans do not have an idea of what the real cost of healthcare is, and how to figure that out. 

Insurance has, by and large kept hidden, the true costs so consumers only pay a small portion of the bill directly out-of-pocket.

The puzzle in all of this is that healthcare costs more in the U.S. despite that the overall population is not fully insured and healthcare statistics show we are healthier than many countries of the developed world.

These documents provide an excellent primer on the healthcare economy and a must-read for those involved in the healthcare debate:

Accounting for the Cost of HealthCare: A New Look Why Americans Spend More.

Executive Summary

Full Report

Interactive Slide Show

December 24, 2008

AdvaMed Releases Revised Code of Conduct

In an effort to track PhRMA and reduce conflicts of interest AdvaMed released a major update of its Code of Ethics on Interactions with Health Care Professionals.

The new code will be effective July 1, 2009.

 The revised Code further clarifies and distinguishes between appropriate and inappropriate activity between health care professionals and representatives of AdvaMed member companies.

It also presents non-member companies with an opportunity to adopt the AdvaMed Code’s principles and unite industry in addressing common issues in a consistent manner.

AdvaMed’s revised Code covers some new areas, including:

  • A new Code Compliance section under which a list of companies that certify their adoption of the Code will be available for public review on AdvaMed’s Web site.


  • An explicit prohibition on providing entertainment or recreation to Health Care Professionals (HCPs). Additionally, the changes prohibit gifts of any type, including all non-educational branded promotional items, regardless of value.


  • Guidelines that allow for companies to enter into royalty arrangements with Health Care Providers in exchange for substantial contributions that improve medical technologies.


  • A new section addressing Evaluation and Demonstration Products which sets forth appropriate parameters under which companies may provide products intended to educate both HCPs and patients on newer or improved medical technologies.
  • An expanded section addressing the provision of objective reimbursement, coverage and health economics information to HCPs in order to improve patient access to medical technologies.


  • Additionally, AdvaMed has revised current Code sections to provide greater clarity and rigor in areas such as consulting agreements, company-conducted training and education for HCPs, and research and educational grants, among other key areas.

“Nothing is more important for our industry than to maintain the public trust and the integrity of its products and services,” said Stephen J. Ubl, president and CEO of AdvaMed.

“Just as medical technology companies are naturally focused on the need for continuous improvement in their product development, our industry’s Code of Ethics should also be dynamic and responsive to change,” said Paul A. LaViolette of Boston Scientific Corporation.

“AdvaMed’s revised Code addresses the realities of today’s marketplace and underscores our industry’s commitment to ethical business practices.” LaViolette chairs the AdvaMed Board’s Special Committee on the Code.

The Attorneys at Hyman, Phelps and McNamara, PC have put together a comprehensive summary of the revised AdvaMed Code.

They point out that the revised Code states that the company may provide support for conferences sponsored by national, regional, or specialty medical associations and conferences sponsored by accredited continuing medical education (CME) providers. However, under the revised Code, grand

rounds are no longer considered third-party educational conferences.

These revisions signal that the device industry is taking the issue of conflict of interest seriously.    Going into 2009, we have seen tremendous changes in our industry and moves like these will clearly resolve many of the issues addressed by the public and politicians.

Code of Ethics on Interactions with Health Care Professionals 7-01-09

Announcement of ADVAMED Code

Hyman, Phelps and McNamara, PC Summary of the revised AdvaMed Code


December 23, 2008

Letters from Grassley: Emory Surrenders

Emory’s swift and sure-footed response sets an example for other research institutions to follow and for the National Institutes of Health (NIH) to hold up as the kind of standard it expects from all those receiving federal research dollars.  Accurate disclosure and transparency are fundamental to the integrity of medical research.  Without them, the public trust is violated and public confidence in the system is legitimately shaken. (Senator Charles Grassley on Emory’s announcement 12-22-08)


After two years of investigations and letters, Senator Grassley has won a major victory in his quest to weed out all undisclosed conflicts of interests with medical researchers at university medical centers.

Today, Emory University announced they were meeting the demands of Senator Grassley and permanently demoting Dr. Charles Nemeroff from his chairmanship of the Department of Psychiatry.

In their statement, Emory said they had conducted an investigation into allegations of conflicts of interest involving Dr. Nemeroff, the long-time Chair of the Department of Psychiatry and Behavioral Sciences at the Emory University School of Medicine. 

·         Emory faulted Dr. Nemeroff for failing to seek clarification if he believed the policies were ambiguous.

·         Emory found no evidence that Dr. Nemeroff’s outside activities affected clinical care for patients or persons enrolled in clinical trials and no evidence that his activities biased scientific research in which he was engaged.

The conditions for Dr. Nemeroff are outlined in the letter to NIH :

·         He will permanently give-up his chairmanship of the Department of Psychiatry that he has held for 17 years

·         Emory will not submit any NIH or other sponsored grant or contract request with Dr. Nemeroff listed as an investigator for two years from the date he stepped down as Chairman of the Department (October 3, 2008)

·         Will cooperate fully with Emory on this investigation

·         Must report and gain prior approval from the Dean’s Office for all external compensation

·         He can only serve on four external advisory boards and is limited to $10,000/year in compensation

·         Non-compensated interaction with biomedical companies to further science must be approved by the Dean’s Office

·         He may accept invitation to lecture at other academic institutions and meetings hosted by professional societies with approval by the department chairman

·         If he receives compensation from societies or institutions, he must report this to the Dean’s Office

·         He is prohibited from speaking at any other event, unless it is an Accreditation Council for Continuing Medical Education (ACCME)-accredited educational event, hosted by an academic institution or medical society

·         His honorarium may not exceed $2,500/event plus reasonable travel

·         If Dr. Nemeroff hosts a continuing medical education (CME) event for which he is the course director, it must be ACCME-accredited and fully compliant with the University’s CME policies.

·         He cannot receive gifts (private donors) directly but only through the University

·         He may accept compensation and travel from NIH or other federal agencies for serving on study sections, review panels, commissions, and similar activities as long as it is reported to Emory

·         He is required to adhere to Emory’s healthcare policies regarding prescribing, vendor relationships, conflict of interest reporting, and receipt of pharmaceutical samples

·         He has to keep track of this information himself (they may want to get him some help).

In their statement, Dr. Nemeroff stated that “I regret the failure of full disclosure on my part that has led to the current situation,” he said.  “I believe that I was acting in good faith to comply with the rules as I understood them to be in effect at the time.  I pledge to continue my cooperation in working with Emory to clarify and strengthen our current system of disclosure here and throughout academic medicine.”

Dr. Fred Sanfilippo, Emory’s Executive Vice President for Health Affairs, noted that “universities traditionally depend on the integrity and voluntary cooperation of our faculty to meet the public trust to which we all strive.”

“To strengthen this approach, we strongly support the public reporting by pharmaceutical and medical device companies of all payments to academic physicians and researchers,” he said.  “With access to a common set of data, medical schools, lawmakers, and most importantly, the general public, will have the transparency needed to ensure objectivity and accountability in biomedical research, clinical practice, and educational activities.”


In the end, Emory had little choice but to sanction Dr. Nemeroff, albeit severe restrictions, they were facing the threat of losing additional NIH grants and subsequent negative grant bias.  The negative publicity that would have cost the University millions of dollars due to lost reputation is immeasurable.

The lesson here is simple, if you are a university faculty member, you need to be diligent in meeting the reporting requirements of your university or face certain public humiliation at the hands of Senator Grassley.

Senator Grassley: Comments on Emory’s Statement to NIH 12-22-08

EmoryUniversity:  Emory University Press Announcement – Nemeroff – 12-22-08

                                Emory Letter to NIH 12-22-08


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