The development, manufacture and distribution of medical devices pose particular challenges for manufacturers and distributors, and medical professionals face challenges when it comes to operating them. It is generally indispensable for manufacturers and distributors of medical devices to work together with medical institutions and medical professionals. However, statutory provisions of criminal law, medical advertising law and competition law must be heeded in this regard. This raises the question as to the requirements which manufacturers and distributors of medical devices have to keep in mind in their dealings and communications with medical professionals.
Medical Device Compliance Code
The German Medical Technology Association (BVMed) has created a medical device compliance code (only in German) in order to facilitate collaboration between manufacturers and distributors of medical devices, on the one hand, and medical professionals on the other, with regard to the statutory conditions. A key object of this code is to keep health care market operators from coming under suspicion of corruption.
1. Basic principles of the code
Under the principle of separation, paid or unpaid benefits provided to medical professionals or employees of medical institutions, such as gifts and benefits in kind, may not have any relationship to the institution’s business transactions and may not affect its purchasing decisions. Conferring benefits for private purposes is prohibited. Under the principle of transparency, medical professionals and employees of medical institutions are required to obtain written authorization from the management of their medical institution before entering into service relationships with manufacturers or distributors of medical devices, insofar as those services relate to their official duties. This procedure is also recommended for other arrangements between medical professionals and manufacturers or distributors of medical devices. Service relationships between manufacturers or distributors of medical devices and medical professionals or employees of medical institutions should also be documented in writing (principle of documentation). And in accordance with the principle of equivalence, compensation should be in reasonable proportion to the services rendered.
2. Impact of the code
Gifts and benefits in kind to medical professionals are generally prohibited. An exception only applies for promotional gifts of little value which include a permanent and visible identification of the manufacturer or device, as well as “socially adequate” gifts on special occasions. Such gifts must be intended for use in the medical practice, for training purposes or for the benefit of patients. Gifts for private purposes are not allowed.This also means that manufacturers and distributors of medical devices need to ensure that any training they provide for medical professionals is relevant and remains within financially reasonable bounds.
General consulting and license agreements between manufacturers or distributors of medical devices and medical professionals or institutions are permitted, but it is necessary to ensure an appropriate balance and proportion between performance and consideration. Donations to medical institutions from manufacturers or distributors may only be provided for a charitable purposes, such as improving patient or health care or promoting medical research, and such donations must be managed by the medical institution.
Otherwise, they are not permitted. Medical devices are to be bought and sold subject to general competition, based on quality and pricing. Manufacturers and distributors of medical devices may not offer or provide cash payments or benefits in kind to medical professionals, not even indirectly. Any cash rebates and rebates in kind which are provided in the course of sales transactions must be specified in the invoice.
Criminal liability in accordance with the Criminal Code
If any of the aforementioned rules of conduct are violated, manufacturers and distributors of medical devices, as well as medical professionals, could face prosecution under the provisions of the German Criminal Code. The purpose of these provisions is to ensure fair competition in the health care sector and to protect patients’ confidence in the integrity of decisions by medical professionals. The crimes of medical bribery in accordance with § 299b of the Criminal Code and medical corruption in accordance with § 299a of the Criminal Code have existed since June 2016. § 299b of the Criminal Code states e.g. that those who, in the course of exercising their profession, offer benefits to a medical professional in exchange for an unfair preference by the medical professional with regard to the latter’s purchasing of medical devices face a prison sentence of up to three years or a monetary fine.
Medical professionals who demand consideration in exchange for an unfair preference in the purchase of medical devices could also face a prison sentence of up to three years or a monetary fine in accordance with § 299a of the Criminal Code.If the medical professional is a public official or a physician employed by a public institution, those who provide benefits could also face prosecution for bribery in accordance with § 334 of the Criminal Code or for granting an advantage in accordance with § 333 of the Criminal Code, while the physicians who accept these benefits may face prosecution for corruption in accordance with § 332 of the Criminal Code or for accepting an advantage in accordance with § 331 of the Criminal Code.
It is therefore essential to ensure that benefits provided to medical professionals are in reasonable proportion to the consideration. In general, any benefit provided to a medical professional is considered to be an “advantage” in terms of these statutes. This is the case even if consideration is provided by the medical professional, if the consideration is not in reasonable proportion to the benefit. Only reasonable reimbursement of expenditures is not considered an advantage, and therefore would not establish criminal liability for the manufacturers or distributors of medical devices.
Provisions of the Medical Advertising Act [Heilmittelwerbegesetz]
The provisions of competition law also include rules which apply in case of violations of the aforementioned principles of conduct. For example, the Medical Advertising Act (only in German) provides for a fine of up to € 50,000, in the context of an administrative offense, if benefits or other gifts are offered which are not intended for use in a medical or pharmaceutical practice. This includes any unpaid benefit which is provided in connection with advertising for a specific medical device. If consideration is provided by the medical professional, an administrative offense in accordance with the Medical Advertising Act would only come into consideration if the consideration is designed to conceal the fact that the benefit was actually provided free of charge from a financial viewpoint.
Provisions of the Unfair Competition Act
Generally speaking, acts which violate the Medical Device Code (only in German) may also violate the provisions of the Unfair Competition Act. Such violations may result in future desistance claims for competitors, entitling them to sue the medical professionals for desistance from such conduct.
Conclusion
Manufacturers and distributors of medical devices should carefully adhere to the compliance rules presented above in their dealings with medical professionals. Particularly considering the severe penalties provided for in the German Criminal Code, it would make sense for manufacturers and distributors of medical devices to continually train and sensitize their employees, particularly their sales employees, in order to satisfy their compliance requirements. Compliance codes should not only be implemented by companies, but practiced as well.
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