California Compliance - Pharmaceutical Executive


California Compliance
A new state law says pharma companies must establish internal compliance programs

Pharmaceutical Executive

Notice to the public. Companies must make their programs and their annual written compliance declarations available to the public on their web pages. They must also provide a toll-free telephone number that callers can use to request copies of the company's program and its annual written declaration.

Other Considerations Although the California statute does not refer to other compliance guidance documents, companies should consider reviewing them as sources for their policies and procedures. One example is "The Code of Ethics for Interactions with Healthcare Professionals," issued by the Advanced Medical Technology Association (AdvaMed). This document, available at, offers guidance for device manufacturers for several types of arrangements that are not covered specifically by either OIG or PhRMA. (See AdvaMed Code of Ethics.)

The California statute does not, by its own terms, explain how it will be enforced. According to the California attorney general's office, however, companies that violate the statute could be subject to civil enforcement action and injunctions under the state's unfair business practices laws, such as "Business and Professions Code 17200." Both the California attorney general and private parties may bring civil actions under the state's unfair business practices laws.

Some commentators have pointed out certain inconsistencies that exist between the OIG and PhRMA guidance documents. These inconsistencies, however, do not alter the fundamental objective of avoiding financial relationships that can affect physicians' decision-making. Companies should begin their efforts to comply with the new regulation by appointing a compliance officer and a compliance committee, and updating or drafting the various required written policies and procedures. Other elements—such as employee training and a program of self-auditing and monitoring—will also need to be rolled out.

AdvaMed Code of Ethics The Code of Ethics for Interactions With Healthcare Professionals, published by the Advanced Medical Technology Association in 2003, sets forth standards relevant to the interaction between medical technology companies and healthcare professionals, just as the PhRMA Code reflects interactions between pharma companies and healthcare professionals.

Providing guidelines for socially responsible industry conduct with healthcare professionals, the AdvaMed code of ethics reviews the types of meetings, meals, and other hospitality that may be extended to healthcare professionals by members subscribing to the code.

The code discusses how a device manufacturer can properly sponsor sales meetings and plant tours, provide education and training, and provide reimbursement information in support of accurate and responsible billing practices. It stresses that it is not appropriate for a member to provide any item of value to a healthcare professional that takes into consideration the value or volume of business that is or may be generated by the healthcare professional, unless permitted by law (such as appropriate discounts.) For example, a member could not offer to provide laptop computers to a purchasing manager whose hospital purchases a quantity of medical devices that the member has just introduced.

Jesse A. Witten is a partner with Jones Day, an international law firm. He can be reached at
or (202) 879-3939.

Toni-Ann Citera is an associate in Jones Day's New York office. She can be reached at
or (212) 326-3939.


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