The New Code - Pharmaceutical Executive

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The New Code

Pharmaceutical Executive


Practical Recommendations

In light of the increased restrictions contained in the revised Code, and increased legislative and enforcement activity with respect to arrangements with healthcare professionals, pharma companies should consider taking the following proactive measures:
Update existing policies and procedures to comply with the revised Code, and notify all employees in writing of such updates.
Provide training on the revised Code, as well as applicable laws and relevant FDA requirements, to all sales representatives and other employees and agents who interact with healthcare professionals, or those who oversee such arrangements. Representatives should be evaluated periodically to assess their current understanding of, and compliance with, these requirements. Maintain copies of all training materials, as well as attendance records.
Carefully review all existing arrangements with healthcare professionals to determine compliance with the revised Code. All arrangements that do not comply should be amended or terminated in writing.
Review all compensation paid to healthcare professionals to confirm that payments are reasonable and fair market value for legitimate services provided. Consider using an outside valuation firm to conduct such reviews, and document all reviews (whether performed internally or externally).
Require healthcare professionals with ongoing consulting or speaking arrangements to maintain a time log detailing the services provided on behalf of the pharmaceutical company. Such time logs should be reviewed on a regular basis to determine if the compensation is fair market value and reasonable with respect to the services actually provided.
Any arrangements which are determined to be in excess of fair market value for services actually being provided should be terminated or modified in writing.
Consider whether to participate in PhRMA's compliance certification and/or external review programs described above.

The revised Code, as well as the recommendations listed above, should be considered at your company's next compliance committee meeting. The compliance committee's determinations should be forwarded to management for approval, with the objective of implementing any changes, reviews, and training prior to January 1, 2009.

Gary W. Herschman is chair of Sills Cummis & Gross P.C.'s Health and Hospital Law Practice Group. He can be reached at

Alexandra Miller Khorover is an associate in Sills Cummis & Gross P.C.'s Health and Hospital Law Practice Group. She can be reached at


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