Compliance for Eucomed: The Medical Technology Industry s s Perspective
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1 Compliance for Eucomed: The Medical Technology Industry s s Perspective Rome, May 29, 2009 John Wilkinson Chief Executive - Eucomed
2 Outline Overview of the Medical Technology Industry What is it? How big is it? What are the differences between pharma and medtech? What is Eucomed? Compliance for the Medical Technology Why is ethical behaviour important for the industry? What are our activities? The future 2
3 Overview of the European Medical Technology Industry
4 Medical Technology 4
5 European Medical Technology Industry Economic Contribution Total sales of 63.6 billion in /3 of global medical technology market ( 187 bn) Second largest market behind the US Employed 435,000 people across Europe 11,000 Companies, 80% of them SMEs Scientific Contribution Major user of R&D services Up to 3.8 billion spent on R&D in 2006 Trade Contribution Germany ( 14.0 bn), Ireland ( 6.6 bn), France ( 6.1 bn), and the UK ( 5.6 bn) are major exporters of medical technology Germany, Ireland, the UK, Denmark, Sweden and Finland have trade surpluses in medical technology 5
6 European Medical Technology Expenditure (Sales) New EU Member States** 5% Other European Countries* 16% Switzerland 2% Germany 31% Spain 9% United Kingdom 11% France 16% Italy 11% ** Other European Countries = NL, BE, LU, IE, DK, GR, PT, AT, SE, FI, NO ** New EU Member States = EST, LT, LV, PL, CZ, SK, HU, SI, MT, CY, RO, BG 6
7 Differences Between Drugs & Devices: The Industry Pharmaceuticals Medical Devices Industry with longer history Relatively young industry Primarily large multinationals 80% are small- and medium-sized companies 7
8 Differences Between Drugs & Devices: The products Pharmaceuticals Medical Devices Limited number of products More than 10,000 products (different Development by trial and selection on the sizes, models, etc.) basis of quality, safety and efficacy Designed specifically to perform certain Therapeutic functions based on quality, safety and Based on pharmacology, chemistry, performance biotechnology, and genetic engineering Diagnostic, therapeutic, monitoring Biologically active and effective when Based on mechanical, electrical and/or absorbed by the body materials engineering Generally act by physical means 8
9 Differences Between Drugs & Devices: The innovations Pharmaceuticals Medical Devices Continuous innovation and some Continuous innovation and iterative improvements based on new science and improvements based on new science, technology technology and available materials Innovation primarily the result of Innovation primarily the result of insights laboratory work from clinicians Extensive product lifestyle and long Short product lifestyle and investment investment recovery period recovery period (~18 months) Breakthrough drugs New devices bring added functions and clinical value based on incremental improvements 9
10 Differences Between Drugs & Devices: The market Pharmaceuticals Medical Devices Low distribution cost High cost of distribution No service or maintenance Training and education essential Limited training required (compared to High cost of training and education high-tech medical devices) Extensive service requirements 10
11 Differences Between Drugs & Devices: The Clinical Data Pharmaceuticals Medical Devices Randomized control trials simple to Randomized control trials difficult to perform perform Efficacy and efficiency can be proven Efficacy and efficiency difficult to prove before going to market before product is used Drugs either work or don t work: efficacy Medical devices are part of whole system and efficiency easy to prove and their efficacy relies on the skills and experience of the physician, the quality of the hospital, and other factors 11
12 Differences Between Drugs & Devices: The Compliance Pharmaceuticals Medical Devices Laboratories and industry research centers It is mostly the physicians that develop develop new products new products, which means that there are Wholesale & retail different risks from an compliance point of view: Product development requires royalties systems (including a definition of fair market value) Market dynamics and business models Important role of distributors in many markets and liability of the manufacturer for third-parties. Product often purchased through tenders 12
13 About Eucomed Represents the European medical technology industry 62 Corporate Members, 27 National Association Members Represents 4,500 companies active in the European medical technology industry 13
14 Compliance for the Medical Technology
15 Change of the global landscape Tightening of public corruption laws (e.g. UK) Set up of authorization systems (e.g. Belgium) Record breaking corporate fines and jail time for violators under FCPA and extension of the extra-territorial reach of FCPA (e.g. Siemens) Reported FCPA enforcement actions Corporate Non-Prosecution Agreements (NPA) and Deferred-Prosecution Agreements (DPA) Arnold & Porter LLP, Jan.2009 Lawrence D. Finder and Ryan D. McConnell, Annual Corporate Pre-Trial Agreement Update 2007, available at 15
16 Eucomed s mission with regards to ethical behavior Take a leadership role in promoting a culture of integrity and ethical business practices across the medical technology industry in Europe Act according the principles of the code in all European countries. Eucomed principles are the minimal standard Lead by behavior Drive harmonization of compliance rules in the EU Drive development and anticipate regulatory trends Share information, promote best practices and support member education Improve implementation of the code. Even if local code was not updated Stimulate national associations to adopt the principles of the code Develop an dispute resolution process (i.e. enforcement) at European level 16
17 Eucomed activities 1. Communication 2. Develop training capacity for members and non members 3. Develop a Eucomed enforcement/complaint-handling process 4. Exchange of information, monitor national implementation & promotion of best practices: The Eucomed Compliance Network 5. Develop a positive endorsement: self-certification system (i.e. Eucomed logo) 17
18 1. Communication Objective Raise awareness internally Promotion of industry self-regulation Raise visibility of industry ethical business practices externally Outreach to establish common level of understanding and in a second step, alliances and collaboration Drive implementation and alignment Types of audiences Internal Corporations National associations External with link with key stakeholder organizations. Physicians organizations, patient organizations Very sensitive: congress organizers Positive messages 18
19 2. Training on the Eucomed rules Objective Share information and support education Target audience Eucomed members NAs Corporations Non members Non-corporate members Distributors, agents Congress organizers, HCPs Format (proposal) E-learning with certification 19
20 3. Proposed principles for an enforcement process Objective: Maintain public confidence, sanctions for blatant non-compliance Key European dispute resolution principles to be transposed by the national member associations, i.e. enforcement will take place at national association level Exception: NAs may demonstrate existence of an effective and comprehensive legal & regulatory framework for dispute resolution (subject to review by Eucomed) Eucomed Panel in case no/no appropriate national handling is available Ensure consistency of interpretation across Europe through the Eucomed Panel playing the role of a Cassation court 20
21 4. The Eucomed Compliance Network Mission Take a leadership role in promoting a culture of integrity and ethical business practices across the medical technology industry, drive development and improve implementation of the code. Members Member companies (i.e. legal, compliance), Board members, National Associations, AdvaMed, EDMA, Etc Activities Exchange of information, monitor national implementation & promotion of best practices Dialogue with national associations, AdvaMed, IFPMA, IPCAA 21
22 The Future
23 In the near future Background Trends Same healthcare professionals (HCPs) Tighter implementation internally & Same exposure externally Similar standards and rules Stronger shift from commercial to science Impact on companies budgets shift Location 1/3 party conference & congress venues Less industry sponsored HCPs Convergence Collaboration? 23
24 Thank you. For questions:
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