Compliance for Eucomed:Compliance for Eucomed: The Medical

Compliance for Eucomed:Compliance for Eucomed: The Medical Technology IndustryThe Medical Technology Industry’’s Perspectives Perspective

Rome, May 29, 2009

John WilkinsonChief Executive - Eucomed

2www.eucomed.orgwww.eucomed.org

OutlineOutline

►

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

Overview of the European Medical Technology Overview of the European Medical Technology IndustryIndustry


Medical TechnologyMedical Technology


European Medical Technology IndustryEuropean Medical Technology Industry

►

Economic Contribution

– Total sales of €63.6 billion in 2006

– 1/3 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


European Medical Technology Expenditure (Sales)European Medical Technology Expenditure (Sales)

Germany31%

New EU Member States**

5%Other European

Countries*16%

Switzerland2%

Spain9%

United Kingdom11%

France16%

Italy11%

** 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


Differences Between Drugs & Devices: The IndustryDifferences Between Drugs & Devices: The Industry

►

Pharmaceuticals

– Industry with longer history

– Primarily large multinationals

►

Medical Devices

– Relatively young industry

– 80% are small- and medium-sized

companies


Differences Between Drugs & Devices: The productsDifferences Between Drugs & Devices: The products

►

Pharmaceuticals

– Limited number of products

– Development by trial and selection on the

basis of quality, safety and efficacy

– Therapeutic

– Based on pharmacology, chemistry,

biotechnology, and genetic engineering

– Biologically active and effective when

absorbed by the body

►

Medical Devices

– More than 10,000 products (different

sizes, models, etc.)

– Designed specifically to perform certain

functions based on quality, safety and

performance

– Diagnostic, therapeutic, monitoring

– Based on mechanical, electrical and/or

materials engineering

– Generally act by physical means


Differences Between Drugs & Devices: The innovationsDifferences Between Drugs & Devices: The innovations

►

Pharmaceuticals

– Continuous innovation and some

improvements based on new science and

technology

– Innovation primarily the result of

laboratory work

– Extensive product lifestyle and long

investment recovery period

– “Breakthrough drugs”

►

Medical Devices

– Continuous innovation and iterative

improvements based on new science,

technology and available materials

– Innovation primarily the result of insights

from clinicians

– Short product lifestyle and investment

recovery period (~18 months)

– New devices bring added functions and

clinical value based on incremental

improvements


Differences Between Drugs & Devices: The marketDifferences Between Drugs & Devices: The market

►

Pharmaceuticals

– Low distribution cost

– No service or maintenance

– Limited training required (compared to

high-tech medical devices)

►

Medical Devices

– High cost of distribution

– Training and education essential

– High cost of training and education

– Extensive service requirements


Differences Between Drugs & Devices: The Clinical DataDifferences Between Drugs & Devices: The Clinical Data

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Pharmaceuticals

– Randomized control trials simple to

perform

– Efficacy and efficiency can be proven

before going to market

– Drugs either work or don’t work: efficacy

and efficiency easy to prove

►

Medical Devices

– Randomized control trials difficult to

perform

– Efficacy and efficiency difficult to prove

before product is used

– Medical devices are part of whole system

and their efficacy relies on the skills and

experience of the physician, the quality of

the hospital, and other factors


Differences Between Drugs & Devices: The ComplianceDifferences Between Drugs & Devices: The Compliance

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Pharmaceuticals

– Laboratories and industry research centers

develop new products

– Wholesale & retail

►

Medical Devices

– It is mostly the physicians that develop

new products, which means that there are

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


About EucomedAbout 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

Compliance for the Medical TechnologyCompliance for the Medical Technology


Change of the global landscapeChange of the global landscape

0

5

10

15

20

25

30

35

40

2003 2004 2005 2006 2007 2008

Reported FCPA enforcement actions

85

12

15

38 37

Arnold & Porter LLP, Jan.2009

Corporate Non-Prosecution Agreements (NPA) and Deferred-Prosecution Agreements (DPA)

0

5

10

15

20

25

30

35

40

2003 2004 2005 2006 2007

• 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)

Lawrence D. Finder and Ryan D. McConnell, Annual Corporate Pre-Trial Agreement Update – 2007, available at http://ssrn.com/abstract=1080263


EucomedEucomed’’ss mission with regards to ethical behaviormission 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


Eucomed activitiesEucomed 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)


1. Communication1. Communication

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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

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Positive messages


2. Training on the Eucomed rules2. Training on the Eucomed rules

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Objective

– Share information and support education

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Target audience

– Eucomed members• NAs

• Corporations

– Non members• Non-corporate members

• Distributors, agents

• Congress organizers, HCPs

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Format (proposal)

– E-learning with certification


3. 3. ProposedProposed principles for an enforcement processprinciples for an enforcement process

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Objective: Maintain public confidence, sanctions for blatant non-compliance

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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)

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Eucomed Panel in case no/no appropriate national handling is available

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Ensure consistency of interpretation across Europe through the Eucomed Panel

playing the role of a “Cassation court”


4. The Eucomed Compliance Network4. The Eucomed Compliance Network

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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

The FutureThe Future……


In the near futureIn the near future……

Background

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Same healthcare professionals (HCPs)

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Same exposure

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Similar standards and rules

Trends

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Tighter implementation internally &

externally

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Stronger shift from commercial to

science

– Impact on companies’ budgets shift

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Location 1/3 party conference &

congress venues

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Less industry sponsored HCPs

ConvergenceConvergence

Collaboration?Collaboration?

Thank you.Thank you.

For questions: [email protected]

Compliance for Eucomed:Compliance for Eucomed: The Medical

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