Medtech anti-bribery compliance: refresher for SMEs in a post-Covid-19 context
This is the fifth of a series of legal briefings jointly published by boutique medtech-focused ﬁrms Swiss Peak Technologies SA (Switzerland) and DeNovo Legal (Ireland) on the key lessons that they have drawn from their respective practices.
All medtech players, large or small, manufacturers, distributors or others, should carry an adequate ‘anti-bribery compliance’ (“compliance”) programme in line with medtech industry requirements.
There are significant misperceptions in industry as to why such a programme matters and what its concrete benefits are.
This article flags unsuspected types of behaviors that might result in “bribery” or ”corruption” as understood under applicable European rules. Further, it explains why implementing a programme early on, and maintaining it live afterwards, are not only the right things to do but also a wise and cost-effective investment. It will conclude on whether Covid-19 will change this.
It does not suffice that a firm’s management be committed to acting honestly and would follow very high ethical standards themselves. It does not matter that they would have no past history of bribery or be newcomers to the medtech space. It does not matter that they would deal only with what appears to be relatively low amounts of money. A compliance programme is focused on something else.
A compliance programme is intended to maximize the chances of a medtech player staying out of trouble compliance-wise and preserving its image and credibility. In essence its aims are twofold.
Medtech players routinely hire consultants, set up scientific advisory boards, hire principal investigators, conduct clinical trials and are involved in scientific conferences. In all these and many other instances, a risk of compliance slip arises.
The first aim of a compliance programme is to help scope out the issues.
A good compliance programme provides management with an issue-spotting tool. What category of decisions should be reviewed with a compliance eye?
It also provides a tool to benchmark. Once the issue is spotted, what is it that we can and cannot do?
One key dimension to consider is geography. Are the rules the same in all the countries involved, such as the country in which the company has its head office, the country of residence of the counterpart (e.g. physician) and the country in which a project is taking place?
The second aim of the compliance programme is to prevent a rotten apple (wrongdoer) from contaminating the other apples in the basket – both on an individual basis (protecting each employee) and collectively (protecting the firm).
A firm that has designed and implemented an adequate compliance programme will:
- protect its other employees individually against the harmful actions of a single or limited number of wrongdoers
- protect its senior management personally from incurring hefty fines or, in some serious cases, jail terms
- protect the financial stability, corporate image and development potential of the company
Setting up an adequate compliance programme does not mean overkilling it. It should not prevent a firm from carrying out proactive market entry, sales efforts and marketing.
To this end, over and above having a compliance policy is the need to be able to turn to insiders of medtech law and practices that can advise and help balance compliance requirements and promotional efforts especially for those situations that may fall in the grey zone in between permissible and prohibited behaviors.
Two special situations
For companies working towards or preparing for an exit, having a balanced compliance programme in place can simplify and speed up the due diligence work of an acquirer. Conversely, not having one and having prior remediation to conduct might significantly delay things or, in some cases, put it in jeopardy.
For companies based in Europe or elsewhere outside of the US, dealings in the US or with US counterparts may involve additional and often more stringent US requirements which should be factored in.
Medtech vs pharma
The medtech compliance rules differ from those of other industries in no small measure, including those of the pharmaceutical industry.
Europe-based medtech players should be sure to draw from medtech compliance rules, both European and local, as a basis for their compliance programme.
There are added twists in a covid-19 and post-covid-19 context. Some believe that enforcement authorities will be more tolerant of some breaches given the exceptional situation. This could not be further away from reality.
Although some leeway exists for specific exceptional situations, enforcement authorities in many countries have made it clear that Covid-19 does not mean medtech compliance rules are put on hold and therefore Companies should continue to practice full compliance.
The co-authors are available to help you strike the right balance between setting up an adequate compliance programme which affords sufficient protection while not unduly restraining operations and allow you to execute on your business plan towards your next success stage.
Feel free to contact either of us with any questions or queries you may have on the above.
Sylvain Poitras is the founder and Managing Director of Swiss Peak Technologies SA (www.sptsa.com), a ﬁrm based in Geneva that provides medtech legal traction. Sylvain has been providing medtech law advice and support in Europe and beyond for some 20 years working with and for Big Medtech (Medtronic, Cardinal Health), SMEs and investors, including on EU-US cross-border issues. He is qualiﬁed as an attorney-at-law in the US (NY) and Canada (QC) and holds a Master of Public Health (MPH) in health-sector management from Harvard University. He has been a lecturer on European medtech law (CE-marking, innovation, contracting practices, compliance) at two leading Swiss universities (EPFL & UNINE) since 2010. Since its creation in 2016 Sylvain has been a health-sector mentor and judge with leading start-up accelerator MassChallenge Switzerland.
Kevin Moore is the founder of DeNovo Legal (www.denovolawﬁrm.com). In 2011, Kevin became the only lawyer in Ireland or the U.S. to be selected to participate in the aﬃliated BioInnovate Ireland and Stanford Biodesign Fellowships. He established DeNovo Legal, a bespoke practice for the life science sector having gained a unique understanding of the I.P., compliance, ethical and funding challenges facing medical devices companies. Kevin has also lectured in Medical Device Law and Regulation at NUI, Galway, a module which he created and ﬁrst began teaching in 2016.
The information contained in this article is intended for general information purposes only and is subject to changes without notice. It does not therefore constitute legal or professional advice. Specific advice should be sought on any particular matter.