M
ost people know that the health
care industry is awash in
regulations, leading to ever-greater
expansion of the field known
broadly as “compliance.” Few, however, know
precisely when to recognize business activity
that may trigger compliance issues.
Since many internal corporate compliance
officers report up to the chief financial
officer, CFOs need to be capable of recogniz-
ing scenarios that require compliance advice
and counseling. This article highlights several
of the largest of these
regulatory pitfalls.
Many compli-
ance issues can be
grouped into three
categories: those that
arise from interactions
with consumers, those
that arise by virtue of
product development, and
more generalized compliance
issues.
1.
Broadly speaking, many com-
pliance issues arise at the point of interaction
between the company, typically a pharma-
ceutical company or medical device manu-
facturer, and their customers. Such customers
include the ultimate consumer —you and me
—and also physicians, hospitals, purchasers,
and other intermediaries between the manu-
facturers of drug and device products and the
patients benefitting from them. Point-of-inter-
action regulatory issues arise through:
• The dissemination of educational,
promotional, and advertising materials,
including physician, managed care, and
direct-to-consumer pieces
• Labeling and recalls
• The structuring and implementation of
health care provider speaker programs
and speaker training
• The dissemination of product samples
• Grants for medical education programs,
consumer programs, and research,
including investigator-initiated studies
•
Legislative and industry
code transparency require-
ments in the U.S. as
well as internationally
The purpose of these
regulations is to ensure
health care providers and
consumers are not misled
or manipulated, so that
they make the best medi-
cal decisions rather than
decisions that can implicate
false claims, personal pecuni-
ary gain, or other improper
practices or motives.
2.
Issues arising as a result of health care
companies’ needing to run a gauntlet of
approvals to bring products to market rest on
a regulatory framework requiring products’
risks and benefits be weighed and
documented through the approval process.
These compliance situations include:
• State requirements for licensure of
manufacturers and distributors of
prescription drugs and devices
• Patient assistance and co-pay reduction
programs to provide free or reduced-
price medications
• Industry-sponsored research and
company-sponsored medical literature
• Advisory boards
• Market research studies
3.
The final category of compliance issues
facing the health care industry arises in the
context of more generalized internal risk
management. These are often similar, in
many respects, to compliance issues
affecting non-health-care-industry companies.
Included within this category are:
• The procurement of insurance, product
liability issues, and general risk-
management initiatives
• Internal corporate compliance audits
and investigations
• Negotiation of various contracts, particu-
larly for marketing, sales, or managed care
In today’s changing political and
regulatory climate, it is safe to say that the
above categories are not all-encompassing
and certainly do not include tomorrow’s
compliance issues.
Most corporations are committed to
doing business ethically, in full compliance
with all laws and regulations. Missteps can
lead to regulatory enforcement actions,
damage to corporate and executive reputa-
tions, lost business, and loss of employment.
Care needs to be taken to ensure that health
care companies are aware and have resources
they can turn to when they perceive
themselves as being in over their heads.
C
C. JOHN DESIMONE, III, ESQ.
Attorney
Porzio, Bromberg & Newman, P.C.
Pharma Compliance 101
CFOs need counsel and advice to cover many types of compliance issues
Learn more about the authors
+
MICHAEL L. RICH, ESQ.
Attorney
Porzio, Bromberg & Newman, P.C.
John DeSimone (
and Michael Rich (
are Principals at Porzio, Bromberg & Newman, P.C. (
, a full-service law firm with
offices in Morristown and Princeton, NJ; New York City; and Westborough, MA. Its subsidiary, Porzio Life Sciences, LLC, is a leading provider of compliance products and services to the health
care industry. Mike and John can be reached at 973-538-4006.
2nd QUARTER 2014
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Photography: 123RF Stock Photo
