Ethics and Leadership in the Medical Device Industry – Ethics Essay

Ethics and Leadership in the Medical Device Industry
Introduction – Ethics Essay

Medical research is necessary to develop and discover innovative therapies and cures. Ideas quickly move from basic science studies in the lab into experiments with

animals and finally to trials with humans. Government policies along with internal institutional processes have been developed to ensure the ethical, responsible conduct of research. These policies were created to ensure that human subjects were shielded from unnecessary risk.

In recent years, ethical questions have emerged in these areas. A governing principle is that research must be performed without any financial conflict of interest. Is it possible to exclude money from the research field? Is there a correlation between physicians and research companies and where in this field is there a role for vendors promoting products? Should doctors be banned from accepting any forms of payment from medical research companies?

The objective of this literature review is to present an overview of literature related to the relationships of physicians, medical research companies and the United States government. After reading this review, the reader may wonder if physicians and leaders in the medical device industry are compromising the health of the public and if so, at what cost?
Discussion of Literature

Sanders, Kleim, Sklar (1996) state that the goal of medical research is to serve the public through improvements in diagnosis and treatment and to protect the public from unnecessary risk. The health of patients should not be compromised by the profit of companies. Charles Epps (2003) adds that the medical research community, which includes experts in science and technology, physicians and health workers and public policy makers, must strive to find a balance between patient safety and innovation. Daniel Rosenberg (2005) tells of the desire to make a profit cannot surpass the needs of the humans the products were made to enhance.

In many companies quandaries about questionable situations now can be taken to ethics officers. Edward Lim (1999) argues in the defense of Ethics programs that came into vogue in the 1980’s. These programs were in response to well-publicized procurement fraud in the defense industry. In 1991, The United States established federal sentencing guidelines for organizations involved in the medical research industry. Charles Epps (2003) discusses the measures put in place by the government to punish those companies whose employees were engaged in wrongdoing. An organization can be fined up to $290 million and individuals can be imprisoned for their actions. John Lenzer (2004) states in his findings that company executives can also be charged if they were aware of fraud or negligent acts. On the other hand, fines can be reduced up to sixty percent if the company instituted an effective ethics program prior to the offense.

Martha Lagace and Glenn Reicin (2003) point out the enormous difference between having a written code of ethics and running a fully functional ethics and compliance program in an organization. The federal guidelines have an expectation that every organization have a serious, ethics and compliance program. Advamed (2001) affirms that an ethics program should have these three parts. An ethics officer who has authority, a written code of conduct and an employee training program. In a further study of the Advamed program, Daniel Rosenberg (2005) states that nearly one-third of

businesses in the United States operate ethics and compliance programs that meet these requirements, including medical device manufacturers Zimmer, DePuy, Biomet and Medtronic.

There are many areas a solid ethics program must cover. These include: acts of dishonesty, sexual harassment, discrimination, and environmental policies. Businesses may want to seek guidance in developing an effective program from the Ethics Officer Association in Belmont, MA. “The biggest growth in developing ethics and compliance programs is in the health-care sector,” says Amanda Mujica, director of communications for the organization. “Good ethics is good business,” says Blair Childs, executive vice president of AdvaMed (2005). To further quote Mr. Childs, “It is not only good business for industry in terms of how it is viewed by the public, but also because it is the way responsible companies behave and want to behave.” Arthur Ciarkowski (2002) argues that ethics programs are increasingly values-based rather than simply adhering to the letter of the law. “Ethics officers teach employees not only what’s legal, but what’s right.”

Most of us know the difference between wrong and right, but some situations aren’t quite so clear-cut. For example, if an engineer is visiting a client who offers to let him inspect the design of a competitor’s device, is it ethical for the engineer to do so?

In a study preformed by Aronoff and Associates (2002) Creating and implementing an ethics program can be costly. It can range from about $250,000 to over $1 million depending on the number of employees who will be trained. Can a business really afford not to have a program in place? Compare running a business to owning a house. An individual wouldn’t, or at least shouldn’t, own a house without having fire insurance. “A mature ethics and compliance program is your insurance in case one of your employees or leaders should spark trouble.”

Ethical decisions of leaders and physicians:

I think most companies, as they think through their codes of conduct, have to make sure that marketing and research & development departments are not providing direct sales inducements. Arthur Sanders, Samuel Keim and David Sklar, (1996) presented the following (true) cases during a symposium to the Biomedical Industry. Do these sound like examples of medical research or kickbacks?

In case one, a doctor performs an orthopedic implant. The implant manufacturer asks the doctor to fill out a questionnaire six months later in order to monitor how the patient is doing. The manufacturer says it wants to learn about implant performance and patient mobility. In return, the doctor will get a check in the mail for $1,000. The amount of time necessary to fill out the questionnaire was fifteen minutes.

In case two, a doctor gets paid more than $1 million annually to supervise other physicians on how to perform minimally invasive hip surgery. The surgery he proctors only uses one company’s implants.
In case three, an orthopedics medical practice wants to expand in order to conduct research. It wants to hire a researcher so it establishes a non-profit foundation to fund a research fellowship. A medical devices company sponsors the fellowship; the researcher uses only the products supplied by one medical device company.
Stacy Bell (1998) notes that medical device companies offer cash, vacation and incentive-driven surgeries to entice physicians to use their products exclusively. When a physician or group of physicians are loyal to one brand, the company can feel confident that this will lead to an increase in sales from that individual doctor over time.
Financial Rewards

Daniel Rosenberg (2005) discusses a shifting of funds from the pharmacy sector to medical devices is evident. Just a few years ago, there was a trillion dollars in market capitalization in the domestic pharmacy sector and only $300 million or so in the medical device sector. More recently, however, investors have been concluding that the drug business is riskier than the franchise model of medical devices because drug patents eventually expire. In comparison, medical devices have very quick product cycles, generally twelve to eighteen months, but device companies develop lasting relationships with their customers and create sustainable franchises that allow growth within an existing customer base.

During a panel forum at the Medical Leadership Forum, (2002) A discussion revolved around the great advances in medical technology. The most promising advances include drug-eluting stents for heart care, minimally invasive hip replacement and, for chronic and degenerative back problems, artificial carbon fiber disks will soon be ‘Food and Drug Administration” (FDA) approved, but the relative returns of medical devices still show room for marginal improvement. During the American Academy of Orthopedic Surgeons meeting (2004) The“only” message from many leaders of device companies is that medical devices are expected to continue to show improving financial returns. The company leaders never mentioned the dramatic effect an implant may have of a life, the message delivered was detailed, but only with expected profits.
John Lenzer (2004) questions the percentage of profits that are set aside for every new implant that is brought to market, for law suits. Raymond Holgram (2002) comments that with Daniel Troy, chief counsel to the US Food and Drug Administration, being under fire for inviting device companies to inform him of lawsuits against them so the FDA could help, is “An abuse of power and lack of ethical leadership from our government, can only raise questions of the influence the device industry has within government”.

When a device company is ready to submit a device for review, the process is called a 510k submission, these guidelines are set forth by the American Society Testing and Materials (2001) The FDA accepts all the implant device submissions in the order of submission and a delay of a few weeks can mean a loss of millions in sales. The first rendition of an implant that meets minimum FDA requirements is submitted as soon as possible for approval. Human trials are a part of each submission. While the data is examined by the FDA, the submitting company continues to make changes on the submitted product. These changes are allowed as long as they again, meet the minimum requirements. Is it ethical for companies to change a product they implanted in trials and not notify the patient?

If minimum guidelines were met and because all implant devices carry the tag of “experimental” patients are not automatically notified of implant failures. The decision to submit a product for approval is purely profit driven and made by the company leaders.

The Major customer of the Device Manufactures:

Martha Lagace & Glenn Reicin, (2003) discuss the medical device industry, where the customer is not the patient. In fact, the patient often has no idea and no choice of the manufacturer of the device their physician uses or the costs associated. The customers for the device companies are the hospital administrator, doctor, and/or nurse.

Medical devices vary from inexpensive to costly, but there are questionable ethical dilemmas associated with both.
At the low end, there are needles and syringes, known in the business as “sharps”. This is a $2.25 billion market with extremely low share volatility. The average selling price of a device (sharp) is twenty to forty cents. The customer is the hospital administrator. The secondary customer is the nurse. If some training is necessary to learn how to use the product, the device companies pay for the hospital training program.

The products are stocked in hospital inventory, so there is no need for the sales representative to be present when the product is used, in contrast to orthopedic implants.
Lagace & Reicin, (2003) continue this discussion stating that one of the most expensive items is the orthopedic implant. They account for over $11 billion in sales, but less than six percent of this amount is spent on research and development. The customer is the orthopedic surgeon; the secondary customer is the surgical team. Hospitals do not keep inventory of orthopedic implants, since there is a left and a right of every product. The sales representative who essentially “lends” them to the hospital usually owns the instruments used to put in an implant. A company’s sales support is involved in every implantation. Since the sales representative and the orthopedic surgeon must be in communication about the products, are all conversations limited to the medical needs of the patient?

Industry Leadership

In describing transformational leadership, Steven Covey (1990) uses words such as developer, mentor, value clarifier, and exemplar. These leaders cultivate collaborative relationships based on mutual interests (win-win). Because Covey believes transformational leadership builds on the human need for meaning, he also uses words like purpose, values, love, morals, ethics, mission, and principles to further clarify this type of leadership. Finally, Covey says that becoming a transformational leader requires vision, initiative, patience, respect, persistence, courage, and faith. Traits needed to guide the medical device industry.

Keshavan Nair (1994) points out that there is a need for moral leaders in all areas of the culture; there is a widely held view that leaders, especially those in business and politics, have lost their moral purpose and sense of idealism. Wilhelm Roepke (1995) makes the case that the most pressing need in society today is the need for moral leadership. Paul King (1997) adds that although many hope for moral leadership, unfortunately, there are too many examples of leaders who appear to pursue objectives that are not moral.

During the past decade, there has been a gradual erosion of the ethical principles that guide relationships between physicians and industry leaders. Two areas in which the decline has been most notable are gifts to physicians and the relationships of industry to educational and research activities. The gifts have become more valuable and industry representatives make gifts available under circumstances where frequently there is no educational program.

Research support continues at a high level but researchers increasingly find themselves in positions that present conflicts of interest with the interests of patients who are research subjects. These changes have taken place during an era in which professionalism also has declined and physicians are losing control of their practices to government and to the corporate sector. Physicians and industry suggest a solution to this dilemma through strict adherence to the existing ethical principles.

Physicians must renew observance of professionalism and improve oversight and discipline. Medicine cannot impose restrictions on the implant manufacturing industries but can appeal to industry’s leadership. Industry leaders must also govern marketing and sales representatives of industry. There must be an ethical common ground if a new physician and industry relationship is to succeed in producing a climate of mutual respect and higher ethics; patients will benefit and physicians and industry will regain the public trust.

In response to ethics violations, policy makers and politicians have crafted new laws and regulations. While some changes in regulations are appropriate and necessary, they do not address the core issues. It is impossible to legislate integrity, stewardship, and sound governance. New laws and regulations, alone will not correct the multiplicity of problems.

Somewhere along the way have companies lost sight of the importance of selecting ethical leaders that create healthy corporations for the long-term? Were the lessons of building great companies like Medtronic, Zimmer, Johnson & Johnson, and P&G lost in the rush for raising stock prices short-term? Were those fortunate enough to lead great companies only the stewards of inherited legacies from past leaders?

If companies continue to use an aggressive sales force to market their product, without paying attention to the ethical consequences, ethical problems will continue to rise to the surface. Should the sales force of the medical implants industry be held to a higher standard than a sales force of other industries? Are the sales force marketing a product or marketing something that could profusely affect humans?

The lessons are evident. If we select people principally for their charisma and their ability to drive up their short-term stock price instead of their character, and shower them with inordinate rewards, why should we be surprised when they turn out to lack integrity?
An ethical and moral person leads by example and by voicing opinions. It means not being afraid to take a stand on questions of ethics or morality, on questions of behavior, or questions of decency.

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