The medical device industry’s global annual sales is forecast to rise to almost
Setting the Scene: Compliance and the Medical Device Industry
Compliance affects all areas of medical device companies—from manufacturing to marketing. For sales and marketing teams specifically, compliance is top of mind. These teams create and distribute materials to healthcare provides (HCPs) and patients daily. Serving as the face of the organization, sales and marketing teams have the cumbersome task of ensuring that every piece of collateral is up-to-date and compliant with industry regulations.
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Take a moment to let that number sink in. This prediction shows that it’s an exciting time of innovation, competition, and market leadership for the industry. However, with this growth comes a series of complex challenges. One of which is compliance.
The Cost of Noncompliance to Sales and Marketing Teams in the Medical Device Industry
The medical device industry is growing rapidly with no signs of slowing down. According to data by KPMG, the medical device industry’s global annual sales is forecast to rise to almost $800 billion by 2030.
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So, what happens when medical device companies are not compliant? Well, quite a few things that each have a significant impact on medical device companies and the industry as a whole.
This means that sales and marketing teams must be compliant with industry regulations every time they interact with HCPs.
So, what’s next? Unsurprisingly, more regulations and laws to enforce compliance in the life sciences space. As of May 2017, the EU Medical Device Regulation (MDR) became law. These new regulations give companies in the medical device industry three years to adhere to stricter compliance measures. According to an EY report, MDR is “expected to enhance patient safety and increase transparency related to the creation and marketing of medical devices.” With new regulations like this, compliance will continue to be at the forefront for sales and marketing teams.
In fact, penalties can be up to $1.15 million a year.
Being noncompliant has a significant financial impact on medical device companies. However, noncompliance does more than cost companies’ money. It can greatly taint both the brand and seller reputation—or worse yet, impact the treatment of patients.
These mandates typically last for 5 years
Fees associated with noncompliance
Additionally, the use of technology will rise, and digital transformation will continue to be critical for sales and marketing teams in the medical device space. Sales enablement solutions and other similar tools will continue to aid sales and marketing teams in the industry control content and maintain compliance. Companies that do not prioritize a digital transformation will fall behind their competitors and be unable to deliver a seamless customer experience.
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The Cost of Noncompliance to Reputation
and require marketing organizations to take corrective actions that demand a reallocation of budget and time. And when a mandate is handed down, resources are taken away from activities that drive growth and instead time is spent creating new internal processes and procedures, coordinating an employee training program, and leveraging an independent review organization (IRO) to conduct annual content audits. With limited resources, it becomes difficult for marketing to adhere to the CIA while simultaneously partnering with the sales team to generate more revenue.
The Financial Cost of Noncompliance
The Cost of Noncompliance
Corrective and Preventative Action (CAPA)
And it goes beyond CIAs – sales and marketing teams must be cognizant of The Sunshine Act, which increases transparency by requiring device manufacturers to report any payments or transfers of value to physicians from the company themselves. Not reporting these payments or providing inaccurate information can be a costly mistake for medical device companies.
A company under a consent decree is subject to reputation damage, which can be accentuated by the ease of publicly available negative media coverage about how the company operated.
Resolving a consent decree
Find out about how a sales enablement solution can help your organization maintain compliance.
Addressing a warning letter
The cost of noncompliance can vary from thousands of dollars to millions of dollars, depending on the severity of the situation. Taking a Corrective and Preventative Action (CAPA) can cost up to $10,000, addressing a warning letter can cost upwards of $20 million, and resolving a consent decree can total more than $100 million.
With this kind of money at stake, sales and marketing teams must ensure they are creating and distributing the most up-to-date and compliant materials. Marketing teams must provide sales reps with the correct version of materials and limit their access to less relevant and noncompliant materials. Producing and distributing noncompliant materials is a costly mistake that medical device companies cannot afford to make within such a competitive environment.
In addition to monetary costs, noncompliance has a major negative effect on organizations’ brand, credibility, and seller reputation. PharmaTech states that “a company under a consent decree is subject to reputation damage, which can be accentuated by the ease of publicly available negative media coverage about how the company operated.”
If marketing and sales teams are distributing noncompliant materials or acting outside of industry regulations, the brand and seller reputations suffer. Buyers in the medical device space will overlook organizations that are presenting inaccurate information and turn to their competitors. Moreover, patients will lose trust in the medical device brands or even worse, suffer health complications due to incorrectly marketed medical devices.
According to a DOJ press release, since 2009, the Justice Department has recovered more than $17.9 billion due to cases involving health care fraud that often lead to Corporate Integrity Agreements (CIAs).
Upcoming Trends Affecting Medical Device Sales & Marketing Teams