Issues to consider when structuring medical device development and license agreements

Physicians often contract with medical device manufacturers to provide services relating to new technologies. For example, the doctor may help the manufacturer develop a new device, or the doctor may help test an existing device.  In the first situation, the physician may assign or license intellectual property to the manufacturer in exhange for payment.  In the second, the physician simply performs consulting services in exchange for a service fee.

In either situation, both parties should ensure that the arrangement complies with applicable laws such as the federal Anti-Kickback Statute and the Stark Act.  My colleague John Jones recently wrote an article on steps that physicans and manufacturers can take to reduce risk in these situations.  As John writes:

The federal Anti-Kickback Statute proscribes . . . remuneration in exchange for a patient referral [in certain situations].  Violations of the Anti-Kickback Statute can result in significant criminal penalties, civil penalties of up to $50,000 for each violation, as well as imprisonment. The primary concern for physician relationships with medical device manufacturers under the Anti-Kickback Statute is whether the compensation paid to the physician constitutes disguised remuneration for referrals.

The article originally appeared in the February 25, 2011 issue of Physicians News Digest, and the full text is also available on the Pepper Hamilton website.

One response to “Issues to consider when structuring medical device development and license agreements

  1. Great info. The doctor may help the manufacturer develop a new device, or the doctor may help test an existing device. In the first situation, the physician may assign or license intellectual property to the manufacturer in exhange for payment. In the second, the physician simply performs consulting services in exchange for a service fee.

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