In recent months, the Massachusetts Legislature has been considering legislation to limit or ban certain marketing activities of pharmaceutical and medical device companies. In April 2008, the Massachusetts Senate approved a proposal that would significantly restrict pharmaceutical marketing to physicians and health care facilities. This proposal was subsequently revised by the Massachusetts House on July 16, 2008. The progress and outcome of this marketing legislation is of significant importance to anyone involved in the Massachusetts biotechnology, health care, and drug and device sectors.
I. Proposed Pharmaceutical Gift Ban: Current Status
The proposed Massachusetts pharmaceutical gift ban originated as part of a broader state Senate bill (Senate 2660) addressing health care cost containment measures. The gift ban provisions of that legislation, which passed the Senate unanimously on April 17, 2008, included a ban on pharmaceutical and device manufacturers and wholesalers providing any item of value to a physician, a requirement that pharmaceutical and device representatives register with the state, and civil penalties for companies that failed to comply.
On July 15, 2008, the Massachusetts House Ways and Means Committee reported its proposed revisions of Senate 2660 (these revisions were numbered as House 4974). This new House version (excerpts available here) makes substantial revisions to the Senate’s proposed pharmaceutical gift ban, striking and replacing the relevant text of Senate 2660. In brief, the House version:
- Requires manufacturers and wholesalers of pharmaceuticals and medical devices to adopt a marketing code of conduct, train their employees in that code, and provide the Department of Public Health with annual evidence of a successful compliance audit (Section 12).
- Eliminates the Senate language that provided for civil penalties for noncompliance, required pharmaceutical representatives to register with the Commonwealth, and required pharmaceutical companies to create a registry disclosing all payments, honoraria, and other items of value provided to physicians.
- Bans the “license, use, [sale], transfer or exchange for value, for any commercial purpose, prescription drug information related to a regulated transaction that has identifying information,” with certain narrow exceptions (Section 15). Those violating this provision are potentially liable for triple damages pursuant to the Massachusetts consumer protection statute.
The House Ways and Means version was approved unanimously by the House on July 16, 2008. Because the House version differs significantly from the Senate version, the competing House and Senate provisions of Senate 2660 will eventually need to be reconciled in conference committee.
II. Summary: Senate 2660 (As Revised by House 4974) - Code of Conduct Provisions (Section 12)
Section 1 - Definitions.
Section 2 - Adoption of a Marketing Code of Conduct.
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Manufacturers and wholesalers must adopt an approved industry marketing code of conduct. The House version expressly states that adoption of either the PhRMA or AdvaMed Codes on Interactions with Healthcare Professionals satisfies this requirement.
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Manufacturers and wholesalers must train their employees about the code, conduct annual compliance audits, identify a compliance officer, and develop protocols for investigating allegations of noncompliance.
Section 3 - Demonstration of Compliance.
- Manufacturers and wholesalers must submit annually to the Department of Public Health:
o a copy of their marketing code,
o descriptions of their training program and investigation policies,
o contact information for their code compliance officer, and
o certification of a successful compliance audit.
Sections 4, 5, & 6 - Departmental Enforcement.
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The House version eliminates the Senate proposal to impose civil penalties for failure to comply with the statute.
- The Department of Public Health is authorized to promulgate regulations to enforce the statutory requirements that companies a) adopt a written marketing code of conduct and b) provide annual evidence of a successful compliance audit.
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The Department of Public Health is expressly prohibited from disclosing “any proprietary or confidential business information that it receives pursuant to” such audits.
III. Background
The gift ban provision was initially proposed by state senators Mark Montigny and Richard Moore (in Section 22 of Senate 2526). It would have banned outright any pharmaceutical or device manufacturer from knowingly offering anything of value to any physician or health care facility, and imposing both civil and criminal liability on those who did. The ban allowed for no exceptions, de minimis provisions, or safe harbors. If enacted, these provisions would have established the strictest gift ban statute in the nation.
The Senate Ways and Means Committee modified this language (in Section 26 of the renumbered Senate 2650) before reporting the bill to the Senate floor. The Committee’s modification provided an exemption for the distribution of (and purchase of advertising in) peer-reviewed academic, scientific or clinical information, and removed the criminal liability provision.
Senate 2650 was further amended on the Senate floor. The floor amendment required pharmaceutical and medical device representatives to register with the Commonwealth, and required such companies to disclose annually (via a state-maintained searchable internet registry) all payments or items of value provided to physicians (and not otherwise banned). This version of the gift ban provision, incorporated into the renumbered Senate 2660, passed the Senate unanimously on April 17, 2008.
Upon arrival in the House, Senate 2660 was referred to the House Ways and Means Committee. Speaker Sal DiMasi appointed a special subcommittee (comprised of Reps. Patricia Walrath, Peter Koutoujian, Daniel Bosley, Michael Rodrigues, and Stephen Kulik) to examine the proposed gift ban separately from the remainder of the health care cost containment bill. On July 15, 2008, House Ways and Means released its version of the health care bill, including its revisions of the gift ban provision, in House 4974.
IV. Next Steps
If the House version of Senate 2660 is adopted by the conference committee and signed by the governor, codes of conduct will be required under Massachusetts law. Those in the pharmaceutical and device sectors should be aware that in practice, it will be insufficient to merely adopt the PhRMA or AdvaMed codes without tailoring those codes to the specific circumstances of an individual company.
Companies that may be affected by this pending statutory change should thus ensure that any code of conduct they adopt complies with both Massachusetts law and other applicable statutes and regulations. Additionally, companies should ensure that they have put in place the supporting policies necessary to implement a code of conduct effectively as part of an integrated and comprehensive compliance program.