I. Proposed Pharmaceutical & Device Gift Ban: Current Status
In recent months, the Massachusetts Legislature has been considering legislation to limit or ban certain marketing activities of pharmaceutical and medical device companies. On the last day of the legislative session, July 31, the House and Senate voted to accept the conference committee report concerning health care cost containment legislation, (Senate 2863.) This legislation includes the provision regulating gifts by pharmaceutical and medical device manufacturers to physicians. The bill now goes to Governor Deval Patrick for his approval. The impact of this marketing legislation is of significant importance to anyone involved in the Massachusetts biotechnology, health care, and drug and device sectors.
The conference committee report, summarized below, is a compromise between the Senate and House versions. The law will apply to any pharmaceutical and medical device manufacturer who “participates in a commonwealth health care program.” It requires the Massachusetts Department of Public Health (DPH) to promulgate a marketing code of conduct that is “no less restrictive” than the PhRMA and AdvaMed codes. It requires that manufacturers adopt the DPH code, train their employees in compliance with the code, and submit an annual compliance audit to DPH. Additionally, the law will require annual disclosure of all items of value of $50 or more that a manufacturer provides to a physician or other health care practitioner, and requires DPH to post this disclosure on its website. The law will also provide for civil penalties of up to $5,000 per violation.
The original Senate version (Senate 2660) included a ban on pharmaceutical and device manufacturers 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. The House version (House 4974), would have eliminated the full ban, and instead required manufacturers and wholesalers of pharmaceuticals and medical devices to adopt a marketing code of conduct.
II. Summary: Senate 2863 - Code of Conduct Provisions (Section 14)
Section 1 - Definitions
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Defines relevant terms, including “health care practitioner,” “medical device,” “marketing code of conduct”, “pharmaceutical or medical device manufacturer agent,” “pharmaceutical or medical device manufacturing company”, “Pharmaceutical or medical device marketer”, “physician”, and “prescription drugs”.
- “Marketing code of conduct” is defined as “practices and standards that govern the marketing and sale of prescription drugs or medical devices by a pharmaceutical or medical device manufacturing company to health care practitioners.”
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“Pharmaceutical or medical device manufacturing company” is defined as “any entity that participates in a commonwealth health care program and which is engaged in the production, preparation, propagation, compounding, conversion or processing of prescription drugs or medical devices, either directly or indirectly, by extraction from substances of natural origin, or independently by means of chemical synthesis or by a combination of extraction and chemical synthesis, or any entity engaged in the packaging, repackaging, labeling, relabeling or distribution of prescription drugs.” The definition further expressly excludes wholesalers or pharmacists.
Section 2 - Promulgation of a Marketing Code of Conduct by the Department of Public Health
- DPH is required to adopt by regulation a “standard marketing code of conduct” that shall include requirements that marketing activities be intended to “benefit patients, enhance the practice of medicine and not interfere with the independent judgment of health care practitioners.”
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The DPH Code shall be “no less restrictive than the most recent version of the Code on Interactions with Healthcare Professionals developed by the Pharmaceutical Research and Manufacturers of America and the Code on Interactions with Healthcare Professionals developed by the Advanced Medical Technology Association.”
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The DPH Code shall include restrictions on a number of activities, including limits on the provision of meals for health care practitioners, CME sponsorship, grants and subsidies, and entertainment.
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The DPH Code shall allow dissemination of peer reviewed information, advertising in peer reviewed journals, drugs provided solely for the use of the practitioner’s patients, compensation for consulting services connected with research or clinical trials, and payment for technical training on medical devices.
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The DPH Code shall be updated every two years.
Section 3 - Violations
Sections 4 & 5- Manufacturer Compliance
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Requires manufacturers employing sales representatives in the Commonwealth to adopt and comply with the DPH Code. Manufacturers must adopt a regular training program for employees, conduct annual compliance audits, adopt procedures for investigating and reporting noncompliance, and identify a compliance officer.
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Requires manufacturers to submit annually to DPH the following:
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.
Section 6 - Internet Disclosure Registry
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Requires every manufacturer to disclose to DPH, by July 1 of each year, the “value, nature, purpose and particular recipient of any fee, payment, subsidy or other economic benefit with a value of at least $50, which the company provides, directly or through its agents, to any physician, hospital, nursing home, pharmacist, health benefit plan administrator, health care practitioner or other person in the commonwealth authorized to prescribe, dispense, or purchase prescription drugs or medical devices in the commonwealth.”
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Requires DPH to make this data publicly available on its website.
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Requires DPH to report any improper transactions to the Attorney General.
Section 7 - Enforcement
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 Senate 2863 is signed into law by the Governor, DPH will be required to promulgate, via regulation, a code of conduct “no less restrictive” than the PhRMA and AdvaMed codes. All manufacturers who a) participate in a commonwealth health care program, and b) employ individuals to sell or market drugs, medicines, or medical devices in the commonwealth, will be required to adopt and comply with this code. Because the development of the code requires rulemaking by DPH, input from those involved in the in the Massachusetts biotechnology, health care, and drug and device sectors will be of significant importance.
Foley Hoag has extensive experience advising companies who wish to comment upon these types of regulation, as well as assisting companies in adopting and implementing codes of conduct as part of a comprehensive compliance program. If you would like to speak further with someone regarding these processes, please contact Paul Kim, Pat Cerundolo, Tad Heuer, or any member of Foley Hoag's Health Care and Government Strategies group.