Massachusetts Proposes Regs For Nation’s Strictest Sales, Marketing Law
Full article reprinted from "The Gray Sheet" - December 15, 2008
Find out how a Dec. 10 proposal for implementing a Massachusetts device and pharmaceutical marketing law contains some concessions for industry but would still impose the strictest rules for medical device marketing in the nation.
The law, signed by Governor Deval Patrick in August, requires the Massachusetts Department of Public Health to issue regulations establishing a code that is "no less restrictive" than the most recent versions of AdvaMed's "Code on Interactions with Healthcare Professionals" and the Pharmaceutical Research and Manufacturers of America's industry code (1"The Gray Sheet" Aug. 18, 2008, p. 3).
It also requires companies to annually report to the government, for public posting on a Web site, the value, purpose and recipient of any payment or other economic benefit transfer made to a practitioner that is valued at $50 or more.
Device industry reps were taken by surprise when the sales and marketing bill was expedited and enacted this summer in Massachusetts, but since then have been engaging the state's health regulators to try to minimize what they said could be inappropriate burdens on industry's interactions with doctors in the state.
One thing industry has gained for sure is more time. The state government reportedly had initially planned to release regulations as an emergency filing to meet a Jan. 1 effective date, without the benefit of additional stakeholder comments.
But within the past week the Massachusetts Public Health Council decided instead to go the more traditional route of issuing draft regulations, as it did Dec. 10, and asking for comment, in writing and at two hearings that will be held in early January.
As proposed by the council, the regulations push back the compliance deadline from Jan. 1, 2009, to July 1, 2009, giving companies six months to put into place necessary systems and procedures.
On July 1, 2010, companies will be required to report on payments that took place in the second half of 2009.
"We're pleased with the department's decision to remove the emergency nature of these regulations," said Thomas Sommer, president of the Massachusetts Medical Device Industry Council (MassMEDIC). However, "this is still the strictest law on the books in the United States, and we're not pleased that the state legislature has developed this law. We're working to correct some of the issues that would pose particular problems to medical device companies."
State Is First To Require Device Firm Disclosures
Under the proposed regulations, Massachusetts would be the only state in the U.S. to require physician payment disclosures by device manufacturers and the only state to make these disclosures part of the public record. Several other states already have similar requirements for drug companies.
Any $50-plus payment involved in qualifying sales and marketing activities would be subject to the disclosure requirement. The draft regulation also requires both pharmaceutical and device makers to disclose any free samples they provide for demonstration or evaluation purposes.
The regulation prohibits payment by companies to doctors for entertainment or recreation activities and gifting of complimentary items like pens, mugs or calendars. It also heavily restricts meal allowances.
The health council says that following implementation, Massachusetts will be the only state to require adoption of and compliance with a state-authored marketing code of conduct for pharmaceutical and device manufacturers that detail activities that are banned and permitted by law and prohibit certain industry payments to health care providers.
Industry Touts Exemption Of Consulting, Research
Industry representatives say they are still reviewing the draft rule, but point to a few areas where they believe the implementation process has moved in the right direction and some where they would like to see more changes.
One apparent gain for industry is that bona fide consulting and research contracts, allowed under the draft code of conduct, are excluded from the definition of sales and marketing activities that must be disclosed. Companies had been worried that disclosure requirements could be drafted in a manner that would force firms to prematurely unveil trade secrets.
"I think they came down appropriately looking at what the intent of the legislation was, which was to look at marketing practices," said Tom Tremble, associate VP for state government affairs at AdvaMed.
At the same time, the Massachusetts Health Department touts in a Dec. 10 press release that it is enacting the "broadest definition of 'sales and marketing'" of any state in the nation.
In addition to straightforward sales and marketing activities, the draft regulation also includes in the definition "product education, training and the provision of any fee, payment, subsidy or other economic benefit with a value of at least $50 to a health care practitioner for any purpose other than reasonable compensation for the substantial professional or consulting services of a health care practitioner in connection with a genuine research project or clinical trial."
Tremble expressed some concern with the inclusion of education and training, noting that "I think most people would see that that's not really sales and marketing in the traditional sense."
Tremble and Sommer both approve of the draft regulation's definition of a "hospital setting" - where the rules allow a bona fide training session to take place.
The language of the law bans payments for meals outside of a doctor's office or hospital and calls for restrictions on paying travel expenses for continuing medical education sessions or other training events.
Industry was worried the policy would not take into account the fact that due to the nature of devices, manufacturers are often not able to conduct training at an actual health care facility.
As defined in the draft regulation, "hospital settings" include medical device or pharmaceutical specialized training facilities, where these facilities are "specifically designed to approximate the conditions of a surgical suite, or the conditions of a working clinical laboratory and to provide medical training that uses human tissues/cadavers, on large and/or technical medical devices, such as surgical equipment, implants and imaging and clinical laboratory equipment."
Although an improvement, this section of the regulations still could use some tweaking, Sommer said, "to help support some other types of companies that have training facilities that don't necessarily approximate a hospital setting."
Ultimately, Manufacturers Want A Federal Solution
Companies will have to pay their first payment of $2,000 for each annual disclosure to the state's Department of Public Health on July 1, 2009, a full year ahead of when their actual reporting is required. The fine for violating the state's law is up to $5,000.
"They've set it at $2,000 across the board, regardless of size of the company. I could see that maybe as a one-time thing, but this could start spreading across the country," which will be particularly difficult for smaller firms, Tremble noted.
Ultimately, manufacturers say they support efforts to increase transparency, or at least are resigned to the fact that more requirements are inevitable, but they are pushing for a federal solution that would pre-empt mandates coming from states like Massachusetts.
In addition to the prospect for separate state fees, companies also worry about having to comply with different requirements at each locale.
AdvaMed and other industry groups have signed on to the Physician Payments Sunshine Act - written by Sens. Herb Kohl, D-Wis., and Chuck Grassley, R-Iowa - which requires disclosure of certain payments to physicians of more than $25, among other provisions (2"The Gray Sheet" May 26, 2008, p. 14).
If the federal bill were to become law in its current form next year, Massachusetts officials say they recognize that the reporting section of the state law would be pre-empted, though the other sections of their statute would remain in effect.
Public hearings on the draft state regulation will be held in Boston on Jan. 9 and in Worcester Jan. 12.
- Ingrid Mezo
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