Marketing drugs or devices to health care providers? The national legal trend is “no more tchotchkes”.

As of today, seven states and the District of Columbia have enacted laws addressing marketing practices of pharmaceutical manufacturers, in terms of gifts and perks provided to their customers. These are California, Maine, Minnesota, Vermont, West Virginia, Nevada and most recently, Massachusetts. Of these, the most recent three, California, Nevada and Massachusetts, include medical device sellers in their proscriptions. While most of the states (DC, West Virginia Maine and Vermont) simply require disclosure, the other states have also included prohibition of certain marketing practices. If we look at the development of these rules over time, we can see a trend to stricter and stricter restrictions on what used to be common marketing practices. We can also see a growing Federal interest in legislation addressing marketing of health care products.

Most of the more recent of these laws are based on the Code published by the Pharmaceutical Research and Manufacturers Association (PhRMA), recently revised, with the new Code effective as of January of this year. ( “”).

By state, here is a summary of what is now law;

Minnesota, since 1993, has had a $50 per physician-per year limit on what any pharmaceutical company can spend. The exceptions are fairly broad, and include payments to the sponsors of medical meetings for educational sessions, and expenses for conference faculty, as long as there are “reasonable”, consulting and investigation for research purposes, presumably, clinical trials. (Minnesota Statutes Chapter 151, section 151.461)

Vermont has a law requiring reporting advertising costs to the State (attorney general’s office), on the books since 2004 and in effect now. The AG will give a summary report to the legislature each year Exemptions are gifts less than $25, grants for conference attendance and CME for students interns and fellows, given to the conference sponsors, free samples for patients, rebates and discounts, ,and payment for conduct of clinical trials (Title 18, chapter 91, section 4632, Vermont Statutes Online)

District of Columbia since 2004 has required manufacturers and labelers to file annual reports of prescription drug marketing expenditures such as advertising and direct promotion, and any expenditure for educational programs, gifts, meals or entertainment over $25 in value, and travel reimbursement for District health care professionals. Clinical trial expenses are exempted, but CME for established practitioners is not mentioned as an exception. The cost of company personnel involved in the promotional activities is included as reportable, as far as the activities relate to promotion within the District. (Division VII, title 48, Subtitle II chapter 8A, Subchapter III, Requirement to disclose prescription drug marketing costs, District of Columbia Code))

Maine: has had a law on the books since 2003, but tightened up in 2005. Maine requires an annual report to the Department of Health and Welfare which specifically includes all costs associated with marketing and advertising in the state, whatever the media employed, but excludes expenses for national or regional advertising that includes Maine as one target. It also requires reporting of any expenses associated with providing health care professionals with educational and informational programs, all expenses associated with food or, entertainment or gifts more than $25, or provided to an HCP at a discount, and all sample expenses, except free samples for patients. As with DC, the cost of employees engaging in any of these promotional acts is also required to be reported, insofar as the activity reaches Maine. Clinical trials are explicitly exempted, and expense less than $25, and scholarships for attendance given to sponsors of conferences for the sponsor to distribute. The information provided is not publicly available, but summary data is public record. (Title 22, Subtitle 2, Part 5, Chapter 603 Subchapter 3 Profiteering in Prescription Drugs, section 2698-A, Maine Revised Statutes)

West Virginia: since 2004, has a law requiring pharmaceutical companies who make drugs sold in the state, and employ marketing staff or contractors, to report their advertising costs. Content of the report is to be specified by regulation. Specified in the law is that all national advertising, whatever the media, must be reported as it pertains to residents of Maine. Exemptions are patient free samples, clinical trial expenses scholarship support for medical students, residents and fellows to attend conferences. Once again, CME for established practitioners is not explicitly excluded. The report will not be public information. (Chapter 5A subchapter 3c section13, West Virginia Code)

California: enacted SB 1764 in 2005, and confounded the medical device industry by including prescription medical devices in its definition of prescription drugs. This law takes two guidances and makes them California law. The first of these is the Office of the Inspector General Guidance (OIG “Fraud and Abuse” Guidelines (68FR86, May5 2003 p.23731-23743). The CA law mandates compliance programs that are in accordance with this guidance, which was in fact developed to support the anti-kickback statute of Medicare, by further defining what was considered an “illegal inducement” to prescribe a drug paid for by Medicare. This CA law also requires that companies develop policies in accord with the PhRMA guidance referred to above. Interestingly, the law also provides that any future revisions of these documents will also become California law, when they become effective. Thus the new PhRMA guideline is now the law in California. The law requires a published compliance program (on the company’s website and available to anyone who asks). Companies must determine spending limits for gifts to California HCPs, and all promotional spending must be accounted for in this budget. This includes medical conferences, and speaker engagements. There is an exemption for CME commercial support, as long as the grants comply with the PhRMA code (similar to the exemptions already described for other states). (California Health and Safety code 119400-119402)

Nevada: followed California’s lead in 2007 by explicitly including medical devices in its law, and also by requiring a marketing code of conduct, and stated that adopting the PhRMA guidelines (most recent version) would satisfy the requirement for the code of conduct. Other requirements are to adopt a training program, conduct annual audits, and have a compliance officer. It also requires submission to the State Board of Pharmacy of an annual report which is composed of a copy of its marketing code of conduct, a description of the training program, a description of its compliance and audit policies, and the identification and contact information for the compliance officer. The Board will keep this information in confidence, but submit a compilation of the information they have received to the legislature, every other year. (Title 54, chapter 639, section 570, Nevada Revised Statutes)

Massachusetts: in August of last year, enacted SB 2863, requiring the MA Department of Public Health DPH, to enact regulations. Massachusetts recognized the difference between drugs and devices, and mandated that the code of conduct be no less restrictive than the PhRMA code for prescription drugs, and, for devices, the Advanced Medical Technology Association (AdvaMed) Code ( This law goes beyond the guidelines in terms of meals. Additionally, the MA code requires that sponsored CMD programs meet the Accreditation Council for Continuing Medical Education Standards for Commercial Support. No such restriction appears in either guidance. Of particular interest to device manufacturers is that reimbursement for training expense is only permitted if the training reimbursement is spelled out and is part of the sales contract. Exempt are payment for clinical trials, rebates and discounts, product samples or evaluation devices, and provision of reimbursement assistance. Companies must adopt the code, conduct annual audits, adopt policies and procedures for investigating noncompliance, appoint a compliance officer, and submit to the DPH a description of the training program and identify the compliance officer. Also, the company must certify annually that it has conducted an audit, as well as provide a disclosure report that will be public, and will include all the value, purpose and recipient of physician payments over $50 made to practitioners in the state by the company. Exemptions to disclosure exist for research and clinical trials, as well as consulting contracts, but samples and evaluation units must be disclosed. Once the regulation is in effect, (present deadline is July 1 2009) companies that sell or market drugs or devices in MA must comply. Regulations to support this code have already been drafted, and are in the process of being adopted.

Federal: In addition, in 2008, S. 2029, was introduced in the Senate by Senators Chuck Grassley and Herb Kohl. This bill and its companion bill in the house, require MDs to publicly report any gifts with value over $25.00 that they receive from sellers of medical devices or drugs in connection with marketing activities. The bill has now been read twice and is in Committee. It may die there, as have others. However, it’s now a Democrat majority, and that may change things

Conclusion: Marketers take note; “the times they are a changing”. Given the new administration, and the apparent trend to stricter and stricter state rules about consumer interactions, you may need RA staff in the Marketing Department soon.

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