On December 10, 2008, the Massachusetts Department of Public Health (the Department) released the Pharmaceutical and Medical Device Manufacturer Code of Conduct Regulations1 (the Proposed Regulations) that set forth the requirements for pharmaceutical and medical device manufacturers to comply with the Commonwealth’s pharmaceutical and medical device disclosure law (the Massachusetts Disclosure Law).2

The Proposed Regulations augment the statutory Marketing Code of Conduct and economic disclosure requirements3 and attempt to account for industry-specific differences between pharmaceutical and medical device manufacturers by incorporating additional defined terms or interpretive requirements. While the Proposed Regulations provide some level of clarity, they create a new layer of concerns by incorporating additional substantive restrictions on activity not explicitly addressed in the Massachusetts Disclosure Law, such as restrictions on pharmaceutical manufacturer use of non-patient identified prescriber data. Equally important, the Proposed Regulations broadly define the scope of reportable sales and marketing activity, which, without further clarification, may result in extensive and ambiguous reporting requirements.

Concurrent with the publication of the Proposed Regulations, Melissa J. Lopes, the Department’s deputy general counsel, published a memorandum addressing the Department’s approach to developing the Proposed Regulations and its interpretation of some of the regulatory provisions.4 The noteworthy aspects of this memorandum are incorporated in the discussion below.

If the Proposed Regulations are implemented as proposed, pharmaceutical and medical device manufacturers will be required to comply with the Marketing Code of Conduct on July 1, 2009. The first financial disclosure report, which will be made on a standardized reporting form developed by the Department, will be due on July 1, 2010. The first financial disclosure will cover sales and marketing activity only for the six-month period from July 1, 2009, through December 31, 2009. All subsequent disclosures will cover activity from the previous calendar year. Each annual disclosure must be accompanied by a $2,000 fee that will be used by the Department to establish an easily searchable public website listing the payments disclosed

On December 10, 2008, the Massachusetts Department of Public Health (the Department) released the Pharmaceutical and Medical Device Manufacturer Code of Conduct Regulations1 (the Proposed Regulations) that set forth the requirements for pharmaceutical and medical device manufacturers to comply with the Commonwealth’s pharmaceutical and medical device disclosure law (the Massachusetts Disclosure Law).2

The Proposed Regulations augment the statutory Marketing Code of Conduct and economic disclosure requirements3 and attempt to account for industry-specific differences between pharmaceutical and medical device manufacturers by incorporating additional defined terms or interpretive requirements. While the Proposed Regulations provide some level of clarity, they create a new layer of concerns by incorporating additional substantive restrictions on activity not explicitly addressed in the Massachusetts Disclosure Law, such as restrictions on pharmaceutical manufacturer use of non-patient identified prescriber data. Equally important, the Proposed Regulations broadly define the scope of reportable sales and marketing activity, which, without further clarification, may result in extensive and ambiguous reporting requirements.

Concurrent with the publication of the Proposed Regulations, Melissa J. Lopes, the Department’s deputy general counsel, published a memorandum addressing the Department’s approach to developing the Proposed Regulations and its interpretation of some of the regulatory provisions.4 The noteworthy aspects of this memorandum are incorporated in the discussion below.

If the Proposed Regulations are implemented as proposed, pharmaceutical and medical device manufacturers will be required to comply with the Marketing Code of Conduct on July 1, 2009. The first financial disclosure report, which will be made on a standardized reporting form developed by the Department, will be due on July 1, 2010. The first financial disclosure will cover sales and marketing activity only for the six-month period from July 1, 2009, through December 31, 2009. All subsequent disclosures will cover activity from the previous calendar year. Each annual disclosure must be accompanied by a $2,000 fee that will be used by the Department to establish an easily searchable public website listing the payments disclosed.

Comparison of the Massachusetts Disclosure Law and Proposed Regulations

The table below (click here for table) compares some of the more significant Massachusetts Disclosure Law requirements and highlights the key corresponding provisions of the Proposed Regulations.

The Proposed Regulations Leave a Range of Issues Open to Question or Interpretation

Some of the more significant open issues or areas where the Proposed Regulations leave room for varying interpretations include the following:

MARKETING CODE OF CONDUCT COMPLIANCE

A key statutory and regulatory requirement is that pharmaceutical and medical device manufacturers “adopt” the Marketing Code of Conduct, including a training program and other policies and procedures. The Proposed Regulations do not inform or instruct how a manufacturer is to “adopt” the Department’s Marketing Code of Conduct. Further, it is unclear what, if any, documentation will be necessary to meet this requirement.5 In addition, the Proposed Regulations do not provide the certification language that will be required for pharmaceutical and medical device manufacturers to certify compliance with the Marketing Code of Conduct. It may be challenging to monitor and subsequently certify compliance with the Marketing Code of Conduct without advance knowledge of the compliance certification requirements.

MEALS

According to the Department, the expansive definition of “hospital setting,” which authorizes the provision of meals in specialized training facilities certified by the Department, was included in the Proposed Regulations to account for the unique nature of training and information provided to health care practitioners on large or highly technical medical devices or equipment that cannot be transported between physician offices or hospitals. A key issue here is that the Proposed Regulations do not set forth the procedure or requirements to certify a specialized training facility to the Department. The Proposed Regulations also do not address whether the Department will establish a procedure to appeal denials of a certification request.

TECHNICAL TRAINING ON THE USE OF MEDICAL DEVICES

In some instances the U.S. Food and Drug Administration (FDA) requires device manufacturers to provide product training and education to physicians or other health care professionals as a condition of FDA clearance. Such FDA-required training may not be incorporated in a written purchase agreement. Medical device manufacturers may find it difficult to appropriately train health care professionals on the proper use of a medical device under the limited circumstances for which reimbursement may be provided for technical training in the Proposed Regulations.

REPORTING OF SALES AND MARKETING PAYMENTS

The Department’s interpretive memorandum indicates that it intentionally defined sales and marketing activities “to include activities beyond those traditionally considered to be pure ‘sales and marketing activities,’ such as advertisements, ‘sales pitches,’ customer satisfaction studies and promotional messages for communication to consumers and health care practitioners.” This broad definition could lead to differing interpretations as to whether a particular activity qualifies as “sales and marketing” and may create inconsistencies in pharmaceutical and medical device manufacturer financial disclosures. For example, pharmaceutical and medical device manufacturers may not apply the same judgment as to whether a particular activity qualifies as “product training” or is intended to “influence market share.” The Department also indicated that it interprets the disclosure requirements to include disclosure of items such as free drug samples. Accounting for the cost of free drug samples or demonstration or evaluation units could vary from manufacturer to manufacturer. Moreover, most other state marketing disclosure laws exclude free drug samples from the reporting requirements.6

USE OF NON-PATIENT IDENTIFIABLE PRESCRIBER DATA

To date, three other states—Maine, New Hampshire and Vermont—have enacted laws addressing the use of non-patient identified prescriber data by pharmaceutical manufacturers for their sales and marketing efforts. All three laws have been challenged and are currently the subject of prolonged and ongoing litigation. Significantly, the Proposed Regulations do not set forth a method of compliance for health care practitioners or pharmaceutical manufacturers. For example, it is unclear whether a health care practitioner who does not want his or her prescriber data available must make a separate request to each pharmaceutical manufacturer, or whether the Department will develop a central repository for health care practitioners to make such requests and for pharmaceutical manufacturers to obtain this information in a reasonable manner.

SUBMISSION OF COMMENTS

The Department will hold public hearings on January 9, 2009, and January 12, 2009, for interested parties to comment on the Proposed Regulations. Testimony can also be submitted electronically through January 19, 2009, to Reg.Testimony@state.ma.us or by mail to LouAnn Stanton, Office of the General Counsel, Department of Public Health, 250 Washington Street, Boston, MA 02108. Further information regarding the upcoming hearings and submission of testimony is available on the Department’s web site at http://www.mass.gov/?pageID=eohhs2pressrelease&L=1&L0=Home&sid=Eeohhs2&b=pressrelease&f=081210_new_regs&csid =Eeohhs2.

CONCLUSION

According to the Department, the Proposed Regulations seek to balance transparency interests with the legitimate proprietary interests of pharmaceutical and medical device manufacturers. The Proposed Regulations, if implemented as proposed, would provide Massachusetts with the most stringent state law governing pharmaceutical and medical device manufacturer conduct.

Further, the law’s main sponsor, Senator Montigny, and consumer advocacy groups such as the Massachusetts Prescription Reform Coalition have publicly expressed concern that the Proposed Regulations are not stringent enough to protect consumer interests and are advocating that the final regulations incorporate more stringent payment disclosure requirements.

In light of the issues raised by the Proposed Regulations, and the important distinctions between pharmaceutical and medical device interactions with health care professionals in the Commonwealth, it will be crucial to evaluate closely the affect the Proposed Regulations may have on a company’s marketing and promotional activities in Massachusetts.