INTRODUCTION

On July 10, 2008, the Pharmaceutical Research and Manufacturers of America (“PhRMA”) issued a revised Code on Interactions with Healthcare Professionals (“HCPs”) (the “PhRMA Code”). The revised PhRMA Code, which becomes effective January 2009, contains several key changes that will impact significantly the sales and marketing efforts of pharmaceutical companies that choose to comply. The most important revisions are those relating to sales representatives’ ability to provide meals and logo items to HCPs. Specifically, the revised Code prohibits sales representatives from paying for off-site or restaurant meals for HCPs and their staff and prohibits the use of branded “reminder” items, such as mugs, notepads or pens. The following memorandum contains a description of these and other revisions and also details the potential impact of the revised Code on the pharmaceutical industry. In addition, attached to this memorandum is a chart summarizing the original and revised PhRMA Codes and highlighting the new provisions that will become effective next year.

I. SUMMARY OF REVISIONS TO THE PHRMA CODE

Revisions to the PhRMA Code include: 

  • Reminder Items/Practice-Related Items. As mentioned above, the revised Code explicitly prohibits practice-related items of minimal value, such as pens, notepads, mugs or similar “reminder” items that are branded with the company’s name or logo. Whereas the original Code permitted companies to provide HCPs and their staff with branded reminder items, the revised Code allows only practice-related items that relate to a patient’s disease or are intended to educate the patient about treatment. Accordingly, educational items such as textbooks, subscriptions to relevant scientific journals or copies of clinical treatment guidelines are permitted, as are anatomical models, informational sheets and brochures, patient self-assessment and tracking tools or written materials that inform patients about adherence to medicine regimens, healthy lifestyle choices or the availability of patient assistance programs (all capped at a $100 value). In addition, unlike the original PhRMA Code, the revised Code states it is inappropriate for companies to offer HCPs medical equipment such as stethoscopes since the equipment is primarily designed for patient treatment and not for education.
  • Meals. The updated Code restricts sales representatives or their direct supervisors from taking an HCP and/or his or her staff to a meal at a restaurant. Sales representatives may continue to host meals accompanied by informational sessions in an office or hospital setting; however, off-site meals are no longer allowed. As with the original Code, take-out meals or “dine and dash” programs continue to be prohibited. Note, however, that this revision does not impact the ability of an individual acting on behalf of a company who is not a sales representative or direct supervisor from providing an off-site or restaurant meal.
  • Entertainment and Recreation. The revised Code prohibits manufacturers from providing entertainment or recreational items to HCPs, including tickets to the theater or sporting events, sporting equipment, or leisure or vacation trips, even if provided in connection with an HCP’s engagement as a speaker or consultant or whether the entertainment or recreation is secondary to an educational purpose. (The original Code permitted entertainment or recreation for HCPs where the HCPs provided legitimate consulting, advisory board or speaker training services.)
  • Consultants and Speakers. The revised Code’s provisions on consultants and speakers remain substantially unchanged. However, the revised Code does add that compensation and reimbursement of expenses should be based on fair market value and, as noted above, that recreational or entertainment events cannot be provided to consultants or speakers in connection with their respective events.
  • Continuing Medical Education (“CME”). The guidelines for funding CME remain predominately unchanged. However, the revised Code explicitly recommends that companies separate grant-making functions from sales and marketing functions and follow the standards for commercial support of CME established by the Accreditation Council for Continuing Medical Education or other accrediting bodies.
  • Adherence to the Code. The PhRMA Code now contemplates that companies may decide to publicly announce their support of the Code and complete an annual certification (signed by the CEO and/or Chief Compliance Officer) that they have appropriate policies and procedures. The PhRMA website will identify those companies that commit to abide by the Code and provide information for companies’ Chief Compliance Officers. In addition, PhRMA will direct complaints about company conduct to the Chief Compliance Officer. Finally, the revised PhRMA Code encourages companies to seek external verification or audits of policies and procedures that comport with the Code.
  • Training. The revised Code instructs companies to provide training on applicable laws, regulations, and industry standards as they pertain to interactions between HCPs and that companies train representatives to ensure general science and product-specific knowledge that is consistent with FDA requirements. Additionally, the PhRMA Code provides that companies periodically assess representatives’ compliance with company policies and provide updates or additional training as needed.
  • Formulary Committee Members. The revised Code obligates companies to require HCPs who act as speakers or consultants on their behalf and who serve as members of a formulary or clinical guideline committee to disclose this relationship to the committee. Importantly, a committee may require the speaker or consultant to recuse himself or herself from decisions relating to the related company’s products. The revised Code further recommends that companies require this disclosure to last for at least two years beyond the termination of the speaker or consulting arrangement with the company.
  • Prescriber Data. According to the revised Code, if companies opt to use non-patient identified prescriber data (i.e., to determine safety and risk information, to conduct research, to track adverse events, to focus marketing, etc.), they should (1) respect the confidential nature of the prescriber data, (2) develop policies regarding the use of the data, (3) educate employees and agents about those policies, (4) maintain an internal contact person to handle inquiries regarding the use of the data and (5) identify disciplinary action for misuse of such data. Additionally, the revised Code recommends that companies honor requests from HCPs who ask that their individual prescriber data not be made available to sales representatives.

A comparison of the original and revised PhRMA Codes is set forth in Attachment A.

II. POTENTIAL IMPACT ON THE PHARMACEUTICAL INDUSTRY

Companies that decide to comply with the revised PhRMA Code will need to amend their compliance policies and procedures by January 2009. In addition to the operational challenges associated with revising, approving and distributing policies and procedures, companies will need to update—and roll-out—updated training programs. As a practical matter, pharmaceutical companies that do business in California and Nevada will likely have to adopt the PhRMA changes to ensure adherence to those states’ legal requirements that drug companies have comprehensive compliance programs. In addition, the PhRMA Code revisions may signal a change to what have long been standard sales and detailing efforts. For example, the restrictions on off-site meals and branded reminder items foreclose very common industry sales and marketing practices. Although less common to begin with, entertainment activities are likely to diminish or to be eliminated entirely. Another significant adjustment for certain companies relates to the separation of grant-making and sales functions. Companies that desire to comply with the revised Code but currently combine these functions will have to restructure their operations.