On January 19, 2010, New York Governor David Paterson introduced Senate Bill 6608[i] as part of the 2010-11 New York State Executive Budget. Included in Senate Bill 6608 is a provision to add Section 279, "Interactions Between Pharmaceutical Companies and Health Care Professionals," to the Public Health Law ("Section 279"). Similar bills are pending in the New York Senate and General Assembly.[ii]

If enacted, Section 279, like other current state marketing laws[iii] and industry codes,[iv] provides a code of conduct applicable to "all companies that sell or market prescription drugs, biologics or medical devices in the state" ("Pharmaceutical Company").[v] Notably, Section 279 would be the first state law also to provide a code of conduct applicable to health care professionals ("HCP") practicing in the state to whom such drugs, biologics or medical devices are sold or marketed.

Significantly, Section 279 includes provisions that differ from other current state marketing laws and industry codes, such as provisions related to continuing medical education ("CME"). Unlike voluntary[vi] industry codes, compliance with Section 279 will be mandatory. Violations may subject Pharmaceutical Companies to civil penalties and HCPs to civil penalties and other disciplinary action.[vii]

This Alert provides an overview of Section 279 and discusses some key considerations for Pharmaceutical Companies and HCPs to monitor as this bill progresses through the state legislative process.

OVERVIEW OF SECTION 279

Key Definitions

"Health care professional" is defined in Section 279 broadly to include persons licensed, registered or certified by the state and authorized to prescribe drugs or medical devices, including physicians, dentists, physician assistants, specialist's assistants, nurse practitioners, midwives and optometrists.

"Pharmaceutical Company" is defined in Section 279 to include entities that engage in the "production, preparation, propagation, compounding, conversion, or processing of prescription drugs, biologics, or medical devices, either directly or indirectly . . ." It also is defined to include entities that package, repackage, label, relabel and distribute drugs, as well as persons who engage in marketing to HCPs on behalf of a Pharmaceutical Company.

Penalties

A Pharmaceutical Company that violates Section 279 is subject to a civil penalty of $15,000 to $250,000 per violation. For HCPs, violation of Section 279 will constitute "professional misconduct."[viii] HCPs will be subject to a civil penalty of $5,000 to $10,000 per violation and other penalties, including censure and reprimand and suspension of license.[ix]

Code of Conduct Provisions

Independence

Section 279 prohibits a Pharmaceutical Company from offering, and HCPs from accepting, any financial support as a reward for prescribing or to induce a HCP to prescribe or continue to prescribe a Pharmaceutical Company's product. A Pharmaceutical Company also may not offer, and HCPs may not accept, a good or service that interferes with the HCP's independence and any payment, directly or indirectly, except as compensation for bona fide services.

Promotional Materials

A Pharmaceutical Company may not provide any promotional materials to HCPs that are inaccurate or misleading, make unsubstantiated claims, fail to provide a fair balance between the benefits and risks, fail to satisfy all U.S. Food and Drug Administration ("FDA") requirements, or which violate the state consumer protection law.[x]

Meals

Occasional, modest meals may be provided by a Pharmaceutical Company to HCPs and staff if the meals are provided in a manner and in a location conducive to a "structured, oral informational presentation" that provides scientific or educational value. If the meal is provided by a Pharmaceutical Company's field representative or his/her manager, the meal must be provided in the HCP's office or hospital setting, except meals provided in connection with a bona fide consulting or speaking agreement.

Entertainment and Recreation

Section 279 prohibits a Pharmaceutical Company from offering or providing, and HCPs from accepting, entertainment or recreational items, including sporting event tickets and leisure trips.

Continuing Medical Education

Section 279 prohibits a Pharmaceutical Company from being a CME provider in the state. Further, Section 279 requires a Pharmaceutical Company that sponsors a CME program in the state to adopt policies and to be in compliance with such policies. Specifically, the CME policies must include the following: (1) CME grant-making functions separate from sales and marketing; (2) objective criteria for CME grant decisions; and (3) requirement to respect the CME provider's independent judgment and follow all standards for commercial support established by the Accreditation Council for Continuing Medical Education ("ACCME")[xi] or an equivalent national accreditation body.

Section 279 also prohibits a Pharmaceutical Company from providing to a CME provider any advice or guidance related to program faculty or content, even if requested by the CME provider. A Pharmaceutical Company may provide certain information to a HCP presenter if the criteria for Promotional Materials, discussed above, is met.

Significantly, Pharmaceutical Company support may not be offered or provided to compensate a HCP for attending or presenting at a CME event or as reimbursement for travel, lodging and other personal expenses. A HCP may not accept such support. Additionally, a Pharmaceutical Company may not provide meals directly at a CME event. A CME provider may, at its own discretion, use support from a Pharmaceutical Company to reduce overall expenses for all attendees or provide meals for all participants.

A HCP may not attend or present at a CME event in New York that is sponsored by a Pharmaceutical Company unless the CME provider advises the HCP that the Pharmaceutical Company sponsor has provided assurances that it has the required policies in place and is in compliance with such policies. A HCP presenter must make a "reasonable inquiry" into all materials presented or made available by the HCP at a CME event in New York regarding compliance with the requirements set forth above for Promotional Materials. A HCP presenter may not represent that he/she authored any materials discussed, distributed or presented by the HCP unless he/she made "substantial contributions to the intellectual content" of the materials.

In addition, a HCP is obligated to disclose the existence and nature of any financial support that the HCP received or expects to receive from a Pharmaceutical Company that sponsors the CME event or a Pharmaceutical Company that manufacturers, distributes or markets any drug, biologic or medical device discussed in the presentation or commonly prescribed for a disease, injury or condition discussed in the presentation.

Professional Conferences and Meetings

Significantly, Section 279 also prohibits a Pharmaceutical Company from offering or providing support to compensate a HCP for attending or participating in a professional conference or meeting or as reimbursement for travel, lodging and other personal expenses. A conference or meeting planner may, at its own discretion, use support from a Pharmaceutical Company to reduce the overall registration fee for all attendees.

Except for company-sponsored meetings, a Pharmaceutical Company may not provide support for a professional conference or meeting in which the Pharmaceutical Company has responsibility for or control over the selection of content, faculty, educational methods, materials or venue.

Consulting and Speaking Agreements

A Pharmaceutical Company may enter into a bona fide consulting agreement[xii] with a HCP if the compensation is reasonable and based on fair market value. Reasonable travel, lodging and meal expenses incurred in connection with the consulting services also may be reimbursed.

Similarly, a Pharmaceutical Company may enter into a speaking agreement with a HCP if the requirements for a bona fide consulting agreement are satisfied and if the compensation paid to the speaker is reasonable and based on fair market value. The HCP must possess general medical expertise, reputation, knowledge and experience regarding a particular therapeutic area and communication skills reasonably expected from a speaker in the relevant field.

Section 279 requires each Pharmaceutical Company to set a cap for the total amount of annual compensation that it will pay to a HCP in connection with all speaking agreements. Each Pharmaceutical Company must periodically monitor speaker programs for compliance with FDA requirements and provide to HCPs "extensive training on the company's drug products or other specific topic to be presented and on compliance with [FDA] regulatory requirements for communications." Speaker training must be held in a venue conducive to the training and a Pharmaceutical Company must reasonably believe that the training will result in the HCP providing a valuable service to the company.

Promotional Speaker Programs

A Pharmaceutical Company may provide modest meals at a speaker program if the meal is offered to all attendees and the venue is conducive to an information presentation. Each speaker and his/her materials must clearly identify the company sponsoring the speaker program and the fact that the speaker is presenting on behalf of the company. The speaker also must present information consistent with FDA requirements.

Members of Formulary or Clinical Guidelines Committees

A Pharmaceutical Company that retains a HCP as a speaker or consultant that also serves as a member of a committee that sets formularies or develops clinical guidelines must require the HCP to disclose to the committee the existence and nature of his/her relationship with the company for the term of the relationship and at least two years after the termination of such relationship. Applicable HCPs must make appropriate disclosures to the committee and follow all relevant procedures set by the committee.

Scholarships and Other Financial Support

Section 279 permits a Pharmaceutical Company to provide scholarships or other financial support for medical students, residents, fellows and other HCPs in training to attend major educational, scientific or policy-making meetings or conferences held by national, regional or specialty medical associations if the recipient is chosen by the academic or training institution.

Prescriber Data

A Pharmaceutical Company that obtains prescriber data from HCPs must comply with all applicable laws and regulations to maintain the confidential nature of the data. The Pharmaceutical Company must develop written policies regarding the use of the prescriber data and train its employees on such policies. Further, the Pharmaceutical Company must designate an internal person to handle inquiries regarding the data and identify appropriate disciplinary action for misuse of the data. If a HCP requests that his/her prescriber data not be available for sales and marketing purposes, the Pharmaceutical Company must abide by the request.

Gifts and Educational Items

Section 279 prohibits a Pharmaceutical Company from offering or providing to a HCP and staff any item or service intended for personal benefit, cash or cash equivalents (except as compensation for bona fide services), and any other tangible item except certain permissible educational items. For example, this includes items of de minimis value, such as pens and mugs.

A Pharmaceutical Company may provide to a HCP, on an occasional basis, items designed primarily for the education or benefit of patients or HCPs if the items are not of "substantial value" and do not have value to the HCP outside of his/her professional responsibilities. "Substantial value" is defined in Section 279 as "the value of an item or service which reasonably appears to an objective person to be one hundred dollars or more."

Representative Training

Pharmaceutical Company representatives that visit HCPs must be trained on applicable laws and regulations, general science, and product-specific information "sufficient to allow the representatives to provide accurate, up-to-date information, consistent with" FDA requirements. A Pharmaceutical Company must assess periodically its representatives to ensure compliance with applicable laws, regulations and company policies and to take appropriate action if a representative fails to do so.

KEY CONSIDERATIONS

Section 279 must progress through the legislative process and may change as a result. Some key considerations for individuals and entities that may be impacted by Section 279 are listed below. This Client Alert will be updated if Section 279 or similar legislation is enacted in New York.

  • Historically, HCPs have not been subject directly through state marketing laws to obligations associated with their interactions with Pharmaceutical Companies. Recently, however, many institutions and academic medical centers have adopted policies related to these interactions. HCPs must ensure their own compliance with obligations directly applicable to HCPs. Institutions and academic medical centers also should ensure that all HCPs are knowledgeable regarding applicable institutional policies and, if enacted, Section 279 requirements.
  • The definition of "Pharmaceutical Company" in Section 279 appears to recognize that Pharmaceutical Company employees other than field sales employees may engage in "pharmaceutical detailing," promotion or marketing activities. •As drafted, Section 279 appears to prohibit support from pharmaceutical companies to be used to compensate HCP faculty or reimburse HCPs for expenses incurred in connection with serving as faculty for a CME event or professional meeting or conference. Pharmaceutical Companies, CME providers, meeting planners and HCPs should be aware of this restriction as it is more restrictive than current industry practices.
  • Section 279 imposes several compliance obligations on CME providers including, by way of example, obtaining assurances from a Pharmaceutical Company sponsor that it has the required policies and is in compliance with those policies. CME providers should carefully evaluate their obligations under Section 279.