On Sunday, August 10, Massachusetts Governor Deval Patrick signed into law Senate Bill 2863: “An Act to Promote Cost Containment, Transparency and Efficiency in the Delivery of Quality Health Care.” This legislation establishes a new statutory section at Mass. Gen. Laws ch. 111N, which will require pharmaceutical and medical device manufacturing companies: to comply with a Massachusetts-promulgated marketing code of conduct; to develop internal training and investigational programs in order to annually certify compliance with the Massachusetts marketing code of conduct; and to report economic benefits valued at $50 or more provided to certain health care professionals and entities as well as certain other health care related entities. These provisions become effective on January 1, 2009.
The new law defines “pharmaceutical or medical device manufacturing company” to mean:
any entity that participates in a commonwealth health care program and which is engaged in the production, preparation, propagation, compounding, conversion or processing of prescription drugs or medical devices, either directly or indirectly, by extraction from substances of natural origin, or independently by means of chemical synthesis or by a combination of extraction and chemical synthesis, or any entity engaged in the packaging, repackaging, labeling, relabeling or distribution of prescription drugs.1
The statute excludes licensed wholesale drug distributors and registered retail pharmacists from this definition.2
Marketing Code of Conduct and Marketing Restrictions
The new law requires the Massachusetts Department of Public Health to promulgate a marketing code of conduct, which shall be adopted by all pharmaceutical and medical device manufacturing companies that employ a person “to sell or market a drug, medicine, or medical device in the commonwealth.”3 The statute mandates that the marketing code of conduct incorporate certain standards and prohibitions.
By statute, the Massachusetts marketing code of conduct “shall be no less restrictive” than the most recent versions of the PhRMA Code on Interactions with Healthcare Professionals and the AdvaMed Code of Ethics on Interaction with Healthcare Professionals.4 It is not clear whether the marketing code to be developed by the Department will allow for differences between the pharmaceutical and device industries’ guidance interactions with healthcare professionals. For example, the recently revised PhRMA Code, which takes effect on January 1, 2009, prohibits certain gifts, meals, entertainment and relationships with medical education programs that may be permitted under the AdvaMed Code.5
The statute also requires that the Massachusetts marketing code of conduct prohibit certain activities.6 Specifically, the law requires that the Massachusetts code of conduct prohibit, among other things:
- paying, directly or indirectly, for meals for health care practitioners,7 with a limited exception for meals provided in a hospital setting or practitioner’s office so long as they are made in the presence of a “marketing agent;”
- providing “entertainment or recreational items of any value” to health care practitioners;
- sponsoring a continuing medical education (CME) program that does not meet Accreditation Council for Continuing Medical Education (ACCME) Standards for Commercial Support or that provides payment directly to a health care practitioner for CME;
- providing financial support for “the costs of travel, lodging or other personal expenses of non-faculty healthcare practitioners attending any CME event, third-party scientific or educational conference, or professional meeting,” with no explicit exception for the provision of scholarships or other similar items;
- providing or paying “for meals directly at any CME event, third-party scientific or educational conferences, or professional meetings;” and
- making “payments in cash or cash equivalents to healthcare practitioners either directly or indirectly, except as compensation for bona fide services.”
The statute requires that the marketing code of conduct allow for certain activities, including: the distribution of peer-reviewed academic, scientific or clinical information; the purchase of advertising in peer reviewed journals; compensation for consulting services in connection with a genuine research project or a clinical trial; and the provision of certain prescription drugs for use by the practitioner’s patients.8 Of particular interest to the device industry, the statute provides that the Massachusetts marketing code of conduct shall allow “payment for reasonable expenses necessary for technical training on the use of a medical device if that expense is part of the vendor’s purchase contract for the device.”9 It is not yet clear whether the Department of Public Health will draft its marketing code to prohibit activities that do not fit squarely within the parameters of the permissible conduct identified by statute.
Compliance Program and Annual Certification
The Massachusetts law also imposes requirements similar to those in effect in Nevada,10 requiring that pharmaceutical and device manufacturing companies that employ a person to sell or market prescription drugs or medical devices in Massachusetts “adopt a training program to providing regular training” to staff on the marketing code of conduct, “conduct annual audits to monitor compliance,” “adopt policies and procedures for investigating instances of noncompliance with the marketing code of conduct,” and identify a compliance officer “responsible for operating and monitoring the marketing code of conduct.”11 The Massachusetts law also adopts the Nevada language requiring each company annually to submit a description of its training program and investigation policies, the name and contact information of its compliance officer, and a certification to the Department that it has conducted its annual audit and is in compliance with the Department’s marketing code of conduct.12
Gift and Expense Reporting
The Massachusetts law also adopts a marketing reporting requirement that borrows heavily from the language of the Vermont gift reporting law13 applicable to pharmaceutical companies. By July 1 of each year, each pharmaceutical and medical device manufacturing company that employs a person to sell or market a drug, medicine, chemical, device or appliance in Massachusetts must report to the Department of Public Health:
the value, nature, purpose and particular recipient of any fee, payment, subsidy or other economic benefit with a value of at least $50, which the company provides, directly or through its agents, to any physician, hospital, nursing home, pharmacist, health benefit plan administrator, health care practitioner or other person in the commonwealth authorized to prescribe, dispense, or purchase prescription drugs or medical devices in the commonwealth.14
Both Massachusetts and Vermont use the term “other economic benefit,” which arguably may be interpreted to reach a broad range of expenditures. Vermont has interpreted its requirement to mandate the reporting of gifts, meals, speaker honoraria, consulting payments, payments for lodging and other travel expenses, and educational grants. It is unclear if Massachusetts will adopt a similar interpretation.
Notably, the Massachusetts law does not contain any explicit provisions similar to those in the Vermont law to protect reported information which is confidential, proprietary and/or a trade secret. Rather, the Massachusetts law states that the Department shall make “all disclosed data publicly available and easily searchable on its website.”15 However, in a press release, Governor Patrick announced that he is “confident that the Department of Public Health, pursuant to its regulatory authority, will safeguard the confidentiality of companies’ trade secrets and proprietary information.”
Based on Governor Patrick’s statement, we anticipate that the Department of Public Health will issue regulations to address both the marketing code of conduct and the reporting requirements. In addition to addressing trade secret concerns, the Governor set forth his expectation that the regulations will “protect against roadblocks to medical research or the education of health care providers.” We expect manufacturers will comment vigorously on these issues and others during the rule-making process. The Department may choose to promulgate regulations governing the marketing code of conduct and/or the reporting requirements under its authority to issue emergency regulations that can be effective for up to three months. If the Department chooses to do so, the official comment process will take place after the emergency regulations are published.
The statute itself takes effect on January 1, 2009. It appears that companies must wait for the Department to issue its marketing code of conduct to act on many provisions. In addition to making their perspectives heard by the Department, pharmaceutical and device manufacturing companies may want to use the period prior to the effective date to assess their marketing practices in Massachusetts with an eye towards transitioning to the new marketing paradigm when the new marketing code of conduct takes effect. For pharmaceutical manufacturers, this process may be incorporated into ongoing efforts to implement the provisions of the revised PhRMA Code. For device manufacturers that have not previously been subject to marketing reporting requirements, the transition may require substantial revisions to their policies and procedures to ensure appropriate tracking of benefits to Massachusetts health care practitioners.