Last week, the Pharmaceutical Research and Manufacturers of America (PhRMA) released a new version1 of its voluntary Code on Interactions with Healthcare Professionals (the “PhRMA Code”), which will take effect in January 2009. The PhRMA Code, which was last updated in 2002,2 addresses interactions between research-based pharmaceutical and biotechnological companies and healthcare professionals regarding marketed products and pre-launch activities. Because of its high stature, the Code also serves as a guide for broader industry. Compliance with the Code was recognized by the Office of Inspector General of the Department of Health and Human Services (OIG) in its Compliance Program Guidance for Pharmaceutical Manufacturers (April 2003) as “substantially reducing a manufacturer’s risk” of violating the requirements of the Anti-Kickback Statute.3

According to PhRMA’s press release, the new version of the Code is “part of an ongoing effort to ensure that pharmaceutical marketing practices comply with the highest ethical standards.” The preamble of the new Code states that it is designed to “reinforce our intention that our interactions with healthcare professionals are professional exchanges designed to benefit patients and to enhance the practice of medicine.” Key changes are discussed below.

Meal Restrictions

The revised Code imposes significant new restrictions on meals offered to physicians and their office staff. While the 2002 Code allowed provision for modest meals if they took place in a “venue and manner conducive to informational communication and provide scientific or educational value,” the updated Code is much tougher. It provides that “meals offered in connection with informational presentations made by field sales representatives or their immediate managers should also be limited to in-office or in-hospital settings” (e.g., bringing in pizza as part of an office detailing visit).

Restaurant meals are, therefore, generally prohibited under the new Code. Such prohibition is intended to ensure than any meal offered is merely incidental to a substantive interaction. Unlike a pharmaceutical sales representative, a senior business executive can provide a healthcare professional with a modest meal in a restaurant, as long as it is not part of an entertainment or recreational event, and the venue and manner of the interaction is conducive to informational communication. A company’s local field representative is able to attend a speaker program where a modest meal is offered outside of the hospital for purposes of logistical support and ensuring the program’s compliance with FDA requirements, as long as the venue and manner is conducive to informational communication.

Gift Prohibitions

The revised Code prohibits sales representatives from providing healthcare professionals with any noneducational items, including those of nominal value (commonly referred to a “tchotchkes”). This new prohibition applies to now-commonly distributed pens, mugs and other “reminder” items which frequently carry company logos. In addition, previously acceptable gift items such as stethoscopes, prescription notepads and other equipment used in patient care are now considered inappropriate gifts under the new Code. The key is a shift in the standard applied: The new Code prohibits “[p]roviding items for healthcare professionals’ use that do not advance disease or treatment education.” The 2002 Code allowed gifts of minimal value if “primarily associated with a healthcare professional’s practice.”

The revised Code allows occasional educational items of $100 or less to be given to healthcare professionals, where permitted by law, as long as the items do not have value outside of the recipient’s professional responsibilities. Examples of allowable gifts include anatomical models for use in an examination room, medical textbooks, a subscription to a relevant scientific journal, and copies of relevant treatment guidelines. Gifts disallowed include items such as a DVD or CD player, since each has independent value outside of the healthcare practice even if it could also be used to provide patient and professional education.

Continuing Medical Education Standards

The updated Code continues to allow companies to provide financial support for Continuing Medical Education (CME), but applies more detailed standards for this practice. It offers increased guidance for avoiding the perception that support is inappropriate, including stating that companies should separate grant-making functions from marketing departments.

Entertainment and Recreational Activities

In a related requirement, the revised Code clarifies and strengthens the prohibition against providing entertainment and recreational activities in any context, noting that including entertainment (such as a sporting event) with an educational or scientific presentation is inconsistent with the Code (e.g., as stated in the 2002 Code, even golf balls or sports bags are prohibited because they do not advance disease or treatment education even if they bear a company or product name.)

Consultants and Speakers Rules

The new Code prohibits recreational or entertainment activities for consultants provided in conjunction with company-sponsored meetings. The 2002 Code allowed social or entertainment events, as long as they were clearly subordinate in terms of time and emphasis. The new Code additionally clarifies that holding consultant meetings at resort locations is not appropriate.

Restrictions on speaking arrangements under the new Code apply more broadly than in the past. Standards, including those for selection and retention of speakers, apply to any healthcare professional engaged by a company to participate in external programs designed to educate and inform other healthcare processionals about company products. The new Code also sets standards to clarify the distinction between speaker programs and CME.

A related addition to the Code imposes disclosure requirements on healthcare providers who sit on committees responsible for setting plan formularies or developing clinical practice guidelines when they also serve as speakers or consultants for a pharmaceutical company.

Prescriber Data

The new Code provides principles for the responsible use of non-patient identified prescriber data and restrictions on its use.

Training Requirements

The revised Code instructs companies to ensure that their representatives receive training on applicable laws, regulations, FDA requirements, and on the Code itself, as well as training on the science behind the products they promote. The new Code also calls for periodic retraining and assessment of sales representatives.

Compliance Mechanisms

Strengthened from the 2002 Code’s single sentence suggestion that adoption of the PhRMA Code was “strongly encouraged,” the updated Code provides that “[c]ompanies that publicly announce commitment to abide by the Code and who complete an annual certification that they have policies and procedures in place to foster compliance will be identified by PhRMA on a public website.” CEOs and Compliance Officers will be required to certify each year that compliance processes are in place. PhRMA will pass on any complaints it receives relating to a company’s compliance to that company’s Chief Compliance Officer.

Future Implications

Moving forward, the new PhRMA Code will directly impact pharmaceutical manufacturers, as well as physician groups, hospitals and health plans. PhRMA’s decision to revise the Code signals that interactions remain under scrutiny and are a focus of government regulators and of the Congress. While the Code is voluntary, the OIG references the PhRMA Code specifically in guidance, calling it a “good starting point for compliance purposes,” and “recommends that pharmaceutical manufacturers at a minimum comply with the standards set by the PhRMA Code.”4

In publishing its revised Code, PhRMA committed to addressing not only the genuine problems created by marketing practices deemed unethical, but also the tarnished perception of particular pharmaceutical industry interactions with healthcare professionals. In the press release and throughout the Code itself, rules are justified based on how various practices may be viewed by the public or may create misperceptions. While the changes to the Code may elicit a significant and visible impact on certain aspects of marketing, the revisions allow the sales force to continue practices deemed essential, including providing lunch for a busy doctor’s office to allow a block of time for detailing presentations.

Some changes also “reflect PhRMA’s position that appropriate transparency in relationships with healthcare professionals can help build and maintain patient trust in the healthcare system.” This sentiment corresponds with legislative efforts to require increased disclosure of payments made to physicians. Senator Grassley (R-IA) introduced the Physician Payments Sunshine Act (S. 2029) this fall, and a similar bill has since been introduced in the House (H.R. 5605).

The question and answer section in the new Code provides updated and expanded answers to questions that appear in the 2002 Code. This section is also expanded to provide guidance concerning additional scenarios. While some practices now prohibited have become less frequent, many of the changes reported above will alter practices that have been used historically by many marketing and sales organizations. The bulk of these practices have been criticized most loudly by Congressional committees and consumer groups and not by the OIG. It remains to be seen whether this proactive action by PhRMA and its industry members will be sufficient to mute public criticism and legislative initiatives. Additional training of marketing and sales personnel is an essential component of this revised paradigm. Company legal and regulatory affairs professionals will also have to develop accurate new mechanisms for oversight of field operations.