While health care reform has taken a national stage over the past year, states have also begun introducing legislation to address health care issues as well. In particular, Alaska, Arizona, Connecticut, Hawaii, Illinois, Minnesota, Colorado, and Washington, among others, have introduced bills including but not limited to prescription drug marketing, data mining, and gifts or payments to physicians. We have been working on this for some time, and since writing several states legislatures have gone out of session without passing bills including Maryland and Maine. Below is a brief summary.
Iowa
The Iowa Senate has introduced SF 2071, a comprehensive pharmacy benefit manager (PBM) oversight bill (mirroring PSN model legislation), while 11 more states (Alaska, Georgia, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, Oklahoma, South Carolina, West Virginia, Wyoming) have bills moving that contain some PBM provisions.
Specifically, the bill requires that a PBM must disclose to the covered entity all financial terms and arrangements for remuneration of any kind that apply between the pharmacy benefits manager and any prescription drug manufacturer or labeler, including but not limited to formulary management and drug switching programs, educational support, claims processing and pharmacy network fees that are charged from retail pharmacies and data sales fees. A pharmacy benefits manager disclosing information under this subsection may designate that material as confidential.
If a pharmacy benefits manager makes a substitution in which the substitute drug's net cost to the covered individual or covered entity exceeds the cost of the prescribed drug, the pharmacy benefits manager must disclose to the covered entity the cost of both drugs and any benefit or payment directly or indirectly accruing to the pharmacy benefits manager as a result of the substitution.
The pharmacy benefits manager must transfer in full to the covered entity any benefit or payment received in any form by the pharmacy benefits manager either as a result of a prescription drug substitution or as a result of the pharmacy benefits manager substituting a lower priced generic and therapeutically equivalent drug for a higher priced prescribed drug.
A pharmacy benefits manager that derives any payment or benefit for the dispensing of a prescription drug within the state based on volume of sales for certain prescription drugs or classes or brands of drugs within the state must pass that payment or benefit on in full to the covered entity.
The bill also directs the department of public health to convene a workgroup to study the feasibility of providing discounted prescription drugs to the most vulnerable of Iowa's citizens through the 340B drug pricing program. Arizona (HB 2272) has also introduced expansions of their 340B programs, while North Carolina is exploring the possibility of moving a bill once their session begins in May.
Iowa also has a large health care bill, SF 48, which includes provisions regarding disclosure and reporting of gifts. There are also provisions about data mining and pharmacy benefit management. The bill prohibits manufacturers or wholesalers that participate in state health care from offering or giving any gift to a health care practitioner. The following gifts are not prohibited but must be disclosed:
Payment to the sponsor of a significant educational, scientific, or policy making conference or seminar if the payment is not made directly to a health care practitioner; the payment is used solely for bona fide educational purposes; and all conference or seminar activities are objective, free from industry influence, and do not promote specific products.
Reasonable honoraria and payment of the reasonable expenses of a health care practitioner who serves on the faculty at a significant educational, scientific, or policymaking conference or seminar pursuant to an explicit contract with specific deliverables which are restricted to scientific issues, not marketing efforts, and the content of any presentation, including slides and written materials, are determined by the health care practitioners.
Compensation for the substantial professional or consulting services of a health care practitioner in connection with a bona fide clinical trial pursuant to an explicit contract with specific deliverables which are restricted to scientific issues, not marketing efforts.
Annually, every manufacturer or wholesaler of prescription drugs, biologics, or medical devices that participates in a state health care program must disclose the value, nature, purpose, and recipient of any gift not prohibited in section, which is provided by the manufacturer or wholesaler, directly or through its agents, to any health care practitioner or any other person in this state authorized to prescribe, dispense, or purchase prescription drugs, biologics, or medical devices in this state. The applicable groups must also submit to the department a report on advertising and marketing expenditures, including support of independent or CME programs, and payments to medical education companies. This information will be publicly available and easily searchable on its internet site.
Alaska
Alaska House Bill 373 requires that by July 1 of each year, a covered manufacturer and a covered labeler must (1) file a report that gives information that relates to marketing activities conducted in the state; and (2) in a form that gives the value, nature, purpose, and recipient of the expense. Information in the report must also include expenses that relate to the state and that are associated with the advertising, direct promotion, or other marketing of prescription drugs through radio, television, magazines, newspapers, direct mail, and telephone communication, except for expenses that are associated with advertising purchased for a national market or a regional market other than this state that includes advertising in the state.
Expenses to be reported include educational or informational programs, food, entertainment, gifts, and other economic benefits provided at less than market value; trips and travel; and product samples, except for samples that are provided for the purpose of free distribution to patients; and the cost, in an aggregated form, of all employees or contractors of the covered manufacturer or covered labeler who directly or indirectly engage in the advertising or promotional activities. A covered manufacturer or covered labeler is not required to report the following expenses:
– Expenses of $25 or less;
– Reasonable compensation and reimbursement of expenses in connection with a bona fide clinical trial of a new vaccine, therapy, or treatment; or
– Scholarships and reasonable reimbursement of expenses for attending a significant educational, scientific, or policy-making conference or seminar of a national medical association, a regional medical association, a specialty medical association, or another professional medical association if the recipient of the scholarship or reimbursement is selected by the association sponsoring the conference or seminar.
The data collected and disclosed will be given in an annual report during each calendar year, beginning in 2011. A covered manufacturer or a covered labeler who knowingly fails to provide a report is subject to a civil penalty of $1,000.
Washington (WA)
Substitute House Bill 1493, seeks to prohibit the use of patient health care information for prescription drug marketing. The bill specifically states that notwithstanding allowable disclosures (defined in the bill), and unless expressly authorized by the patient (1) health care providers, including pharmacies and licensed entities licensed (2) health carriers, (3) pharmacy benefit managers, or (4) the business associates, subsidiaries, or affiliates of the entities cannot intentionally share, sell, or otherwise use any health care information for the purpose of marketing prescription drugs to patients.
Arizona
The Arizona legislature introduced HB 2705, a bill dealing with prescription medication disclosure requirements. The bill defines a “gift” as “food, entertainment or travel, or a payment, honorarium, subscription, advance, service or product sample or anything of value, unless consideration of equal or greater value is received. Gift includes anything of value provided to a health care practitioner for less than market value.” The bill prohibits any manufacturer or wholesale drug, biologic or medical device distributor who participates in a state health care program from offering or giving any gift, fee, payment, subsidy or other economic benefit to a health care practitioner. The following are excluded from the prohibition:
– Payment to the sponsor of a significant educational, scientific or policy-making conference or seminar if:
o The payment is not made directly to a health care practitioner;
o Funding is used solely for bona fide educational purposes; and
o All activities are objective, free from industry influence and do not promote specific products.
– Reasonable honoraria and payment of the reasonable expenses of a health care practitioner who serves on the faculty at a bona fide significant educational, scientific or policy-making conference or seminar if (a) there is an explicit contract; and (b) the content of the presentation is determined by the HCP; and
– Compensation for the substantial professional or consulting services of a practitioner in connection with a bona fide clinical trial if there is an explicit contract with specific deliverables that are restricted to scientific issues and not marketing efforts.
These gifts and information, along with data on advertising and marketing expenditures, must be reported on or before July 1 of each year. Specific information that must be included in these reports includes:
– Support of independent or CME programs, including payments to medical education companies;
– Design, printing and production costs of patient education materials and disease management materials distributed in this state;
– Consulting fees and expenses, participation in speakers' bureaus and honoraria or other payments for time while speaking at or attending meetings, lectures or conferences;
– Writing articles or publications, product samples;
– Charitable grants, either directly or earmarked, even if unrestricted; and
– Market research surveys or other activities undertaken in support of developing advertising or marketing strategies, or both.
An annual report will compile this information and be presented to the Governor of Arizona and the legislature.
The bill also establishes an evidence-based prescription education service designed to provide health care professionals who are licensed to prescribe or dispense prescribed products with information and education on the comparative efficacy, safety and cost‑effectiveness of commonly used prescribed products. The bill outlines how the program will be designed, requirements and how it will be implemented. This education service will include a code of conduct governing the behavior of educators in their interactions with health care professionals and establishing conflict of interest guidelines for educators and others involved in advising, developing and administering the service.
HB 2272 attempts to control prescription costs by stating that a PBM must notify the covered entity in writing of any activity, policy or practice of the pharmacy benefits manager that directly or indirectly presents any conflict of interest with the duties imposed by this section. PBMs who substitute a prescription drug for a prescribed drug to a covered individual must:
– Disclose to the covered entity the cost of both drugs and any benefit or payment directly or indirectly accruing to the pharmacy benefits manager as a result of the substitution, if the substitute costs more than the prescribed drug; and
– Transfer in full any benefit or payment the PBM receives for substituting a lower priced generic and therapeutically equivalent drug for a higher priced prescribed drug.
PBMs must disclose to the covered entity all financial terms and arrangements for remuneration of any kind that apply between them and any prescription drug manufacturer or labeler, including, without limitation, formulary management and drug‑switch programs, educational support, claims processing and pharmacy network fees that are charged from retail pharmacies and data sales fees. A pharmacy benefits manager that discloses information pursuant to this subsection may designate that material as confidential.
Lastly, SB1237, requires that on February 1, 2011, each manufacturer or labeler of prescription drugs dispensed in this state that employs, directs or uses marketing representatives in this state must submit an annual report of marketing costs for prescription drugs in this state to the administration. The annual report must be in a form that provides the value, nature, purpose and recipient of the expense, including:
– All expenses associated with advertising, marketing and direct promotion of prescription drugs through radio, television, magazines, newspapers, direct mail and telephone communications as they pertain to residents of this state, except for expenses associated with advertising purchased for a regional or national market that includes advertising in this state.
All persons and entities licensed to provide health care in this state, including health care professionals and persons employed by them, insurance carriers, health plans and benefits managers, pharmacies and health care institutions must disclose:
– All expenses associated with educational or informational programs, materials and seminars, and remuneration for promoting or participating in educational or informational sessions, regardless of whether the manufacturer or labeler provides the educational or informational sessions or materials; and
– All expenses associated with food, entertainment, trips, travel, and gifts that are valued at more than twenty-five dollars and anything provided to a health care professional for less than market value; all expenses associated with product samples, except for samples that will be distributed free of charge to patients.
The aggregate cost of all employees or contractors of the manufacturer or labeler, who directly or indirectly engage in the advertising or promotional activities, including all forms of payment to those employees, must be disclosed. Marketing expenses not subject to the requirements of this section:
– Expenses of less than twenty-five dollars; reasonable compensation and reimbursement for expenses in connection with a bona fide clinical trial of a new vaccine, therapy or treatment; scholarships and reimbursement of expenses for attending a significant educational, scientific or policymaking conference or seminar of a national, regional or specialty medical or other professional association if the recipient of the scholarship is chosen by the association sponsoring the conference or seminar.
The information collected will be presented in an annual report, and companies that fail to report face a civil penalty of $1,000 for each violation.
Hawaii
H.B. 2634 addresses pharmaceutical marketing, requires that before December 31 of each year, every pharmaceutical manufacturing company must disclose to the board of pharmacy the value, nature, and purpose of any gift, fee, payment, subsidy, or other economic benefit provided in connection with detailing, promotional, or other marketing activities by the company, directly or through its pharmaceutical marketers, to any physician, hospital, nursing home, pharmacist, health benefits plan administrator, or any other person in the State authorized to prescribe, dispense, or sell prescription drugs in this State. The following is exempt from disclosure:
– Free samples of prescription drugs intended to be distributed to patients;
– The payment of reasonable compensation and reimbursement of expenses in connection with bona fide clinical trials, in connection with a research study designed to answer· specific questions about vaccines, new therapies, or new ways of using known treatments;
– Any gift, fee, payment, subsidy, or economic benefit less than $25; and
– Scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policy-making conference of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association.
Initial disclosures will be made before December 31, 2011, for the twelve-month period ending June 30, 2011. The attorney general will report on the disclosures to the legislature and the governor each year. Failure to disclose may result in no more than $10,000 per violation.
A second bill, S.B. 2506, provides limitations on gifts and requires disclosure of allowable expenditures and gifts to health care providers and facilities providing health care. The bill states that “these activities can serve important and beneficial functions.” The bill defines gift as (1) Anything of value provided to a health care provider for free; or (2) Any payment, food, entertainment, travel, subscription, advance, service, or anything else of value provided to a health care provider, unless it is allowable or reimbursed at fair market value. The bill defines allowable expenditures as: Payment to the sponsor of a significant educational, medical, scientific, or policy-making conference or seminar, provided:
– The payment is not made directly to a health care provider;
– Funding is used solely for bona fide educational purposes; and
– All program content is objective, free from industry control, and does not promote specific products;
Honoraria and payment of the expenses of a health care professional who serves on the faculty at a bona fide significant educational, medical, scientific, or policy-making conference or seminar, provided:
– There is an explicit contract with specific deliverables which are restricted to medical issues, not marketing activities; and
– The content of the presentation, including slides and written materials, is determined by the health care professional;
Payment is allowable for a bona fide clinical trial (with specific requirements), and for research (with specific requirements). If payment or reimbursement for the reasonable expenses, including travel and lodging-related expenses, necessary for technical training of individual health care professionals on the use of a medical device if the commitment to provide those expenses and the amounts or categories of reasonable expenses to be paid are described in a written agreement between the health care provider and the manufacturer, those expenses are allowable. Royalties and licensing fees paid to health care providers which they hold an ownership right.
Manufacturers of a prescribed product or any wholesale distributor of medical devices are prohibited from giving any gift to a health care provider, except the following:
– Free samples for distribution to patients;
– The loan of a medical device for a short-term trial period, not to exceed 90 days;
– Reasonable quantities of medical device demonstration or evaluation units;
– The distribution or receipt of peer-reviewed academic, scientific, or clinical articles or journals that serve a genuine educational function;
– Scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policy-making conference or seminar of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association;
– Rebates and discounts for prescribed products; or
– Labels approved by the FDA for prescribed products.
Annually, on or before October 1, every manufacturer of prescribed products must disclose allowable expenditures to the director of commerce and consumer affairs for the fiscal year ending the previous June 30. Fines can be issued for noncompliance up to $10,000 per violation.
Illinois
H.B. 332 creates the Prescription Drug Ethical Marketing Act, which requires every manufacturer and labeler that sells prescription drugs in the State to disclose to the Director of Public Health the value, nature, and purpose of any gift, fee, payment, subsidy, or other economic benefit provided in connection with detailing or promotional or other marketing activities by the company, directly or through its pharmaceutical marketers, to any physician, hospital, nursing home, pharmacist, health benefit plan administrator, or any other person in the State authorized to prescribe or dispense prescription drugs. Exempt from disclosure includes:
1) Any gift, fee, payment, subsidy or economic benefit less than $25;
2) Free samples of prescription drugs to be distributed to patients;
3) The payment of reasonable compensation and reimbursement of expenses in connection with a bona fide clinical trial conducted in connection with a research study designed to answer specific questions about vaccines, new therapies, or new ways of using known treatments; and
4) Scholarship or other support for medical students, residents, and fellows to attend a bona fide educational, scientific, or policy-making conference of an established professional association if the recipient of the scholarship or other support is selected by the association.
On or before February 1 of each year, every manufacturer and labeler that sells prescription drugs in the State must disclose to the Director the above referenced information. Violations of this act can result in a civil penalty of up to $10,000 15 per violation. Disclosure covers the prior year. This data will be reported by the Director to the Governor and the General Assembly.
Colorado
SB 126 is an act modeled on the federal "Physician Payments Sunshine Act of 2009," which requires manufacturers of a drug, medical device, biological product, or medical supply for which payment is available under the state Medicaid program or the children's basic health plan to submit an annual transparency report to the secretary. The transparency report, due March 31, 2011, and each March 31 thereafter, is to detail information regarding payments or other transfers of value made by the manufacturer to a health care practitioner during the immediately preceding calendar year.
Specifically, the bill requires information as to the name, address, and other identifying information of the health care practitioner, and the value, dates, and description of the form and nature of the payment or transfer of value. Payment or other transfer of value does not include the following:
– Payment or other transfer of value provided by a manufacturer to a health care practitioner where the total does not exceed $100 during a single calendar year;
– Product samples that are not intended to be sold and are intended for patient use;
– Educational materials that directly benefit patients or are intended for patient use;
– The loan of a covered medical device for a short-term trial period, not to exceed 90 days, to permit evaluation of the covered device by the practitioner;
– Items or services provided under a contractual warranty, including replacement of a covered medical device;
– Anything of value to a practitioner when they are a patient, not acting in a professional capacity;
– Discounts or rebates; In-kind items used for the provision of charity care; and
– A dividend or other profit distribution from ownership or investment in a publicly traded security and mutual fund.
The reporting must include a description of the nature of the payment for all that apply including:
– Consulting fees; compensation for services other than consulting; honoraria; gifts; entertainment; food; travel; education; research; charitable contributions; royalties or licenses; current or prospective ownership or investment interest; compensation for serving as faculty or as a speaker for a CME program; grants; and anything the State Secretary defines.
The report must also list the names of specific drugs, medical devices, biological products, or medical supplies, in which payment is made related to marketing, education, or research. Failure to report can result in fines between $1,000 and $10,000 for each offense, not to exceed an aggregate fine of $150,000 per calendar year, and in the case of knowing violations, between $10,000 and $100,000 for each offense, not to exceed an aggregate fine of $1,000,000 in any calendar year.
The bill would also require manufacturers to disclose information pertaining to ownership or investment interests held by a health care practitioner in the manufacturer, detailing the dollar amount invested, the value and terms of the interest, and payments or other transfers of value provided to the health care practitioner.
The bill imposes an additional transparency requirement, not contained in the federal proposal, obligating a manufacturer to disclose whether it has adopted procedures to assure adherence to the code of interactions with healthcare professionals adopted by the pharmaceuticals trade group known as "pharmaceutical research and manufacturers of America" (PhRMA). A manufacturer would also have to disclose whether it: Has publicly announced its commitment to abide by the code; completes an annual certification of its policies to ensure compliance; and is identified by PhRMA on a public web site as a manufacturer that has committed to abide by the code.
Minnesota
HB 1640 and SB 895 require the commissioner of human services to establish a prescription drug education program for providers participating in state health care programs. The bill specifies program components and other requirements in collaboration with the Board of Pharmacy, the University of Minnesota Medical School, and the University of Minnesota College of Pharmacy, and establishes an assessment on wholesale drug distributors.
The program is designed to develop an evidence-based prescription drug education program to provide information and education on the therapeutic and cost-effective utilization of prescription drugs to health care professionals authorized to prescribe drugs. The program would consist of a Drug Utilization Review Board to determine cost-effective utilization of drugs. The commission would also create specific requirements for educational materials, and would require the program to include in-person outreach and education sessions for health care professionals in their place of work, facilitated by qualified educators.
Another component would include establishing (1) minimum clinical and educational qualifications for educators; (2) training for educators; and (3) a code of conduct for educators and conflict of interest guidelines for educators and others. The program would cover and provide outreach and education to health care professionals who as a group prescribe 80 percent or more of medications dispensed to state health care program enrollees. The program would also assess a quarterly fee on each drug distributor, equal to 0.5 percent of revenues the distributor would have received had the distributor been reimbursed at the MA rate for drugs provided to state health care program enrollees. Finally, An assessment of this program would be given in an annual report starting in April, 2011.
California
This bill would enact the Prescription Record Privacy Act, prohibiting a person from knowingly disclosing or using regulated records that include prescription information containing individual identifying information for marketing a prescribed product. This bill would also require that any person who knowingly fails to comply with these provisions be subject to an administrative penalty of at least $10,000.
Maryland
SB 1040 was introduced to prohibit certain patient–identifiable or prescriber–identifiable information from being licensed, transferred, used, or sold for any commercial purpose by certain entities. The bill generally relates to the confidentiality of certain information derived from or relating to a prescription drug order.
To view a full map of prescription drug reform bills Download State Bills – Version for Website 4-13-10.