Vermont SB 104 Proposes Additional Changes in “Gift” Ban Rules

Almost two years ago, the Vermont Legislature passed (S. 48)—a gift ban and disclosure law which includes all marketing activities for healthcare providers in the state.  At the time, the law basically outlawed Vermont physicians from participation in promotional events and dinner meetings, including product theaters and consulting.  It also required reporting of payments to physicians and health care providers or institutions on just about everything else (i.e. food, travel, education, etc.).    

One year later, the Vermont Senate passed a major health care reform bill, which included provisions about disclosure and gifts from drug and device companies. The Vermont health care reform bill, SB 88, contained specific provisions that amended Vermont’s existing gift ban law, Vt. Stat. Ann. tit. 18, § 4631a (“§ 4631a“), and disclosure law, Vt. Stat. Ann. tit. 18, § 4632 (“§ 4632“).

An article analyzing the changes, published by the law firm Epstein, Becker and Green, noted that significant changes from S.B. 88 included provisions that “require manufacturers of pharmaceuticals, medical devices and biological products to report annually to the Vermont Office of the Attorney General certain information related to “free samples of prescribed products provided to health care providers during the preceding calendar year.” The first report is due by April 1, 2012, for the reporting period of January 1, 2011, through December 31, 2011.

Now, just one year after the last change, the Vermont Legislature has again proposed to make changes to the gift ban and disclosure laws.  The changes to the law are underlined in the bill.

Consequently, the consistent changes made to the gift ban and disclosure law over the past few years demonstrate that the Vermont Legislature had little idea of what they were doing when they first created the law.  For a legislative body to have to amend a law each year not only creates doubt in the legitimacy of the legislation in the first place, it also creates unpredictability and uncertainty for healthcare stakeholders residing in Vermont. 

The various changes to the bill demonstrates the Vermont Legislature’s inability to consider viewpoints from various stakeholders affected by the legislation, presumably because the changes made since the original legislation came only after various groups complained of the burdens and negative impacts the law had on their companies or institutions.  Nevertheless, most of the requirements and substantive provisions with respect to the gift ban and disclosure remain unchanged and the proposed changes make sense for many constituencies.  Below is a summary of some of the changes.

S.104

This bill proposes to make minor and clarifying changes to laws prohibiting most gifts from manufacturers of prescribed products and requiring disclosure of permitted gifts and allowable expenditures. The bill would: 

–       Specifically authorize manufacturers to conduct blind market research studies and would require related disclosures;

–       Exempt from the scope of the gift ban and disclosure laws manufacturers who sell particular categories of over-the-counter products;

–       Extend the period for which a manufacturer may lend a medical device from 90 days to120 days and exempt the loans from disclosure if they result in a sale or lease after issuance of a certificate of need;

–       Exempt from disclosure prescription drugs provided through a manufacturer’s patient assistance program;

–       Exempt manufacturers from disclosing the provision of nonprescription products if they do not have any other required disclosures to make; and 

–       Change the reporting period for required disclosures from the fiscal year to the calendar year and pro rate the related reporting fee

Specifically, the proposed bill added to the category of “allowable expenditure,”

–       “Other research paid at fair market value, as long as the manufacturer on behalf of which the survey or other research is conducted is unaware of the identity of the health care provider receiving expenditures related to the research”

In addition, the proposed bill clarifies that prescription drugs provided through a manufacturer’s patient assistance program are not classified as a “sample,” and drugs given through such programs are not prohibited or classified as “gifts.”

With respect to reporting and disclosure, reports would not be due April 1 of each year, instead of October 1 for the preceding calendar year (not fiscal year).  The change in reporting would also require manufacturers to report the amount of rebates and discounts provided to “health care providers.”

The bill is moving through the legislature and should be voted on by the full state house and senate sometime before summer.

Ultimately, as the federal government begins to prepare making rules to implement the Sunshine Physician Payment Act contained within the Affordable Care Act (ACA), it would benefit health care providers and stakeholders in Vermont to urge their legislature to adopt standards of disclosure and reporting similar to the ACA requirements.  This would create a sense of predictability and uniformity with the federal requirements.  Otherwise, Vermont’s “legislate and then let’s see if it works approach” will only continue to scare health care providers and industry out of the state.