State House Speaker Calls for Repeal of Massachusetts Manufacturers Code of Conduct AKA “the Gift Ban”

As we noted back in April of this year, the Massachusetts legislature voted 128-22 to pass a fiscal 2012 budget amendment repealing the ban on gifts over $50 from pharmaceutical and medical device companies to doctors—also known as the Massachusetts Code of Conduct. The Senate stuck by the ban law, leaving the issue to be resolved by a conference committee eyeing a budget resolution next week.

The bill before the Joint Committee on Community Development and Small Business is one of two efforts to roll back the gift ban, which also required drug and device makers to report payments they make to physicians and other health care professionals. The House in April added a measure to its budget proposal, now being debated in conference committee, that would repeal the law altogether.

The ban, enacted in 2008 to control health care costs and guard against conflicts of interest, has proven to be a “hindrance” to job creation, scaring off companies who would otherwise do business in Massachusetts, according to House Speaker Robert DeLeo.

Backers of the gift ban believed it would address soaring health care costs and argued that gifts from pharmaceutical companies and medical device makers to doctors interfere with the doctor-patient relationship, often swaying doctors to prescribe costlier medications or recommend costlier courses of treatment rather than what is medically necessary.

DeLeo told the Boston Herald that he looks “at the lifting of the gift ban in Massachusetts as a means to create more business.” Based on conversations he has had with restaurant owners, caterers, and Jim Rooney, executive director of the convention center, DeLeo asserted that Massachusetts is losing business in the state because companies are not willing to come to Massachusetts because of this ban.

For example, Dalya’s Restaurant at Bedford Farms was well-equipped to host dinners put on by pharmaceutical companies for doctors, with seating for 30 in a private dining room wired with projection equipment. Owner Frans von Berkhout said doctors liked to come to his restaurant in Bedford because they knew they were in for a good meal. But, when the Legislature in 2008 made such gatherings illegal as part of a broader effort to limit the relationship between physicians and marketers, Dalya’s lost about 10 percent of its business, he said.

However, Representative Lori Ehrlich, a Democrat from Marblehead who sits on the joint committee, said claims that the restaurant industry has been broadly harmed are “tenuous at best.” Others are skeptical of the idea that the gift ban has hurt the economy and point to talks of expanding the Boston Convention and Exhibition Center and Department of Revenue numbers that show restaurant revenues are growing.

Nevertheless, Dayla and other restaurant representatives appealed to a panel of lawmakers to roll back the law and allow the doctor dinners to go on, in the name of supporting small businesses.

Consumer advocates said the change would be a dangerous undoing of a law aimed at protecting patients and curbing prescription drugs costs, even as the national trend is toward stricter controls.

Some members of the Joint Committee on Community Development and Small Business said the negative impact on restaurants seemed like an “unintended consequence” of the 2008 law.  DeLeo said the gift ban is “a hindrance” and runs against his “biggest goal,” job creation. Representative James J. Lyons, a Republican from Andover, further added that the gift ban is “creating the burden on the small businessman.”

Senator Anthony Petruccelli, a Democrat from East Boston, does not support the full repeal but he sponsored the restaurant bill. Under the law today, drug salespeople can bring meals to doctors in their offices or in a hospital setting as long as the cost of the meal does not exceed $50 and if the hospital’s internal policy allows it. He said he does not see a difference between providing a meal in that setting or in a dining room where the restaurant owner can benefit.

Petruccelli’s “pro jobs” bill would change the current ban’s provision, allowing meals to take place, once again, at restaurants that have been hammered by the recession. He asserted that his bill, SB 1849, “isn’t weakening anything, but rather, it’s strengthening business and restaurants.”

Sen. Mark Montigny from New Bedford, who was an author of the original gift ban, believes it’s problematic that there is even a discussion that small businesses and restaurants should impact life-saving health policy is the problem in Massachusetts. Montigny asserted that, “the corruption of the sacred doctor-patient relationship by the pharmaceutical industry by schmoozing at fancy restaurants is exactly the consequence that the law was intended to prevent.”

He added further that, “such dinners contribute to the “illegitimate relationship” between physicians and industry,” and that “such connections to marketers can make doctors feel obliged to prescribe high-cost brand name drugs, even when cheaper options may be more appropriate.”

Those in favor of repealing the gift ban recognize that industry is already governed by a strict code of ethical conduct, that doctors with years of medical schooling wouldn’t be plied by a free meal from a drug company, and that the Massachusetts ban far exceeds the strictest standards set by the industry. In particular, proponents of the repeal bill say that restaurants have suffered in neighborhoods like the North End, adjacent to major hospital districts, where doctors are often treated to dinner and presentations by the medical companies they work with.

As small businesses continue efforts to recover from the economic downturn, they will continue to press the Massachusetts legislature to repeal this bill.  Regardless of whether small businesses and restaurants are improving, we should want people to continue the economic recovery, not avoiding it. We still need more jobs and revenue for small businesses to survive during this recovery.  A repeal or revision of the gift ban in Massachusetts will likely be the best way to help companies on their road to recovery and concerns about undue influence by industry are misplaced and unsupported.