Vermont Prescribed Products: State AG Offers Amnesty, Three Settlements, and Assembly Calls for Meals Exemption

Over the past few years, we have covered closely the evolving transparency laws in the state of Vermont, regarding physician-industry relationships and payments. Three new stories are of interest.

First, the Vermont Attorney General’s Office has announced an offer to accept limited penalties from medical device and biological manufacturers to resolve failure to report expenses related to health care providers under Vermont’s Prescribed Products Gift Ban and Disclosure Law during any of the law’s reporting periods.

Additionally, the state’s Attorney General’s Office recently filed and posted Assurances of Discontinuance executed by three manufactures, settling violations of the state’s gift ban and disclose law.

Finally, in an attempt to extend the law, Vermont’s General Assembly introduced legislation to exempt the provision of meals or other food to a health care professional and his or her employees from the gift ban, so long as the meals are consumed in the health care professional’s office

Amnesty Offer

The Vermont Attorney General’s Office announced an offer to accept a limited penalty from medical device and biologic manufacturers to resolve failure to report expenses related to health care providers under Vermont’s Prescribed Products Gift Ban and Disclosure Law during any of the law’s reporting periods. This offer does not apply to other violations of Vermont’s law, such as gift ban violations. Unlike Vermont’s past offer of limited amnesty, this offer would require payment of a limited penalty to settle past – or anticipated – violations.

To take advantage of the amnesty offer, manufacturers must email prescribedproducts@atg.state.vt.us on or before May 1, 2014 with the following information:

• Manufacturer name;
• Reporting period(s) for which the manufacturer failed to report; and
• Name, physical address, email address and phone number of person with whom the Office should communicate about the unreported activity.

More information about Vermont’s Prescribed Products Gift Ban and Disclosure Law is available here, and the official notice of limited financial penalties is available here. 

The state is offering to accept a payment in the amount of $10,000 per reporting period to settle failures to report, as well as any anticipatedfailure to report 2013 data.  It is possible that Vermont is reacting to the various delays in gathering and reporting data related to the federal Physician Payments Sunshine Act, as well as previously undisclosed activity that has come to light during the ramp-up process.  Although the announcement stated that Vermont is not seeking full disclosure for unreported activity, the state does expect to require disclosure – at a later, unspecified date – of some aggregate information related to unreported activities, as well as information about whether the manufacturer also gave gifts in violation of the state’s gift ban. 

According to an email sent over the Vermont Attorney General’s listserv and posted to its website, reporting obligations under the Vermont law took effect on July 1, 2009, and applied to FY10 (7/1/09-6/30/10), FY11 (7/1/10-6/30/11), 2011 (7/1/11-12/31/11), 2012 (1/1/2012-12/31/2012), and 2013 (1/1/2013-12/31/2013).  

Though the offer of limited penalties may encourage self-reporting, Norton Rose Fulbright note that open questions remain.  For example, will companies that do notpay the limited penalties be subject to investigation and enforcement – particularly if they submit federal Sunshine Act reports that include addresses of Vermont physicians?  And what sort of “aggregate information related to the [previously unreported] activity” would manufacturers need to compile and submit at a later date? 

Settlements

The Vermont Office of the Attorney General (AG’s Office) recently filed and posted on its website Assurances of Discontinuance executed by three manufacturers settling violations of Vermont’s Prescribed Products Gift Ban and Disclosure Law (Law).

The three new Assurance of Discontinuances all represent supply companies and include fines that range from $1,750 for unpaid registration fees by EMD Milipore, $64,000 for providing meals and other gifts to healthcare providers during fiscal 2010 which was self-reported by Medline Industries and $71,750 in fines for providing meals and gifts to healthcare providers by Patterson Companies.

Patterson Companies Inc a dental supply distributor, February 11, 2014

Medline Industries Inc. a surgical supply company, December 19, 2013

In re EMD Millicore Corp. a scientific supply company, November 19, 2013

These are large fines for violating an almost unpublished law outside of Vermont. Under the national Open Payments rules expect that many companies will find out about the Vermont law for the first time and end up paying hefty fines.

In September 2013, the AG’s Office issued a press release stating that it had settled with 25 manufacturers for violations of the Law. On February 11, 2014, the AG’s Office issued another press release stating that it has settled with 3 additional manufacturers for violations of the Law. The press release summarizes that each of the manufacturers self-reported and agreed to prospective compliance with the Law. The manufacturers paid a total of $102,500 to the State in fees and civil penalties. Additionally, one manufacturer donated $35,000 to the Vermont Head Start Tooth Tutor Program, a program that helps provide children with access to adequate dental care. According to the press release, Vermont Attorney General William H. Sorrell reiterated that “similarly situated manufacturers that are less forthright or less cooperative will not receive such favorable treatment.”

New Legislation

Vermont’s Prescribed Products Gift Ban and Disclosure Law (Law) makes it unlawful for manufacturers of prescribed products and wholesale distributors of medical devices to offer or give any gift to a health care professional. On February 4, 2014, the Vermont General Assembly introduced House Bill 836 (HB 836), which would amend the Law by exempting the provision of meals or other food to a health care professional and his or her employees from the gift ban, so long as the meals are consumed in the health care professional’s office. If passed, HB 836 would become effective on July 1, 2014.

Please note that the Law currently exempts the following items, among other things, from the gift prohibition:

• Samples of a prescribed product or reasonable quantities of an over-the-counter drug, a nonprescription medical device, an item of nonprescription durable medical equipment, an item of medical food, or infant formula provided to a health care provider for free distribution to patients;
• The loan of a medical device provided for a short-term trial period, not to exceed 120 days, for the purpose of an evaluation of a medical device by a health care provider or patient; 
• The provision of reasonable quantities of medical device demonstration or evaluation units provided to a health care provider to assess the appropriate use and function of the product and determine whether and when to use or recommend the product in the future; 
• The provision, distribution, dissemination, or receipt of peer-reviewed academic, scientific, or clinical articles or journals and other items that serve a genuine educational function provided to a health care provider for the benefit of patients; 
• The provision to a free clinic of financial donations or of free prescription drugs, over-the-counter drugs, medical devices, biological products, combination products, medical food, infant formula, or medical equipment or supplies; and
• Provision of snacks or coffee at a conference or seminar booth.

Click here to view a copy of HB 836.