New Jersey Finalizes “Gift” Ban of Physicians Working with the Pharmaceutical Industry

In an unusual administrative move – without passing any new laws – on December 22, 2017, the Attorney General of New Jersey finalized new rules governing physician interactions with pharmaceutical companies.  The rule is titled:   LIMITATIONS ON AND OBLIGATIONS ASSOCIATED WITH PRESCRIBER ACCEPTANCE OF COMPENSATION FROM PHARMACEUTICAL MANUFACTURERS.

Starting January 15, 2018, all contracts and payments entered into by physicians directly with the pharmaceutical industry will be subject to a $10,000 total yearly cap for New Jersey physicians with all pharmaceutical companies. This includes payments from industry for consulting and speaking but exempts research and education related payments. In addition, physicians will be subject to a $15 dollar meal cap, for meals related to all activities.

The rule is scheduled to be published on January 16, 2018, in the NJ state registry.   The writers at Policy and Medicine have created a “clean” version of the final rule without the edit marks and comments for companies and physicians to utilize in their compliance programs. 

It is worth noting that this rule is the first of its kind for any state to adopt a rule that compliance with the rule is tied to physician licensure and applies not to the pharmaceutical manufacturers but to physicians.

We have previously written about the proposed “gift ban” in New Jersey wherein New Jersey Governor Chris Christie proposed a regulation to cap the amount physicians are able to earn annually from drug companies at $10,000.

The original legislation attempted to:

• Delineate prohibited items to include cash, gift cards, entertainment and recreational items; items for prescriber’s personal use; payments supporting non-faculty attendance at promotional activities; and continuing education events;
• Establish some exemptions from these prohibitions where the purpose is for the benefit of patients or prescriber education, such as educational materials;
• Set standards for agreements by which prescribers are paid for “bona fide services,” i.e., speaking at promotional activities and continuing education events, participation in advisory bodies and under consulting arrangements;
• Require the terms of those agreements to be in writing, with dollar amounts and an articulation of the prescriber’s expertise;
• Allow for and defining the value (not to exceed $15 for each provider) and “modest” meals that can be provided in different settings 
• Cap the compensations for bona fide services (with the exception of speaking at continuing education events) from all manufacturers at $10,000 every calendar year.

Following its publication in the New Jersey Register on October 2, 2017, a hearing was held on October 19, 2017, where Attorney General Christopher S. Porrino noted that it was his intent, and the intent of other officials present at the meeting, to move forward with the proposed rules. As we previously noted, the hearing was short with only thirteen speakers present, most of whom warned about possible unintended consequences of the legislation.

The Final Rule

Definitions

Bona fide services: those services provided by a prescriber pursuant to an arrangement formalized in a written agreement including, but not limited to, presentations as speakers at promotional activities and education events, participation on advisory boards, and consulting arrangements. Does not include services provided by a prescriber in connection with research activities. All agreements must be in writing, shall specify the services to be provided and the dollar value of the consideration to be received by the prescriber and identify the following:

1. The legitimate need for services in advance;
2. The connection between the competence, knowledge, and expertise of the prescriber and the purpose of the arrangement;
3. How participation of the prescriber is reasonably related to achieving the identified purpose;
4. The manner by which the prescriber will maintain records concerning the arrangement and the services provided by the prescriber; and
5. An attestation that the prescriber’s decision to render the services is not unduly influenced by a pharmaceutical manufacturer’s agent.

Education Event: an education event, third-party scientific or educational conference, professional meeting or workshop, seminar, U.S. Food and Drug Administration required education and training, or any other gathering, held in a venue that is appropriate and conducive to informational communication and training about healthcare information, where:

1. The gathering is primarily dedicated, in both time and effort, to promoting objective scientific and educational activities and discourse (one or more educational presentation(s) should be the highlight of the gathering); and
   2. The main purpose for bringing attendees together is to further their knowledge on the topic(s) being presented.

Modest meals: food and/or refreshment, where its fair market value does not exceed $15.00 for each prescriber.

Non-faculty: a prescriber who does not serve as a speaker or provide actual and substantive services as a faculty organizer or academic program consultant for an education event or for a promotional activity.

Pharmaceutical manufacturer: any entity that

1. Is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drugs or biologics, by extraction from substances of natural origin, or independently by means of chemical synthesis; or
   2. Is directly engaged in the packaging, repackaging, labeling, relabeling, or distribution of prescription drugs or prescription biologics, provided, however, that “pharmaceutical manufacturer” or “manufacturer” shall not include a healthcare facility licensed by the Department of Health, or a pharmacy holding a permit issued by the Board of Pharmacy.

Pharmaceutical manufacturer’s agent: a person who, while employed by, or under contract with, a pharmaceutical manufacturer, engages in detailing, promotional activities, or other marketing of prescription drugs or biologics to any prescriber authorized to prescribe, dispense, or purchase prescription drugs, biologics, healthcare facility, or pharmacist, but shall not include a prescriber or pharmacist when acting within the ordinary scope of the practice for which he or she is licensed.
 
Prescriber: a physician, podiatrist, physician assistant, advanced practice nurse, dentist, or optometrist. It does not include a licensee who is an employee of a pharmaceutical manufacturer who does not provide patient care.
 
Promotional activity: any unaccredited activity, meeting, or program organized or sponsored by a pharmaceutical manufacturer, or the manufacturer’s agent, that is directed at prescribers to promote the prescription, recommendation, supply, administration, use, or consumption of the manufacturer’s products through any media or medium. Does not include an education event or services provided in connection with research activities.

Research: any study assessing the safety or efficacy of prescribed products administered alone or in combination with other prescribed products or other therapies, or assessing the relative safety or efficacy of prescribed products in comparison with other prescribed products or other therapies, or any systemic investigation, including scientific advising on the development, testing and evaluation, that is designed to develop or contribute to general knowledge, or reasonably can be considered to be of significant interest or value to scientists or prescribers working in a particular field.

Prohibited Gifts and Payments

A prescriber shall not accept any financial benefit from any pharmaceutical manufacturer or manufacturer’s agent. This includes any item of value that does not advance disease or treatment education, including:

1. Pens, note pads, clipboards, mugs, or other items with a company or product logo;
2. Items intended for the personal benefit of the prescriber or staff, such as floral arrangements, sporting equipment, artwork, or items that may have utility in both the professional and non-professional setting, such as electronic devices;
3. Any payment in cash or cash equivalent, such as a gift certificate;
4. Any payment or direct subsidy to a non-faculty prescriber to support attendance at, or as remuneration for time spent attending, or for the costs of travel, lodging, or other personal expenses associated with attending any education event or a promotional activity. 

These rules also apply to any immediate family member of a prescriber, unless an immediate family member is employed by a pharmaceutical manufacturer and receives the prohibitions listed as part of the usual and customary employment relationship, compensation, financial benefit, or other item of value.

Permitted Gifts and Payments

A prescriber may accept the following from a pharmaceutical manufacturer or manufacturer’s agent:

1. Items designed primarily for educational purposes for the patients or the prescriber that have minimal or no value to the prescriber outside of his or her professional responsibilities. This includes anatomical models for use in an examination room or other information and materials in any form directly related to patient care or prescriber education. Items that may have an independent value to the prescriber outside of his or her professional responsibilities, such as electronic devices, may only be accepted if they are used by patients and remain in a common area of the prescriber’s office.
2. A pharmaceutical manufacturer subsidized registration fee at an education event, if that fee is available to all event participants.
3. Modest meals provided through the event organizer at an education event, provided the meals facilitate the educational program to maximize prescriber learning.
4. Modest meals provided by a manufacturer to non-faculty prescribers through promotional activities.
5. Compensation, based on FMV, for providing bona fide services as a speaker or faculty organizer or academic program consultant for an education event. A prescriber serving in this capacity may also accept reasonable payment and remuneration for travel, lodging, and other personal expenses associated with such services. A prescriber may be granted continuing education credit for participation in such activities, if the continuing education requirements of the prescriber’s professional licensing board are satisfied.
6. Compensation, based on FMV, for providing bona fide services as a speaker or faculty organizer or academic program consultant for a promotional activity, consistent with such caps as set forth at N.J.A.C. 13:45J-1.6. A prescriber serving in this capacity also may accept reasonable payment or remuneration for travel, lodging, and other personal expenses associated with such services. A prescriber may not claim continuing education credit for participation in such activities.
7. Compensation, based on FMV, for participation on advisory bodies or under consulting arrangements, consistent with such cap as set forth at N.J.A.C. 13:45J-1.6. A prescriber serving in this capacity also may accept reasonable payment or remuneration for travel, lodging, and other personal expenses associated with such services.

8. Reasonable payment or remuneration for travel, lodging, and other personal expenses in connection with research activities.

9. Reasonable payment or remuneration to prospective applicants for travel, lodging, and other personal expenses associated with employment recruitment.

10. Royalties and licensing fees paid in return for contractual rights to use or purchase a patented or otherwise legally recognized discovery for which the prescriber holds an ownership right.

Disclosure Requirements

A prescriber serving as a speaker at an education event or for a promotional activity shall directly disclose to attendees either orally or in writing at the beginning of the presentation that the prescriber has accepted payment for bona fide services from the sponsoring pharmaceutical manufacturer within the preceding five years.

Comments and Responses

Any comments were due on December 1, 2017, and on December 22, 2017, the New Jersey government quietly finalized the regulation, albeit with some changes from the proposed rule.

Some of the comments expressed concern that while the rules were proposed to curtail opioid abuse, they were not in line to accomplish that goal and would instead of a broader impact beyond just opioids. The Attorney General’s response acknowledged the truth behind those comments, “the intent of the rules is to apply to all prescription medications so as to ensure that patient care is guided by the unbiased, best judgment of the treating prescriber.”

Additional commenters expressed concern about the unintended consequences of the rules on clinical trials and research because “bona fide services” is too broad of a definition and would encompass payments in connection with vital clinical research, potentially restricting the ability of providers and manufacturers to conduct life-saving research in New Jersey and negatively impacting the advancement of medicine and commercial drug development.

 According to the Adoption Notice, commenters believe that it is unrealistic to expect a physician to conduct a clinical trial for $10,000, and to impose such a limit would guarantee that clinical trials are driven out of New Jersey, with severe impact to the professionals and institutions that have contributed to so many cures. Some comments even went so far as to propose new language for the regulation that would clarify definitions and not put New Jersey in such a disadvantageous position. In response to these comments, the AG amended the bona fide services cap to exclude activities that further “research.”

Several commenters noted that the $15 dollar meal limit was unworkable, as even breakfast any 3 star hotels in New Jersey are over $40 after tax and services are added.  The AG did drop the 4 meals per year per company limit proposed in the original version of the rule. 

Several of the comments opined that the $10,000 figure was too high and should be reduced to $5,000, but the AG found the figure to be appropriate and did not lower it.

In response to several comments about education, the AG amended the term “continuing education event” to “education event,” and amended the definition to include a workshop or seminar and to remove the requirement that “responsibility for and control over the selection of content, faculty, educational methods, materials, and venue belongs to the event’s organizers in accordance with the standards of a nationally recognized accrediting entities.” As such, payments to prescribers speaking at both accredited and non-accredited education programs that meet the definition of an education event and, are for fair market value and are set forth in a written agreement will not be included in the $10,000 cap.

Conclusion

Companies have until January 15, 2018, to enter into any contracts with New Jersey Health Care providers that may exceed the $10,000 total cap for promotional speaking and consulting payments.

Unfortunately, these types of rules often work against their stated purpose which is to fight the “Opioid Crisis” our review of the open payments database showed a modest use of payments to physicians by opioid companies in New Jersey. Rather than consulting with companies to determine the optimal use for their products, NJ physicians will have to pay close attention to their payments or find outside work in the legal industry suing or defending those companies.

One part of the rule which will get the most press attention (pens, note pads, clipboards, mugs, or other items with a company or product logo) deals with a practice in which the pharmaceutical industry has not participate in over 10 years. The level of miss information from policymakers can sometimes be baffling.

Pharmaceutical Research and Manufacturers of America (PhRMA) also has a code of ethics regarding such gifts. However, as we have seen time and time again, those pre-existing codes and rules which are closely followed by industry, do little to stop the behemoth of the regulatory state from setting in.

Key Documents

Final Rule 12-22-17 with comments:  LIMITATIONS ON AND OBLIGATIONS ASSOCIATED WITH PRESCRIBER ACCEPTANCE OF COMPENSATION FROM PHARMACEUTICAL MANUFACTURERS

 Final New Jersey Physician Regulation – rule only 12-22-17

Final Rule incorporating changes from proposed rule – unofficial version – eliminating the need to review the proposed rule in reading the rule.

Proposed Rule 10-2-17