Recently the Vermont Legislature passed their “Prescription Drug Marketing Law” This law bans certain gifts and requires registration and financial disclosure by manufacturers of pharmaceuticals, biological products, and medical devices.
The Vermont Attorney General issued “Guide to Vermont’s Prescribed Products Law for Fiscal Year 20010 Disclosures.”
Parties whose practices will be affected include:
- Manufacturers of prescribed products, such as pharmaceuticals, biological products, and medical devices;
- Wholesale distributors of prescription drugs/biological products (but not wholesale distributors of medical devices), as well as pharmacists licensed under chapter 36 of Title 26; and
- An entire company that has multiple divisions, some of which market prescribed products to prescriber’s in Vermont
Companies that manufacture only non-prescribed products do not need to report (e.g. Medical oxygen, medical food products, and CT scanner).
Gift Ban—Effective July 1, 2009
The gift ban essentially covers anything of value given to a health care provider for free.
Examples of the provisions regarding gifts include:
- Any payment, food, entertainment, travel, subscription, advance, service or anything else of value provided to a health care provider unless the provider reimburses the cost at fair market value;
- The Vermont gift ban encompasses more than just those items prohibited by the PhRMA and AdvaMed Codes;
- Monetary donations from a manufacturer of prescribed products to a doctor or clinic, as well as charitable donations to a hospital;
- Fellowship for a residency program even if the company does not select the recipient; and
- Meals provided in a doctor’s office at which information on a drug is discussed, unless the office reimburses the pharmaceutical representative for the meals, as well as trips.
Gifts Allowed
- Free samples of prescribed products for distribution to patients, including humanitarian needs outside the United States;
- Rebates and discounts for prescribed products;
- Articles or journals and other educational items as long as they are peer-reviewed academic, scientific, or clinical articles or journals;
- Brochures for patients including a corporate logo, medical books or product information for physicians, models of human anatomy, other visual aids to be used with patients;
- Loan of a medical device for a trial period not to exceed 90 days, and returned to the device manufacturer (e.g. X-ray machine);
- Medical device demonstration or evaluation units (e.g. knee replacement or disposable devices for endometrial ablation);
- Scholarships or other support for medical students, residents, and fellows to attend a significant educational event; and
- Gifts to academic institutions and professional, educational, or patient organizations are not banned, but must be reported.
Under the new law, “allowable expenditures” not banned:
- Royalties and licensing fees paid to health care providers in return for contractual rights to use or purchase a patented discovery;
- Conference sponsorship as long as (1) the event is educational, (2) the payment is not made directly to a health care provider, (3) the funding is solely for educational purposes, and (4) all program content is free from industry control, and does not promote specific products.
- Honoraria and payment of the expenses of a health care professional if (1) the individual serves on the faculty at a educational, medical, scientific, or policy-making conference or seminar, (2) there is an explicit contract with specific deliverables which are restricted to medical issues, not marketing activities, and (3) the content of the presentation, including slides and written materials, is determined by the health care professional.
- Technical training on medical devices expenses for individual health care professionals as long as the expenses are reasonable, including food, travel and lodging-related expenses. Costs of setting up and providing training on a medical device need not be reported.
- Bona fide clinical trial expenses of gross compensation for the Vermont location(s) involved, direct salary per principal investigator and other professionals per year, and expenses paid on behalf of investigators or other health care professionals paid to review the clinical trial.
- Research project expenses that are limited to (1) gross compensation, (2) direct salary support per health care professional, and (3) expenses paid on behalf of each health care professional.
Other reasonable fees, payments, subsidies, or other economic benefits provided by a manufacturer of prescribed products at fair market value include:
- Expenses for advisory or product development meetings, as long as the payment for the work is at fair market value (including food).
- Payment to a physician to present information to other physicians, even without CME accreditation, if no food is provided.
- A “clinical trial” which is not FDA-approved is an allowable expense if it meets the requirements of a “research project,” or may be an allowable expense if it is a payment for fair market value.
Reporting
No later than July 1, 2010, each manufacturer of prescribed products (including wholesale distributors of medical devices) must disclose to the Vermont Office of the Attorney General the name and address of the person responsible for the company’s compliance with the law. Any company with expenditures to report in FY10 must also pay a $500 registration fee by July 1, 2010.
No later than October 1, 2010, each manufacturer of prescribed products (including wholesale distributors of medical devices) with expenditures to report must disclose marketing expenditures during the 12-month period ending June 30, 2010 for pharmaceuticals, or during the 6-month period ending June 30, 2010 for biological products or medical devices.
What Gets Reported
The “value, nature, and purpose, and recipient information” of most permitted gifts or allowable expenditures to a provider must be disclosed as well as the prescribed product(s) being marketed, if any. Any expense to an active Vermont
prescriber or institution covered by the law which is not exempt must be reported.
- For loans of medical devices, no monetary value of the loan need be reported, but the fact of the loan must be reported.
- For gifts that are not banned but are of a fair market value below $25, the manufacturer may elect to report the expenditures in the aggregate.
- For items that are not customarily sold (e.g. brochures), the value is the manufacturer’s cost of production.
- For items that are produced for national use, the value is the portion of the manufacturer’s cost attributable to Vermont.
- The value of a permitted gift/allowable expenditure provided to multiple prescribers must be allocated among the relevant prescribers.
- If more than five prescribed products are reported, the company must list the five prescribed products most relevant to the expenditure.
- Expenditures for a prescriber with an active Vermont icense must be reported, whether or not the expense is incurred in Vermont
- Only expenditures on prescribers with active Vermont icenses need be reported. Other Considerations Confidentiality provisions: If a clinical trial contract entered into before July 1, 2009, contains confidentiality provisions protecting the identity of or amount of any expenditure to a recipient, the names and amounts must be reported but will be kept confidential by the Attorney General’s Office. Delayed disclosure/Minimum information: Expenditures for bona fide clinical trials must be disclosed after the earlier of the date of the approval or clearance of the prescribed product by the FDA or two calendar years after the date the payment was made, except that for a clinical trial for which disclosure is delayed. The minimum information to report is: the name of the clinical trial, the start date, and the web link to the clinical trial registration on the national registry. Beginning October 1, 2010, information regarding all ongoing clinical trials must be reported, providing the minimum information if the trial is less than two calendar years old and the FDA has not approved or cleared the prescribed product, and otherwise providing complete information on the expenditures for the trial since July 1, 2009, for pharmaceutical manufacturers, or since January 1, 2010, for manufacturers of biological products or medical devices. Expenditures made prior to those dates need not be reported.
Any contract for a clinical trial entered into on or after July 1, 2009, must not contain a confidentiality clause that would violate Vermont s disclosure law. After July 1, 2009, manufacturers may no longer designate any of the disclosed information as “trade secret.” Unrestricted grants for CME must be disclosed but disclosure is limited to the value, nature, and purpose of the grant and the name of the grantee; the names of the individual participants in such a program need not be disclosed. The costs of maintaining a table at a conference or seminar which is not limited to Vermont prescribers or institutions need not be reported. Public Information The Vermont Attorney General must file an annual report with the Vermont legislature and the Governor by April 1, 2011. After the report is issued, the all disclosed data will be publicly available and searchable on an internet website. Consequently, although information designated in previous years’ disclosures as trade secret will be kept confidential, data received for FY10, covering expenditures made between July 1, 2009, and June 30, 2010, will be release to the public after the FY10 report is issued. Penalties The Vermont Attorney General may bring a civil suit in Washington Superior Court for injunctive relief, costs, and attorney’s fees for any violation. In addition, a company that fails to comply with the gift ban or fails to disclose under the law may be assessed a civil penalty of not more than $10,000 per violation. Each individual violation constitutes a separate violation. The guide which is an evolving document (seems like they have issued version every week or so, and they don’t return emails) is worth reviewing if your company is doing business in the state of Vermont or you are a Vermont healthcare provider. State of Vermont Attorney General FY10_Pharmaceutical_Marketing_Disclosure_Law_Guide.6.29.09 State Legislature Prescription Drug Marketing Law
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