Life Science Compliance Update

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April 18, 2012

Physician Payment Sunshine: Vermont Prescribed Products Gift Ban and Disclosure Law 9th Report - Shows Increase in Payments to Vermont HCP’s

Vermont Physicians
Vermont’s Prescribed Products Gift Ban and Disclosure law bans most gifts to Vermont health care providers and requires manufacturers of prescribed products - including pharmaceuticals, biological products and medical devices - to disclose expenditures deemed appropriate by the legislature—similar to Physician Payment Sunshine Act (only stricter).  Consequently, Vermont recently released its ninth report on such payments for fiscal year 2011. 

Vermont’s Prescribed Product Disclosure Law, 18 V.S.A. §§ 4631a, 4632, requires manufacturers to file these disclosures with the Vermont Attorney General’s Office by October 1, 2011, and requires the Vermont Attorney General to issue a report about the disclosures by April 1, 2012.  

Like the FY10 Report, this report reflects the substantial amendments made to Vermont’s law in 2009.  Among other changes, the amendments largely prohibit manufacturers from giving gifts to health care providers and require reporting by manufacturers of biologics and medical devices as well as reporting by pharmaceutical manufacturers, which has been mandated since 2002.  The amendments also require clinical trial and research expenditures to be reported.  Further, the amendments eliminated the trade secrets exemption to public disclosure. 

The expanded definition of manufacturer and the new requirement that clinical trial and research expenditures be reported, means that the FY10 and FY11 reporting captures a wider range of the dollars spent on health care than in prior years.  Thus, comparison with prior years’ exclusively pharmaceutical and exclusively marketing-related data is difficult.  Moreover, both the ban on gifts and the elimination of trade secret protection may have caused manufacturers to decrease the amount of money they spent on marketing products to Vermont health care providers. Notably, the ban includes food, which accounted for over 27% of FY08. 

The report, released in late March, is based on disclosures for the fiscal year July 1, 2010, through June 30, 2011 (FY11). Starting in April, 2012, the law also requires manufacturers to disclose the distribution of free samples and of vouchers and co-pay cards that enable an individual to receive a prescription product for free or at a discount. A report on those expenditures will be published in the fall. 

In the twelve months before July 1, 2011, 154 manufacturers of pharmaceuticals, biologics, and medical devices spent approximately $5.6 million in direct payments to Vermont doctors, hospitals, universities and others.  That figure represents an overall spending increase of 17% from the $4.8 million reported the previous fiscal year.

excluding payments made on clinical trials and research puts FY11 expenditures at approximately 2.2 million dollars, a figure at the low end of prior reported levels of pharmaceutical marketing expenditures, which ranged from approximately 1.8 million dollars in FY10 to roughly 4 million dollars in FY04. 

Expenditures on pharmaceutical products accounted for approximately 4 million of the 5.6 million dollar total, and were made by 64 manufacturers.  Thus, 42% of the manufacturers accounted for 70% of expenditures.  Expenditures for pharmaceuticals also dominated the percent of total dollars reported (77% as compared with 20% for medical devices and 3% for biologics).  However, more than half of the total number of expenditures were for medical devices (53% as compared with 43% for pharmaceuticals and 4% for biologics). 

Only 14 manufacturers had expenditures greater than $100,000, and 116 manufacturers had expenditures of less than $20,000. The maximum single expenditure was $400,000, with the next highest at approximately $130,000 and $100,000.  In particular, the amount spent on pharmaceutical marketing ($2.2 million) is about 22% higher than the $1.8 million reported in the previous fiscal year.  In FY11, 

  • Approximately 42% of the $5.6 million in expenditures were for clinical trials and research.
  • Doctors received 23% of the expenditures,
  • 12% went to professional, educational, or patient organizations
  • 5% to academic institutions; and
  • 12% of the expenditures went to all health care providers combined for educational materials. 

Approximately $676,000 of FY11 expenditures took the form of educational materials. This represents a 26% increase from the FY10 level of $535,000. However, as a proportion of total expenditures, educational materials rose only slightly from 11% in FY10 to 12% in FY11. 

Providers receiving $3,000 or more rose from 44 in FY10 to 56 in FY11, a total increase of approximately 27%. The total dollars received by this group rose from approximately $740,000 to over 1.3 million. 

In FY11, nurses (Registered Nurses and Advance Practice Registered Nurses) who received $3,000 or more each received a total of roughly $57,000, a slight (8%) increase from the FY10 level of $53,000. Expenditures to Advance Practice Registered Nurses who received $3,000 or more rose approximately 35% from about $32,000 in FY10 to about $43,000 in FY11, while expenditures to Registered Nurses receiving $3,000 or more dropped 34% from approximately $21,000 in FY10 to nearly $14,000 in FY11. 

Of the 50 products with the greatest expenditures (over $28,000), drugs for treating Type 2 or Type 1 & 2 diabetes garnered the greatest amount of expenditures, as they had in FY10.  Multiple sclerosis was the second highest indication.  Expenditures for both indications were up significantly from last year. 

Of the 50 products associated with over $28,000 in expenditures in FY11, 74% were pharmaceutical products, 24% were medical devices, and 2% were biologics. The ten products with the highest expenditures were all pharmaceutical products, and accounted for about one-third of overall spending.

The five manufacturers with the highest total expenditures to Vermont health care providers, institutions and organizations during FY11 were: 

  • Abbot Laboratories
  • Novartis Pharmaceuticals
  • GlaxoSmithKline
  • Eli Lilly
  • Medtronic  

Of these, Eli Lilly was in the top five manufacturers for all four of the previous fiscal years, Novartis Pharmaceuticals for three of the last four fiscal years, and GlaxoSmithKline for two of the prior three fiscal years. Abbot Laboratories and Medtronic appear in the top five for the first time in FY11, and also represent the first manufacturers ranked in the top five to have reported expenditures other than solely pharmaceutical expenditures. 

The percentage of payments reported by the top five manufacturers, as compared with the total amount of expenditures reported, continued to drop in FY11 to 39%. In FY09 and FY10, the top five manufacturers were responsible for 47% of total expenditures, which represented a decrease from prior levels of 52% (FY08) and 56% (FY07).

 

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