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25 posts from November 2012

November 30, 2012

Massachusetts Pharmaceutical and Device Manufacture Code of Conduct: Final 2012 Revisions

Resturant Opening
In late September, the Massachusetts Public Health Council passed the first round for emergency regulations to amend the 2008 Pharmaceutical and Device Manufacturer Code of Conduct (PCOC), which came through legislation as part of the 2013 state budget.  The amendments allow companies to provide “modest meals” for healthcare providers for product education (non-CME) outside of the office or hospital setting.   

The council then held a public hearing on October 19, 2012, to hear testimony on the emergency regulations.  Approximately 100 people attended the hearing and 19 offered oral testimony.  There were seventy-seven (77) written submissions from organizations, individuals or groups of individuals.   

Consequently, on November 21, 2012, the Council approved the final amendments, which reflect changes following public comment on emergency regulations approved by the Council on September 19, 2012.  In a memo discussing the amendments, the Public Health Council summarized comments and responses based on several topics. The Boston Globe quoted several policy makers, physicians, and consumer groups who are frustrated with the changes. 

While many may still be concerned about the potential for conflicts or bias, these amendments reflect the tremendous outpouring from physicians, industry and related stakeholders who saw first hand the detrimental and stigmatic impact the regulations had on physician-industry collaboration and patient care.  The Massachusetts gift-ban and severe restrictions on physician-industry collaboration was misguided from the beginning, and the Massachusetts Legislature, and the Council correctly amended it to reflect the fact that modest meals do not sway or influence physicians.   

These meals are necessary only because physicians have no other time in their busy schedule of seeing patients and conducting research to receive this innovative education and information to stay up-to-date on the latest clinical data and breakthroughs.  Moreover, numerous studies have shown that such meals have no impact on physicians.  In fact, a recent survey of almost 24,000 US physicians found that 72% said a meal would not influence them

Why is it acceptable for politicians, lobbyists, and every other industry to conduct business over meals, but not the most time-constrained and highly regulated industry?  This double standard has, and always will be, unacceptable.  While abuses have occurred in the past, and are still possible, the proper authorities have the resources and skills designed to prosecute those companies and individuals who try to improperly use these events, but the overwhelming majority of educational seminars and events that include modest meals help patients and improve physician competency and clinical skills. 

Public Comment and Staff Response and Recommendations  

Provision of meals:  Chapter 111N originally prohibited the provision of meals to health care practitioners outside of a hospital or the practitioner’s office.  The legislature removed that prohibition, and chapter 111N now permits a pharmaceutical or medical device manufacturer to provide modest meals and refreshments outside of such a healthcare setting in connection with non-CME educational presentations for the purpose of educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information, provided that such presentations occur in a venue and manner conducive to informational communication.   

The emergency regulation defined “modest meals and refreshments” as “food and/or drinks provided by or paid for by a pharmaceutical or medical device manufacturing company or agent to a health care practitioner that, as judged by local standards, are similar to what a health care practitioner might purchase when dining at his or her own expense.”  The Council explained that “This definition is consistent with the definitions contained in industry codes of conduct and allows the manufacturers to adjust for regional or other variations in costs.”  As a result, the council made no change to this definition.  

The council explained its position by noting that Chapter 111N directs that the Department’s regulation be “no less restrictive than the most recent version of the Code on Interactions with Healthcare Professionals developed by the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Code on Interactions with Healthcare Professionals developed by the Advanced Medical Technology Association (AdvaMed).”  The Council asserted that “The definition as adopted is consistent with these codes, and also with the American Medical Association’s ethical guidelines.”   

In general, the regulated manufacturers, several medical associations and representatives of the Massachusetts hospitality industry supported the definition as fair and consistent with existing codes of conduct.  Consumer advocates and professional groups representing providers and medical students objected to the definition as vague and unenforceable.  Most recommended that the Department specify a particular dollar limit on meals, with many recommending that the Department base the dollar limits on per diem allowances for government employees.   

However, the Council maintained that “Imposing a specific dollar cap is a simplistic approach to a complex regulatory provision.”  The statutory change permits meals outside of physician office or hospital settings, i.e., in restaurants or other facilities with function rooms.  The per-person cost for the meal component of a presentation or group event is often more than the menu price of similar meals because the cost of the room and attendant amenities (audio-visual equipment, for example) may be included, as may be beverages, taxes and gratuities.   

In order to take into account variations in costs based on regional differences, number of participants, etc, the Department would have to establish a ceiling that was at such a high level so as to invite criticism that in many lower-cost areas or events, it would exceed any reasonable interpretation of “modest.”  Additionally, among any regulated group, a defined upper limit often as a practical matter becomes the average, and a figure high enough to account for regional variations could have the unintended consequence of encouraging additional spending beyond what would otherwise be considered modest.

The Council explained that Comparison to government employee “per diems” is not apt for a number of reasons.  When government employees travel on business, the travel allowance is intended to cover a personal meal, not a meal that is part of any seminar or conference event.  Also, the per diem amount does not limit the amount of the cost of a meal but rather limits the amount of reimbursement to the employee – the employee is free to spend additional amounts at his or her own cost.   

The Council clarified again that meals that were previously prohibited are now allowed to be provided and that “Past cases of noncompliance were related to impermissible activities, and not to disputes about the dollar value of reported payments.”  The Council said it was “confident that any complaints regarding provision of meals that do not meet the definition will be investigated.” 

Alcohol as part of modest meals.  Consumer advocates and groups representing medical students stated that alcohol should not be permissible as part of modest meals and refreshments because the provision of alcohol is inconsistent with providing meals for educational purposes and in appropriate venues. 

The Council recognized that the new statutory language is silent on the provision of alcoholic beverages, although the legislature chose the term “modest meals and refreshments” rather than simply “modest meals.”  As a practical matter, nearly every venue with function rooms or conference capacity serves alcoholic beverages, and “it would be unrealistic to expect either the host site or the manufacturer to police the contents of participants’ glasses.”  As such, the Council did not propose “any language around the provision of or payment for alcohol.” 

Expenses related to training.  Previously, chapter 111N and the regulation had permitted payment or reimbursement for expenses, including travel and lodging related expenses, necessary for technical training of health care practitioners on the use of a medical device if the commitment to provide such expenses, and the amounts or categories of reasonable expenses to be paid, were described in the written agreement between the health care practitioner and the device vendor for the purchase of the device.   

The 2012 changes to chapter 111N removed the requirement that the reimbursable expenses appear in the written contract.  Accordingly, the proposed amendment to 105 CMR 970.008(2)(b) removed this condition.  The Council recommended that the revised statutory language continue to be part of the amended regulation. 

Federal preemption of reporting requirements.  An additional component of chapter 111N required disclosure to the Department of payments by pharmaceutical and medical device manufacturers to covered recipients.  Federal provisions in the Affordable Care Act known as the Physician Payments Sunshine Act (“the Sunshine Act”) require manufacturers of drugs, biologics, devices and medical supplies covered under Medicare, Medicaid and the Children’s Health Insurance Program to report payments and other transfers of value made to physicians and teaching hospitals to the Centers for Medicare and Medicaid Services (“CMS”) for subsequent public disclosure.  The Sunshine Act also preempts any state law that requires the collection and reporting of the same type of data.   

Thus, current provisions in chapter 111N that require disclosures of certain payments by pharmaceutical and medical device manufacturers to certain covered recipients will be preempted once federal regulations are finalized and federal reporting goes into effect.  The Sunshine Act also provides that the federal Secretary of Health and Human Services will send reports of payments to each state.   

The 2012 changes to chapter 111N acknowledge the federal preemption and that the Department will receive the federal reports, and requires the Department to make all disclosed data in annual reports publicly available and easily searchable on its website not later than 90 days following the receipt from the Secretary. 

The emergency amendments had stated that manufacturers would no longer have to make any required annual disclosures after the federal preemption begins.  Additionally, the regulation stated that the Department would deem any manufacturer to have met any requirements regarding the quarterly disclosure of payments if that manufacturer complies with all federal reporting requirements and the federal Secretary subsequently sends the data to Massachusetts.  Many commenters objected to the Department’s treatment of the federal preemption on two grounds. 

First, the federal reporting requirements apply to payments to physicians and teaching hospitals, while the original Massachusetts requirements under c. 111N apply to all prescribers and health care providers.  Commenters want the Department to continue to collect data on payments to providers other than physicians and teaching hospitals, (primarily nurse practitioners and physician assistants) and payments by manufacturers who do not have to report under the federal law (e.g., for drugs and devices that are not reimbursable by federal insurance programs because they are strictly for cosmetic purposes and not covered by insurance).  However, reported payments to nurse practitioners and physician assistants represented 0.8% of the total reported payments for FY2010 and 0.7% of the reported payments for FY2011. 

Second, commenters wanted the Department to enforce the quarterly reporting inserted in c. 111N as a condition for the provision of modest meals, notwithstanding any federal preemption issues. 

Although the vast majority of reporting will be preempted by federal law, the Council recommended that the regulation be amended to require all annual reporting of information that is not reported pursuant to federal requirements.  The Council also recommended that the regulation require the quarterly reporting set forth in the statute, despite the fact that much of the information is of the type required to be reported under the Sunshine Act and therefore likely to be found to be preempted if challenged. 

Annual fee.  Previously, c. 111N had linked the fee that manufacturers must pay to the Department with the required disclosure.  The statutory change added authority for the fee to the section regarding the provision of modest meals and refreshments; the emergency amendment had separated the fee from the required disclosures, many of which will be preempted by federal law. 

The Council recommended that the current amount of the fee ($2000) be added to the new section where the fee now appears in order to make it more readily apparent that regulated companies must pay an annual fee with their registration with the Department. 

Venue and manner conducive to informational communication.  Consumer advocates urged the Department to define or otherwise regulate the places outside of the office or hospital setting where modest meals may be provided, by specifically prohibiting such meals at recreational sites like resorts, sporting clubs, casinos or other vacation destinations. 

The Council reiterated that “Meals (or any other types of gifts or payments) in connection with entertainment or recreation are already prohibited by both the statute and regulation.”  There are many examples of dual-purpose venues that provide conference services in addition to functioning as sites for recreation or entertainment.  Likewise, non-recreational sites can provide entertainment within their function rooms.  Accordingly, the Council said it was “confident that the current statutory and regulatory language provide limitations that prohibit inappropriate gifts or payments from being provided to practitioners.” 



970.006:        Provision of Meals


(1)  Pharmaceutical or medical device manufacturing companies and agents may provide or provide payment for modest meals to health care practitioners in the health care practitioner’s office or hospital setting in connection with informational or educational meetings or presentations.   

(2)  Pharmaceutical or medical device manufacturing companies and agents may provide or provide payment for modest meals and refreshments to health care practitioners outside of the health care practitioner’s office or hospital setting for the purpose of educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information, provided that such presentations occur in a venue and manner conducive to informational communication.  For the purposes of 105 CMR 970.006(3), “appropriate uses” may not include the promotion of off-label uses of prescription drugs or medical devices. 

(3)  No pharmaceutical or medical device manufacturing company may provide or provide payment for such meals and refreshments permitted under 105 CMR 970.006

(4) unless such pharmaceutical or medical device manufacturing company files quarterly reports detailing all non-CME educational presentations at which such meals or refreshments are provided.  Reports shall include:  

(a)  the location of the non-CME presentation;

(b)  a description of any pharmaceutical products, medical devices or other products discussed at such presentation; 

(c)  the total amount expended on such presentation; and  

(d)  an estimate of the amount expended per participant, factoring any meals, refreshments or other items of economic value provided at such presentation.


970.007:        CME, Third-Party Scientific or Educational Conferences, or Professional




(1)  No pharmaceutical or medical device manufacturing company that employs or contracts with a pharmaceutical or medical device manufacturer agent may provide: 

(a)  financial support for the costs of travel, lodging, or other personal expenses of non-faculty health care practitioners attending any CME event, third-party scientific or educational conference, or professional meetings, either directly to the individuals participating in the event or indirectly to the event’s sponsor. 

(b)  funding to compensate for the time spent by health care practitioners participating in any CME event, third-party scientific or educational conferences, or professional meetings;

(c)  payment for meals directly to a health care practitioner at any CME event, third-party scientific or educational conferences, or professional meetings, although a CME provider or conference or meeting organizer may, at its own discretion, apply any financial support provided by a pharmaceutical or medical device manufacturing company for the event to provide meals for all participants.

(d)  sponsorship or payment for CME, also known as independent medical education, that does not meet the Standards For Commercial Support as established by the Accreditation Council for Continuing Medical Education (ACCME) or equivalent commercial support standards of the relevant continuing education accrediting body, or that provides payment directly to a health care practitioner.   

(2)  A pharmaceutical manufacturing company shall separate its CME grant-making functions from its sales and marketing departments. 

(3)  A pharmaceutical manufacturing company shall not provide any advice or guidance to the CME provider regarding the content or faculty for a particular CME program funded by the company. 

(4)  Nothing in 105 CMR 970.000 shall prohibit:

(a)  compensation or reimbursement made to a health care practitioner serving as a speaker or providing actual and substantive services as a faculty organizer or academic program consultant for a CME event, third-party scientific or educational conference, or professional meeting, provided that the payment:

1.  is reasonable;

2.  is based on fair market value; and

3.  complies with the standards for commercial support as established by the relevant accreditation entity.

(b)  sponsorship or payment for any portion of a third-party scientific or educational conference, charitable conference or meeting, or professional meeting, where the payment is made directly to the conference or meeting organizers;   

(c)  the use of hotel facilities, convention center facilities or other special event venues for CME or other third-party scientific, educational or professional meetings or conferences.

November 29, 2012

Physician Payment Sunshine: Final Rule Sent from CMS to OMB for Final Review

Throwing a ball
According to the Office of Management and Budget Website the Physician Payment Sunshine Final Rule has been completed by the Centers for Medicare and Medicaid Services (CMS) and has been sent over to OMB for review.   The OMB review is conducted by the Office of Information and Regulatory Affairs (OIRA) and will look at the likely economic impact of the rule on the government and to industry.  Once the review is done, it may be sent back to CMS for changes or issued within 90 days.

The final rule has to be issued 90 days after receipt of the final rule by OMB which is Monday, February 25, 2013.  Typically, the review period at OMB is 30 days but given the number of rules in front of this regulation currently at the OMB, it could take slightly longer.

Earlier this fall the Senate Select Committee on Aging held a round table to encourage  CMS to complete the rule.  In addition, stakeholders including the American Medical Association, industry and consumer groups have recently sent letters asking for CMS to issue the rule in time to be implemented in 2013. 


RIN: 0938-AR33

TITLE: Transparency Reports and Reporting of Physician Ownership of Investment Interests (CMS-5060-F)

STAGE: Final Rule


RECEIVED DATE: 11/27/2012



 Thanks to King & Spalding for the link to the OMB website.


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