Life Science Compliance Update

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February 25, 2015

Physician Payments Sunshine Act: Vermont Gift Ban and Disclosure Law Update

Vermont

In the last few months, Vermont’s Attorney General's Office has been busier than usual regarding its Prescribed Product Gift Ban and Disclosure Law. On February 2, 2015, the AG posted an enforcement action against LifeNet Health for failure to submit disclosure reports over a number of years. This was the first disclosure-related settlement in almost a year. In December 2014, Vermont put out its Guide to Vermont’s Prescribed Gift Ban and Disclosure Law for 2015 Disclosures. This guidance is virtually identical to the previous Guide for 2014 payments. In October of last year, Vermont published its 2013 Prescribed Products Disclosure Report, covering payments from January 1 – December 31, 2013. This report outlines the number of samples and expenditures, listed by manufacturer.

2014 Reports Due April 1, 2015

As a reminder, 2014 disclosures for expenditures and samples from January 1 – December 31, 2014 are due by April 1, 2015, using the following documents:  2014 Expenditures Disclosure Form and 2014 Samples Disclosure Form

Vermont’s Prescribed Products Gift Ban and Disclosure Law

As a background, Vermont law bans most gifts and requires manufacturers of prescribed products, including pharmaceuticals, biological products, and medical devices, to “disclose allowable expenditures and permitted gifts given to Vermont healthcare providers.” Vermont law also requires manufacturers to disclose the distribution of samples of prescribed products to Vermont HCPs. Under Vermont law, a “sample” includes starter packs, coupons, and vouchers that enable an individual to receive a prescribed product free of charge or at a discounted price.

Starting on page 6 of this document, Vermont walks through a variety of transactions that are banned or, if they are allowed, then if those transactions must be reported. 

With the advent of Federal Sunshine Act reporting, some of Vermont’s disclosure requirements became preempted. The Attorney General’s Office notes that “while the gift ban and samples reporting are not affected, Vermont may not require manufacturers to disclose those allowable expenditures and permitted gifts which are required to be reported to the federal government.” Manufacturers may choose to disclose this information to Vermont if they want to. 

However, Vermont states that “[t]he federal law is narrower than Vermont’s law in several ways...for example, only physicians and teaching hospitals are covered recipients under the federal law.” Vermont includes in its definition of "covered recipient"  professional, educational, and patient organizations and anyone who "is authorized by law to prescribe or recommend prescribed products (such as a licensed clinical social worker or a licensed psychologist)." 

Vermont Enforcement

Vermont’s Prescribed Product Gift Ban and Disclosure Law requires the Attorney General to include in its annual report “[i]nformation on violations and enforcement actions” brought pursuant to the statute’s enforcement provision.” According to the most recent report, “[d]uring 2012 and 2013, the Attorney General conducted dozens of investigations into potential violations of both the gift ban and the disclosure law. To date, the Attorney General has entered into 28 settlements resulting in payments to the state of $102,500.00, and one payment of $35,000 to Vermont’s Head Start Tooth Tutor Program.”  

Earlier this month, the AG added to this total by settling with LifeNet Health. According to the “Assurance of Discontinuance," LifeNet Health reported to Vermont on January 15, 2014 that it may have given allowable expenditures and/or permitted gifts to Vermont healthcare professionals from 2010-2012, but failed to submit required reports with the Vermont AG for those years.  LifeNet Health agreed to comply with the Disclosure Law going forward and pay $7,750 for missing their payment reports.

This seemingly unprovoked self-disclosure by LifeNet makes it unclear how proactive Vermont has been in its enforcement, and follows the majority of Vermont actions that focus on manufacturers who have simply failed to file the necessary reports. 

A noteworthy exception to this trend was the Assurance of Discontinuance between Vermont and Novartis, which charged Novartis $36,000 because of six meals (totaling $194) that violated the state's gift ban.

View the list of now 29 enforcement actions by Vermont's AG

2013 Disclosure Reports Published

In October of 2014, Vermont published its 2013 Prescribed Products Disclosure Report, covering payments from January 1 – December 31, 2013. This is Vermont's twelfth such report, and is the first since implementation of the Sunshine Act. While some of Vermont's disclosures are preempted by the federal law, as noted above, many transactions are exclusively reportable in Vermont. 

The report outlines the number of samples and expenditures listed by manufacturer. Vermont summarized their results:

The disclosures for 2013 reveal that 169 manufacturers reported distributing 53,500 samples and spending approximately 9.8 million dollars [ ] with Vermont health care providers, institutions and organizations...Although more than a quarter of manufacturers indicated that for 2013 they would not report expenditures to physicians and teaching hospitals that were going to be reported to the federal government under the ACA, expenditure reports in 2013 were more than two million dollars above expenditures to all health care providers in 2012... Only 5 manufacturers distributed 3,000 or more samples, and 108 manufacturers disclosed no sample activity at all.

Here are the top 25 manufacturers, listed in order by number of samples. AstraZeneca's Crestor, Nexium, and Symbicort were all in the top 5 of products with the greatest number of samples. 

Top 25 manufacturers VT

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We will continue to provide state and Federal transparency updates going forward. 

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