Life Science Compliance Update

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June 16, 2017

California "Gift" Ban Bill Amended to Drop Fines and Requires Accreditation for Education Events

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California has not been known to be the most “business friendly” state in the union in recent history. We recently wrote about legislation passed in the California state senate that was intended to restrict pharmaceutical companies from giving gifts and incentives to medical professionals. The bill prohibits drug manufacturers from offering or giving a gift to a health care provider.

The bill also prohibits a manufacturer or an entity on behalf of a manufacturer from providing a fee, payment, subsidy, or other economic benefit to a health care provider in connection with the provider’s participation in research. Exempts the annual direct salary support for principal investigators and other health care professionals for the purposes of a bona fide clinical trial from this provision.

The Bill was amended in the California assembly on June 13, 2017, to remove the penalty provisions. The bill passed in the assembly does not allow the Attorney General to bring an action seeking injunction relief, costs, attorney fees and a civil penalty up to $10,000 for each violation of the law, nor does it allow the Attorney General to

investigate and obtain remedies as are granted to the Director of Consumer Affairs pursuant to Chapter 4 (commencing with Section 300) of Division 1 of the Business and Professions Code.

Additionally, as those provisions were dropped, the amended legislation would ban doctors from participating as faculty or speakers in events that are not accredited by the Accreditation Council for Continuing Medical Education (ACCME) – or a comparable organization.

The legislation, as written, specifically lists monetary benefits that shall be excluded from the prohibition, and therefore, considered to be permitted notwithstanding the passage of this bill. Some of those include:

  • Samples of a prescribed product or reasonable quantities of an over-the-counter drug, an item of medical food as defined in Section 360ee of Title 21 of the United States Code, or infant formula as defined in Section 321 of Title 21 of the United States Code, that are provided to a health care provider for free distribution to patients.
  • The provision, distribution, dissemination, or receipt of peer-reviewed academic, scientific, or clinical articles or journals and other items that serve a genuine educational function provided to a health care provider for the benefit of patients.
  • Scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policymaking conference or seminar of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association.
  • Rebates and discounts for prescribed products provided in the normal course of business.
  • Labels approved by the federal Food and Drug Administration for prescribed products.
  • The provision to a free clinic of financial donations or of free prescription drugs, over-the-counter drugs, biological products, combination products, medical food, or infant formula.
  • Prescribed products distributed free of charge or at a discounted price pursuant to a manufacturer-sponsored or manufactured-funded patient assistance program.
  • Fellowship salary support provided to fellows through grants for manufacturers of prescribed products, provided that all of the following conditions are satisfied:

(1) The grants are applied for by an academic institution or hospital.

(2) The institution or hospital selects the recipient fellows.

(3) The manufacturer imposes no further demands or limits on the institution’s, hospital’s, or fellow’s use of the funds.

(4) Fellowships are not named for a manufacturer and no individual recipient’s fellowship is attributed to a particular manufacturer of prescribed products.

Industry Reaction

The Biotechnology Innovation Organization (BIO) states that their member companies know the importance of basing relationships with health care practitioners on high standards of ethics and professional conduct, which is why they strictly adhere to federal statutes, regulations, and internal policies already in place. BIO is concerned that this bill could encumber important interactions between biopharmaceutical manufacturers and health care practitioners.

The Pharmaceutical Research and Manufacturers of America (PhRMA) writes that this bill is unnecessary because current law already addresses interactions between health care practitioners and drug manufacturers, public disclosures are already required, and they know of no problem that has surfaced recently which would give rise to more legislation in this area.

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