Life Science Compliance Update

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September 06, 2017

New Jersey Governor Christie Introduces Regulation to Cap Physician-Pharma Relationships


In the last days of his administration, New Jersey Governor Chris Christie has introduced a regulation to cap the amount physicians can earn from drug companies – an already rule-laden area – to $10,000 per year.

The Regulation

In addition to the $10,000 per year cap on any earnings from pharma to physicians, prescription writers are prohibited from accepting certain gifts, such as entertainment and lavish meals (an exception is carved out for four meals a year under $15). The $10,000 cap excludes compensation for speaking at continuing education events.

The new regulations detail the different kinds of services – such as speaking at promotional events and consulting arrangements – physicians and other prescription writers can perform for drug companies. According to Christie’s office, all such agreements and payments would have to be in writing.

According to the press release, summarized by Nicodemo Fiorentino, G&M Health LLC the bill proposes to do the following:

  • Prohibit prescribers from accepting (1) cash, (2) gift cards, (3) entertainment, (4) recreational items, (5) items for the prescriber’s personal use, and (6) payments supporting non-faculty attendance at promotional activities and continuing education events;
  • Establish exemptions if the items of value (includes the prohibitions) are for the benefit of patients or prescriber education (e.g., educational materials);
  • Set standards for agreements for “bona fide services” (i.e., (1) speaking at promotional activities and continuing education events, (2) participation in advisory boards, and (3) consulting arrangements);
  • To require “bona fide service” agreements to be in writing, with dollar amounts and an “articulation” of the prescriber’s expertise;
  • To cap compensation for “bona fide service” arrangements from all manufacturers at $10,000 every calendar year; and
  • To allow and define the value (not to exceed $15 for each provider) and frequency (4 times each from each manufacturer) of “modest” meals.

The regulation follows a 2016 Centers for Medicare and Medicaid Services (CMS) open payments report in that showed pharmaceutical companies paid out $69 million to physicians in New Jersey – with two-thirds of that cash going to 300 physicians alone. Thirty-nine physicians received at least $200,000 in New Jersey according to the press release.  The report outlines how Insys the manufacturer of Subsys a Fentanyl spray spent the most money over 3 years of all the opioid manufacturers, but that payments by opioid manufacturers dropped significantly between 2015 and 2016.

Presidential Commission on Opioids

It’s also important to remember that Governor Christie is the Chair of President Donald Trump’s Commission on Combating Drug Addiction and the Opioid Crisis, which recently persuaded President Trump to declare the opioid crisis a national emergency.

This is the First of its Kind

While many other states have started to implement regulations with respect to the way physicians and medical and device companies interact, New Jersey is the first state to propose capping physician incomes and applying the regulations not to pharmaceutical companies but to the physicians themselves. Other states, such as Massachusetts, Maine, Vermont, and Minnesota, all have varying restrictions on practitioner relationships with industry, but none of them restrict income. Instead, Massachusetts established a code of conduct that prohibits certain types of payments and interactions between pharmaceutical and medical device companies and Massachusetts health care practitioners, as well as a disclosure requirement. Maine also restricts pharmaceutical and medical device manufacturers and wholesalers from providing gifts to practitioners.

Vermont bans most gifts and requires manufacturers of prescribed products to register with the Attorney General’s Office and disclose the allowable expenditures made and permitted gifts given to Vermont Health Care Providers and other recipients. The law also requires manufacturers to disclose the distribution of samples to Vermont providers, including starter packs, coupons, and vouchers that allow an individual to receive a prescribed product for free or at a discounted price.

Minnesota, one of the earliest states to prohibit certain payments, limits the amount of gifts manufacturers and wholesalers can give to practitioners, but the gifts must not exceed an annual limit of $50 in retail value. There are several items carved out and not considered gifts, including samples, sponsorship for medical conferences or professional meetings, honoraria and other reasonable expenses for practitioners who serve as faculty at professional or educational conference/meeting, consulting services, educational materials, and salaries or other benefits paid to employees.

Other states have recently implemented similar laws, summaries of which can be found here.

Statements by New Jersey Officials

Christie said the rule addresses concerns about whether treatment is being influenced by industry, “While the vast majority of doctors care for their patients honorably and professionally, their education about many of the drugs they are prescribing comes too often from pharmaceutical sales people, who may not always provide an objective analysis of the human and social impacts the drugs may have,” said Christie in a statement. “This rule will help us address any concerns about whether treatment decisions of prescribers are being improperly influenced.”

“Doctors who prescribe medicine should be motivated only by what is best for their patients, and never by financial incentives heaped on them by the pharmaceutical industry,” Attorney General Chris Porrino said. "The rule will prohibit doctors from forming unsavory financial relationships with drug companies that manufacture highly addictive opioids. It also gives our professional boards enforceable standards to hold doctors accountable if they violate that rule."

State Sen. Joseph Vitale, D-Middlesex, said the proposal was a step in the right direction, but said $10,000 was still too high. "$10,000 is still a lot of money," Vitale said. "Why not limit it to $100 or $200?"

However, Vitale noted that he would like to see the proposal pass through the legislature for debate – something that many in Christie’s political party harped on about the Obama Administration’s implementation of the Affordable Care Act. As we have seen time and time again, many politicians can argue either side of the coin, depending on who is in charge.

Public Hearing

The new regulation which was submitted last week to the Office of Administrative law and will be published on October 2, 2017,  in the New Jersey Register must undergo a public hearing before it is implemented, but that doesn’t necessarily mean that changes will be made. The public hearing is expected to be held on October 19, 2017, in the Monmouth Room at the Division of Consumer Affairs in Newark.

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I think Pharma ought to take all of it's employees out of this state. Mr. Christie has failed at leading this state and this proposal exemplifies how he needs to hang his hat on something before he leaves office. We are so regulated now that he is looking to put more taxpaying Citizens out on unemployment. I have provided thousands of patients with free medicine for 39 years. My company has been extremely generous.

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