Life Science Compliance Update

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October 23, 2017

New Jersey "Gift" Ban Next Step - Public Hearing on Limitations on and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers


Pictured from left to right: Sharon M. Joyce, Acting Director, Division of Consumer Affairs; Christopher S. Porrino, Attorney General of New Jersey; Maryann Sheehan, Director of Legislative and Regulatory Affairs, Division of Consumer Affairs; Rachel D. Glasgow, Regulatory Analyst

“It is our intent to move forward with these rules.” Attorney General, Christopher S. Porrino

Last Wednesday, the New Jersey Office of Attorney General, Division of Consumer Affairs, Department of Law and Public Safety, held a public hearing regarding the state’s proposed regulation, “Limitations on and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers.” Our colleague, Nicodemo Fiorentino, Manager, Research & Compliance, G&M Health, LLC, contributed the following update for our readers.

The proposed regulation significantly curtails the industry’s interactions with licensed prescribers (physicians, podiatrists, physician assistants, advanced practice nurses, dentists, and optometrists) in two key areas: (1) Defining the value ($15) and frequency (four times each year) of “modest” meals per physician; and (2) Capping “bona fide services” (i.e., speaker fees, participation on advisory boards, and consulting arrangements, but excludes speaking at continuing education events) at $10,000 per year per healthcare provider.

The NJ Attorney General, Christopher S. Porrino, opened the hearing discussing the opioid epidemic and segued into the “genesis of the proposed rule.” First, AG Porrino mentioned the recent publication of the 2016 Open Payments data and how the “top 300 of the 30,000 NJ doctors listed received two-thirds of $69 million in the median amount of $62,500.” AG Porrino then singled out how 39 doctors were paid at least $200,000 in 2016. Further, in reviewing New Jersey’s Open Payments data, he broke down the figures as follows: General Payments: $50,514,208.02; Research: $961,140.62; and Ownership Payments (value of interest): $19,835,028.

This is another example of Open Payments data being used against the industry and the fact that we continue to see this happen over and over again brings us to highly recommend that companies scrutinize the data prior it being submitted to the government, especially since inaccuracies can create the false impression of impropriety or as in here, being used to vilify the industry.

However, AG Porrino cautioned that “this [regulation] is not about and has never been about vilifying the medical profession or the pharmaceutical industry.” He turned toward stating how “pharmaceutical marketing practices, paying for consulting arrangements, speaking engagements, food, beverage, and travel are all appropriately being scrutinized.” Essentially, these payments are inappropriately influencing the independent-decision making of physicians. He pointed to an “extreme example”: the October 5 announcement of the state’s lawsuit against Insys Therapeutics, Inc. for its alleged “greed-driven scheme.” Next, he announced that on the day of the public hearing, the state was moving to revoke the license of a Warren County doctor, Kenneth P. Sun, who allegedly received kickbacks from Insys to prescribe its fentanyl product, Subsys.

AG Porrino made it known that “these cases just didn’t fall out of the sky and into their laps” and reminded attendees that the Office of Attorney General warned the public about the dangers of using Subsys off-label in October 2016.

AG Porrino state while this was indeed an “extreme example,” the Attorney General’s research has found that “even small gifts and payments can affect prescribing patterns.” He then provided a word of caution to the rest of the industry: his office is currently investigating other companies and individuals. He assured his audience that “there will be more cases against doctors and more cases against pharmaceutical companies.” AG Porrino explained that the state will “continue to fight to make sure that these drugs are used properly, that prescribing decisions are based on what is in the best interest of the patient, and nothing else.”

AG Porrino also mentioned the way other states already limit marketing practices and suggested that the New Jersey legislature may want to consider additional measures. Importantly, AG Porrino stated he had “existing authority over prescribers.” Thus, this regulation is about ensuring “patient care is guided by the unbiased, best-judgment of the treating prescribers.”

AG Porrino moved toward opening the floor for public comment and suggested “we are here to listen” and that there may be “certain unintended consequences” of the regulation that could lead to revision. Though revision is possible, AG Porrino made clear that the regulation was not going anywhere – stating quite clearly, “It is our intent to move forward with these rules. . . . A legislative initiative might be complicated, might take time, and I don’t believe we have the luxury of spending more time on this without taking action.”

The public hearing was short with only thirteen speakers, including members from industry trade groups such as PhRMA, BIO, BioNJ, Association of Clinical Research Organizations, Coalition for Healthcare Communication, HealthCare Institute of New Jersey, and The Insights Corporation. Physicians were represented either individually or by professional organizations such as the New Jersey Society of lnterventional Pain Physicians, New Jersey Association of Osteopathic Physicians and Surgeons, Rutgers Biomedical & Health Sciences, and Medical Society of New Jersey.

Most of the speakers spoke of the “unintended consequences,” especially the “chilling effects” of the proposed definition for “bona fide services” and broad prohibition against “accept[ing], directly or indirectly, any financial benefit or benefit-in-kind, including, but not limited to, gifts, payments, stock, stock options, grants, scholarships, subsidies, and charitable contributions . . . from any pharmaceutical manufacturer or manufacturer's agent.” Currently, the term, “bona fide services,” is defined to mean “those services provided by a prescriber pursuant to an arrangement formalized in a written agreement including, but not limited to, presentations as speakers at promotional activities and continuing educational events, participation on advisory boards, and consulting arrangements.” Taken together, payments or other transfers of value related to research and clinical trial related spend would likely fall within the proposed prohibition or $10,000 cap.

Some members also expressed their opinion that the proposal “impedes meaningful interactions” between the industry and prescribers, an appeal for additional exemptions (double-blind market research, a national conference or large gathering exemption for meals and beverage, royalties and ownership interests, and how the $15 cap nearly eliminates meetings in “high cost New Jersey.”

Considering the amount of comments related to spending concerning research and clinical trials, the Office of the Attorney General is likely to clarify those provisions. The comments that were offered with respect to the “modest” meals provision do not seem convincing enough, especially since no one offered an alternative (e.g., price capped at $25 per meal, frequency limited to six). Additionally, the submission of written comments will need to better detail why the $10,000 cap on “bona fide services” is too low and offer a reasonable alternative. After all, these proposed regulations are here to stay in some capacity or another.

Moving into 2018 and beyond, as an industry, it is likely that we will face an even bigger battle against the states. None of the issues that are driving public discussion are going away. If anything, the noise against the industry is getting louder.

Companies and individuals are highly encouraged to submit written comments by December 1, 2017, to:
   Maryann Sheehan, Director, Legislative and Regulatory Affairs
   Division of Consumer Affairs
   124 Halsey Street, 7th Floor
   PO Box 45027
   Newark, New Jersey 07101
   or electronically at:

List of Speakers (in order of appearance)

1. Andy Kaufman

New Jersey Society of lnterventional Pain Physicians

2. Kristina M. Moorhead, MPA

Senior Director, State Advocacy

Pharmaceutical Research and Manufacturers of America (PhRMA)

3. Andrew N de la Torre MD FACS
Liver, Pancreas and Biliary Surgery

St Joseph's Medical Center

4. Otto Sabando

New Jersey Association of Osteopathic Physicians and Surgeons

5. Dean Paranicas

President and CEO

HealthCare Institute of New Jersey (HINJ)

6. Patrick Plues

Vice President, State Government Affairs

The Biotechnology Innovation Organization (BIO)

7. Howard Fienberg

Director of Government Affairs

The Insights Association

8. Debbie Hart

President and CEO


9. Larry Downs, Esq.


Medical Society of New Jersey

10. John Kamp

Executive Director

Coalition for Healthcare Communication

11. Steven Andreassen, Esq.

Chief of Staff

Rutgers Biomedical & Health Sciences

12. Douglas Peddicord, Ph.D.

Executive Director

Association of Clinical Research Organizations (ACRO)

13. Beverly Wong

MD Candidate, Class of 2018

Rutgers Robert Wood Johnson Medical School

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