Life Science Compliance Update

June 26, 2015

Massachusetts Governor Orders Review of All State Regulations; Opportunity For Healthcare Industry Comment

Mass government

Earlier this year, the Governor of Massachusetts, Charles Baker, signed an executive order initiating a “comprehensive review’ for all regulations enforced by the Executive Department. Only those regulations which are mandated by law or essential to the health, safety, environment, or welfare of the Commonwealth’s residents will be retained or modified, the order states. The measure is aimed at reducing “burdensome regulations to increase efficiency and competitiveness.”

To meet the standard set forth in the order, agencies must show:

  1. There is a clearly identified need for governmental intervention that is best addressed by the Agency and not another Agency or governmental body;
  2. The costs of the regulation do not exceed the benefits that would result from the regulation;
  3. The regulation does not exceed federal requirements or duplicate local requirements;
  4. Less restrictive and intrusive alternatives have been considered and found less desirable based on a sound evaluation of the alternatives;
  5. The regulation does not unduly and adversely affect Massachusetts citizens and customers of the Commonwealth, or the competitive environment in Massachusetts;
  6. The Agency has established a process and a schedule for measuring the effectiveness of the regulation; and
  7. The regulation is time-limited or provides for regular review.

Perhaps most notably is the prong that the regulation not “exceed federal requirements."  This is an important announcement for life sciences companies—Massachusetts has long been one of the more complicated and challenging states to do business in based on several regulatory requirements that require time and resources above and beyond an already complex legal landscape. For example, Massachusetts instituted a physician payment disclosure law before the Federal Physician Payments Sunshine Act requirements set in during 2013.  While the Federal law preempts much of the Massachusetts measure, the state’s law includes more expansive definitions as to who constitutes a “covered recipient,” requiring additional resources and fees to comply.  

Furthermore, the state’s Pharmaceutical and Medical Device Manufacturer Code of Conduct is largely parallel to the PhRMA and AdvaMed codes that the respective industries follow.

“[C]onfusing, unnecessary, inconsistent and redundant government regulations inconvenience individuals, encumber cities and towns, stress resources of non-profit organizations, including our health care and educational institutions, inhibit business growth and the creation of jobs, and place Massachusetts for profit enterprises at a competitive disadvantage relative to their out-of-state and foreign competitors,” states the Order. In its assessment of the announcement the National Review noted:

For the citizens and businesses of Massachusetts, where state agencies have a long history of expansive regulatory programs, aggressive rule development, expansive regulatory programs, and sweeping administrative authority, this is an extraordinary measure, and it will undoubtedly reshape state government programs for many years to come.

This will be an important measure to follow and stakeholders should take advantage of the opportunity to participate in this regulatory review process. 

June 06, 2014

Massachusetts Pharmaceutical and Device Code of Conduct: Companies Won’t Have to Report Payments Covered by Federal Sunshine Act; Gift Ban Still In Place

In 2009, the State of Massachusetts enacted the Massachusetts Pharmaceutical and Medical Device Manufacturer Code of Conduct (PCOC), which requires companies to report payments of more than $50 made to any healthcare practitioner. The law has provided a foreshadowing of the Federal Physician Payments Sunshine Act, which came into effect August of 2013. We have covered the release of Massachusetts' data from 2010, 2011, and, most recently, in 2012.

Massachusetts just released a Notice of Federal Preemption, which states that their "Department of Public Health may not require a pharmaceutical or medical device manufacturing company to disclose information that has been disclosed to a federal agency pursuant to federal law and that may be obtained by the department from such federal agency." Therefore, any payments disclosed to the Centers for Medicaid and Medicare Services (CMS) pursuant to the Sunshine need not be disclosed to the Department. The District of Columbia released a similar notice of Federal preemption a couple of weeks ago.

However, payments to practitioners that fall outside the federal mandate must continue to be disclosed. In Massachusetts, companies must track and report payments to nurse practitioners for example. Click here for our list of state transparency laws and their specific requirements.

Furthermore, Massachusetts' "Gift Ban" still remains in effect. The Federal Sunshine law merely requires disclosure of certain transfers of value.

While the original law strictly prohibited pharmaceutical and medical device companies from providing any meals of any value to health care practitioners outside a hospital or the practitioner's office, this section was amended in 2012. Such companies may now provide meals outside the office or hospital in a non-CME setting, as long as they are of "modest value," while in a setting conducive to informational communication. Massachusetts still prohibits meals in most settings:

  • Meals and refreshments provided as part of entertainment or a recreational event
  • Meals and refreshments provided without an informational presentation
  • Meals and refreshments provided to a health care practitioner's spouse or guest

Massachusetts' Code of Conduct also prohibits:

  • Entertainment or recreational items of any value, such as tickets to a sporting event or concert, or vacation trips
  • Payments of any kind, except as compensation for bona fide services
  • Grants, scholarships, subsidies or other items, in exchange for prescribing or disbursing prescription drugs, biologics or medical devices

Massachusetts notes: "Consistent with the regulation, the Department expects companies to continue to report all instances of non-compliance or be subject to a penalty (970.010) or enforcement action (970.011)."

They also state that a "guidance document regarding the new quarterly meal reports is being worked on, and will be released in the near future. Until that time, manufacturers should not take any action regarding the quarterly meal reports. Once guidance is released, it will be available in this location."

Thanks to Porzio Life Sciences for alerting us to this notice.

May 07, 2014

Massachusetts Department of Public Health Posts 2012 Payments to Healthcare Providers: 12% Drop in Payments from 2011, Payments to Hospitals Dropped 59%

In 2009, the State of Massachusetts enacted the Massachusetts Pharmaceutical and Medical Device Manufacturer Code of Conduct (PCOC), which requires the reporting of payments of more than $50 made to any health care practitioner by industry.  We have covered the release of the payment data in 2010 and 2011.

This past week, Massachusetts finally released the 2012 database. Virtually no news stories covered the spend reports, but companies have apparently reacted to the transparency requirements. From 2011-2012, the total payments from industry to healthcare providers and hospitals dropped -12% from about $62.5 million to $55.6 million.

Despite the decrease in total payments, for 2012 there was a significant increase in the number of payments. The change in the number of payments can credited to the increase in the food spend which was a result of a change in the Massachusetts Law in 2012. The Massachusetts Public Health Council amended the PCOC to allow companies to provide "modest meals" for healthcare providers. In 2012, there were 3,507 additional payments with 3,487 of those payments 99.9% resulting from the increase spending on meals.

Food spend

 Breakdown of Payments: The following pie chart shows that compensation and grants/education were the two highest forms of payments in 2012. Compensation for services accounted for 58% and Education, CME, and Training together accounted for 30% of pharmaceutical and device spending. This leaves 12% for Food, Charitable Donations, Marketing Studies and other spending. The exact dollar amount follows.

  • Compensation:  $32,097,007
  • Grants/Education:  $9,642,140
  • CME Conferences:  $5,085,729
  • Education/Training:  $2,170,666
  • Other:  $2,059,638
  • Food:  $1,556,465
  • Marketing Studies:  $1,507,442
  • Charitable Donation:  $1,447,269

Massachusetts Top 20 Companies: 

Top 20

The one story highlighting the release of this data, titled "Mass. Doctors are getting fewer gifts from drug and device companies," noted: "The largest amount of "gifts" in 2012 were given by Abbott Laboratories, which gave $3.2 million to 558 different recipients, followed by Sanofi and Boehringer Ingelheim, which gave $2.4 million and $2.3 million respectively. Massachusetts life science companies included in the top 20 were Genzyme (which gave $1.2 million), Covidien ($924,000), Boston Scientific Corp. ($834,000), Hologic ($753,000) and Millennium Pharmaceuticals ($737,000)."

This does not represent the most diligent reporting we have seen on stories about payments to health care providers and hospitals. For example, the $3.2 million from Abott represents 7 different categories of payments. As our Breakdown of Payments chart above shows, "gifts" is not the proper categorization of the total payments. Massachusetts breaks down the nature of payments. However, the story may foreshadow some selective journalism we may see once the Sunshine Act data is published later this year. 

As the chart below shows, the top 20 companies represent about half of the total payments in 2012, but have actually reduced their payments by much more than the Massachusetts total. The 23 percent drop from 2011-2012 for the top companies represents a far greater decline than the 12 percent drop industry wide in the first chart, above. 

Breakdown of recipients:

Physicians represent the largest slice of the pie with 56% of payments going to them, then followed by hospitals at 19% and clinical labs at 13% which together account for 89% of the payments from manufacturers in Massachusetts. Some of the "physicians" under the physician payment sunshine act such as Chiropractors, Optometrists and Podiatrists all received 1% or less of the total payments from manufacturers. Non physician healthcare providers received little in the way of payments amounting to 6% for al Pharmacists, NP's and PA's.

Massachusetts Top 50 Doctors from 2009-2012:

When we break down the data into the top 50 physicians, the total payments have gone up slightly since 2011, but the average payment and median have both gone down.

We are also interested in the effect that being named as one of the top industry-paid doctors has on practitioners in Massachusetts. The following table suggests that doctors do not like being called out in this data. The attrition rate is very high from year to year. Often doctors show up for one year, than fall off. We looked closely at the Top 50 doctors and have seen that for the most part, doctors drop off the list once they have been on there for one year.

Massachusetts Hospital Data

Physician payments took a hit from 2011 to 2012, but hospitals' pay took an absolute beating, dropping 59 percent during the year.

The ten Massachusetts hospitals that received the most payments from 2010 to 2012 have lost nearly $6 million. The top three hospitals who earned the most in 2012 — Massachusetts General, Brigham and Women's and Dana-Farber Cancer Institute — saw the dollar amount from drug and device companies decline $3 million in just two years, from $10.9 million in 2010 to $7.8 million in 2012. Brigham & Women's Hospital alone dropped from $4.1 million in 2011 to $1.3 million in 2012.


Massachusetts has given us a bit of a preview for how the Physician Payments Sunshine Act will work later this year. It took Massachusetts almost a year and a half to publish one state's data. The Centers for Medicare and Medicaid Services (CMS) clearly have a tall order in publishing payments for all fifty states.

Also of note, given the immense expense that went into collecting this spending data, it is hard to imagine that less than $55 million was spent on compliance, which means that it was probably more expensive to collect the data than the actual dollars spent. 

Massachusetts is still considering how to treat preemption under the Physician Payments Sunshine Act beginning in 2013. It will be interesting to see what changes are made to what is reported to Massachusetts in the coming months, but right now there are no instructions for applicable manufacturers to file their 2013 report on the Massachusetts Department of Public Health website. There appears to be no instruction updates since May 2013. It is not clear if they ever decided what to do about the quarterly reporting for meals--the website says the regulation is being updated.

Given the small amount of recipients and payments which are not preempted under the Physician Payment Sunshine Act, a strong case could be made to completely drop the reporting requirements for Massachusetts. It is important that legislators consider the compliance cost vs. the usefulness of this paltry amount of additional data.

If companies have expenditures to hosptials or healthcare providers in Massachusetts according to the Department of Public Health they will still need to register and pay the $2,000 for each year 2013 and 2014.

Earlier this year, we published a transparency chart that examined the individual state reporting requirements. We noted that some states have expanded transparency requirements to nurse practitioners and physician assistants. States considering including these professions should consider that in Massachusetts they amounted to about 1 percent of all payments. With state resources strapped for cash, there are significantly better ways to control spending than to force companies to spend more on needless additional transparency.

View the entire data sets here: List of the Prepared Reports


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