Life Science Compliance Update

February 25, 2015

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


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


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

July 14, 2014

Physician Payment Sunshine Act: FDA Issues Revised Draft Guidance for Reporting Drug Samples

The Affordable Care Act puts a lot of emphasis on transparency. Section 6002, the Physician Payments Sunshine Act, requires manufacturers to report to the Centers for Medicare and Medicaid Services (CMS) almost every transfer of value they make to doctors—from lunches to peer-reviewed medical journals. Another part of the Act, Section 6004, requires manufacturers and distributors to submit to the Food and Drug Administration (FDA) reams of data about drug samples.

The distribution of drug samples is already highly regulated. The Prescription Drug Marketing Act (PDMA), which has been in place since 1987, requires that drug manufacturers and distributors maintain records of the samples they distribute. Companies are only allowed to distribute samples in response to a formal written request containing information about both the manufacturer and the practitioner making the request. Only practitioners licensed in their state to prescribe the requested drugs may even request samples in the first place. Manufacturers then have to maintain thorough records of their drug samples, and conduct annual inventories of their products.

Now, in addition to maintaining records, Section 6004 of ACA requires manufacturers and distributors to submit much of the same information to FDA, including:

  • The identity and quantity of drug samples requested
  • The identity and quantity of drug samples distributed
  • The name, address, professional designation, and signature of any person who makes or signs for the request
  • Any other category of information determined appropriate by the Secretary.

On April 3, 2012, FDA issued a draft guidance for Section 6004. It explained the availability of the Electronics Submission Gateway for submission of the above drug sample information and FDA's temporary compliance policy regarding submissions. FDA provided a walkthrough on how to submit drug sample information through the Gateway, . FDA "strongly encourages" manufacturers and distributors submit drug sample data electronically through the Gateway. Click here for a link providing a download for the XML schema and a user guide with FAQs. 

FDA's New Samples Guidelines

FDA is now issuing new draft guidance, which updates and replaces the 2012 guidance.

Who must submit sample reports to FDA?

FDA defines "drug sample" as "a unit of a prescription drug that is not intended to be sold and is intended to promote the sale of the drug."

The requirements to submit drug sample information applies to manufacturers and "authorized distributors of record" (ADR), which FDA defines as "distributors with whom a manufacturer has established an ongoing relationship to distribute such manufacturer's products." An "ongoing relationship" exists when a manufacturer and a distributor enter into a written agreement whereby the distributor is authorized to distribute the manufacturer's products for a period of time or for a number of shipments. The definition of "distribute" does not include: (1) delivering or offering to deliver a drug by a common carrier in its usual course of business; or (2) providing a drug sample to a patient by a practitioner licensed to provide the drug, by a healthcare professional under the supervision of such a practitioner, or by the pharmacy of a hospital acting at the direction of a licensed practitioner that received a sample in accordance with the FD&C Act and related regulations.

FDA states that "there may be instances when a manufacturer and ADR both have records regarding the same drug sample request or distribution." When, for example, a manufacturer provides a sample to an ADR, which then distributes the sample to a physician, the distribution to the physician should be reported to FDAonly once ― by either the manufacturer or the ADR. Since manufacturers and their ADRs are already required to have written documentation of their relationship, FDA recommends ADR agreements specify who is responsible for reporting the drug sample information.

There may also be instances when requests for samples are transmitted to a manufacturer through an ADR, or when multiple ADRs are used to fulfill a single sample request received by a manufacturer. FDA expects manufacturers to ensure that the submissions for such drug sample requests and distributions are "complete and non-duplicative." FDA believes that manufacturers are best positioned to determine who will do the reporting for their sample requests and distributions. FDA states that they
"will not object if a third party is contracted by the manufacturer to provide the report to FDA, provided the contractor clearly identifies the manufacturer for whom it is reporting. In each such case, the person or firm submitting should identify the manufacturer from whom the report is being made."

What must be submitted to FDA?

The Agency is required under the Paperwork Reduction Act to outline the information they want manufacturers and distributors to report electronically in the Gateway. The list includes:

  • The year the sample was distributed to the provider;
  • The type of business (i.e., either manufacturer or distributor);
  • The business name of the manufacturer or distributor that distributed the sample;
  • The trade name and dosage of the drug sample distributed;
  • Total quantity of the drug requested by the practitioner during the calendar year;
  • Total quantity of the drug distributed to the practitioner during the calendar year;
  • The first name, last name, and middle initial of the practitioner;
  • The practitioner's designation (i.e., M.D., D.O., P.A., or more);
  • Street number, street name, city, state, and ZIP code address of the practitioner;
  • An electronic affirmation that a signed written request for drug samples was received by the manufacturer or ADR from the licensed practitioner and is available to FDA upon request;
  • An electronic affirmation that a signature of the requesting practitioner, or appropriate designee, acknowledging receipt of drug samples has been received by the manufacturer or ADR and is available to FDA upon request;
  • The first name, last name, and middle initial of a practitioner's designee; and
  • Address of the designee.

In summary, manufacturers and ADRs must submit the identity and quantity of drug samples requested and the identity and quantity of drug samples distributed. The information must be aggregated by name, address, professional designation, signature of the practitioner making the request, and signature of the practitioner or the practitioner's designee receiving the distributed drug samples.

FDA states that if someone other than the requesting practitioner receives a sample, that person must be designated by the practitioner as an authorized recipient and sign for the sample on the practitioner's behalf. This situation might arise where samples are delivered to the front desk of the practitioner's office or affiliated pharmacy. These signatures should be collected to comply with the PDMA (which, as stated above, requires a record of the sample), and also now provide the necessary information to compile the reports required by the Affordable Care Act Section 6004.

Identity of drug samples requested or distributed: When reporting drug sample information to FDA, the information provided must "be sufficient for the Agency to identify each unique drug product sample that was requested or distributed." The required elements include:trade name, strength, dosage of the samples, and sample package size (which includes the units/#per unit dosage).

Aggregation of drug sample information: FDA interprets the aggregation requirements to require that the quantity of samples requested and distributed be reported, with respect to each drug product: (1) for each person who makes a drug sample request, and (2) for each person who signs at the time of a drug sample distribution.

Thus, FDA states: "if a practitioner requested 300 samples of drug X and signed for 300 samples of drug X, both quantities would be reported for that practitioner. Alternatively, if a practitioner requested 300 samples of drug Y and designated a pharmacist to sign for 300 samples of drug Y, these quantities would be reported separately for the practitioner and pharmacist. FDA also wants addresses of both the practitioner making the request and the address of the individual who signs for delivery of the requested samples (which may be the same as the practitioner's address).

FDA notes that they "do not believe that the actual, individual signatures must be submitted to comply with the provision in section 6004 that requires 'aggregation' of drug sample information by signature." They note that "[i]t would be impractical for manufacturers or ADRs to submit, and for FDA to receive, such voluminous records." Thus, the Gateway includes checkboxes to indicate whether the signature of the medical practitioner who actually signed a request for samples and the person who signed for the delivered samples (either the requesting practitioner or the practitioner's designee) are on file with the manufacturer or ADR.

For example: Dr. Jones requests 500 samples of drug product X. The manufacturer distributes 250 samples to Dr. Jones at her clinic, and at Dr. Jones' request, the remaining 250 are delivered to Dr. Jones' designee, Mr. Smith, at a different address. The manufacturer determines that it has appropriate signatures on file for the drug sample request and for the samples distributed to Dr. Jones and Mr. Smith. The manufacturer should use the Gateway to report that:

  • Dr. Jones requested 500 samples of drug product X,
  • Dr. Jones received 250 of those samples, and
  • Mr. Smith received the remaining 250 samples.
  • The addresses for both Dr. Jones and Mr. Smith should be provided, and the manufacturer should affirm that it maintains the signature information for Dr. Jones and Mr. Smith by checking the appropriate box in the Gateway submission window.

Period covered by each report

Section 6004 requires reports to be submitted not later than April 1 of each year with respect to the previous year. Thus, "manufacturers and ADRs must report, not later than April 1, 2014, on distributions and requests that occurred between January 1, 2013, and December 31, 2013."

Requests and distributions are to be reported for the year in which they occurred. FDA recognizes that the number of requests and the number of deliveries may not be the same for a given reporting period. For example, if a practitioner requests 100 samples of drug X and the manufacturer fulfills only half of the request before the year ends, a report for that year would show 100 samples requested and 50 distributed. If the manufacturer filled the rest of the request in the following year, the manufacturer would report the distribution of 50 samples to that physician, along with any other distributions made to that physician (or physician's designee) during the calendar year in which the distributions were made.


FDA expects manufacturers and ADRs to comply with section 6004 according to the policies set forth in the guidance, beginning with the submission of data for 2014 due no later than April 1, 2015.

FDA is offering a comment period for its latest samples guidance. Stakeholders should submit either electronic or written comments on the draft guidance by October 9, 2014. Submit either electronic or written comments concerning the proposed collection of information by September 9, 2014.

With respect to the collection of information associated with this draft guidance, FDA invites comments on the following topics: (1) Whether the proposed information collected is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimated burden of the proposed information collected, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information collected; and (4) ways to minimize the burden of information collected on the respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.


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