Life Science Compliance Update

May 22, 2017

California Senate Passes Ban on "Gifts" to Physicians


Late last week, California passed legislation in the state senate that restricts pharmaceutical companies from giving gifts and incentives to medical professionals. The legislation restricts pharmaceutical companies from providing flights, travel, speaking fees, entertainment, consulting payments, or other financial benefits to healthcare providers.

The sponsor of the bill, Senator Mike McGuire, stated, “I’ll be the first to say that the vast majority of physicians and medical professionals put the needs of their patients first. There’s a reason why doctors answer the call to practice medicine – to help people in their time of need. But growing evidence reveals that financial relationships between some physicians and pharmaceutical companies confirm what has been suspected – financial incentives change minds.”

According to Senator McGuire, data shows that in 2014 California physicians received the highest number of gifts and payments from pharmaceutical companies of any state.

“The facts are clear. Current voluntary efforts are not enough. California physicians and medical professionals lead the nation in the number of gifts taken, over $1.4 billion in 2014.  SB 790 will curb financial payments, gifts and incentives to medical professionals and help drive down the skyrocketing costs of prescription drugs for millions in California.”

Senator Ted Gaines, an opponent of the bill, believes its passage will affect patients, noting that, “Successful products provide the funding for the research, for cures. Why would we do anything to diminish the ability of pharma companies to be successful in providing these new products?”

Senate Minority leader Patricia Gates, also pointed out that gifts from pharmaceutical companies to doctors are already regulated. She also believes that doctors may now be deterred from participating in clinical trials and limit Californians’ access to experimental drugs.

As drafted, this bill looks like it would only apply to drug manufacturers and prescribed medications, not device manufacturers and any products that have a medical device as part of the combination. Interestingly, it also included a provision toward the end that says if the Sunshine Act is repealed, the state would enact a similar provision to disclose payments.

The Bill is drafted as a hybrid between VT’s and MN’s gift ban law. It explains what allowable expenditures are, and then carves out certain exceptions from the “gift” definition (e.g., samples, reprints, scholarships, rebates, etc.)

Under the legislation as currently drafted, “Gift” means either of the following:

(1) Anything of value provided for free to a health care provider.

(2) A payment, food, entertainment, travel, subscription, advance, service, or anything else of value provided to a health care provider, unless it is an allowable expenditure as defined in subdivision (a) or the health care provider reimburses the cost at fair market value.

For example, companies are permitted to pay for meals for doctors as long as the costs are below $250 per year per individual doctor and educational events but not all education.

They did give some allowable expenditures including:

Payment by a manufacturer of a prescribed product to the sponsor of a significant educational, medical, scientific, or policymaking conference or seminar, provided that all of the following conditions are satisfied:

(A) The payment is not made directly to a health care professional or pharmacist.

(B) Funding is used solely for bona fide educational purposes, except that the sponsor may, in the sponsor’s discretion, apply some or all of the funding to provide meals and other food for all conference participants.

(C) All program content is objective, free from industry control, and does not promote specific products.

(2) Honoraria and payment of the expenses of a health care professional who serves on the faculty at a bona fide educational, medical, scientific, or policymaking conference or seminar, provided that all of the following conditions are satisfied:

(A) The honoraria or payment is governed by an explicit contract with specific deliverables which are restricted to medical issues, not marketing activities.

(B) Consistent with federal law, the content of the presentation, including slides and written materials, is determined by the health care professional.

(3) For a bona fide clinical trial, the annual direct salary support for principal investigators and other health care professionals.

(4) For a research project that constitutes a systematic investigation, is designed to develop or contribute to general knowledge, and reasonably can be considered to be of significant interest or value to scientists or health care professionals working in the particular field of inquiry, all of the following:

(A) Gross compensation.

(B) Direct salary support per health care professional.

(C) Expenses paid on behalf of each health care professional.

Royalties and licensing fees paid to health care providers in return for contractual rights to use or purchase a patented or otherwise legally recognized discovery for which the health care provider holds an ownership right.

 The payment of reasonable expenses of an individual related to the interview of the individual by a manufacturer of prescribed products in connection with a bona fide employment opportunity or for health care services on behalf of an employee of the manufacturer.

Provision of meals for a health care provider that do not exceed two hundred fifty dollars ($250) per person, per year in value.

(5) Voluntary provision of care

 The bill, passed by a 23-13 vote, now heads to the California Assembly and if it passes there, then it heads to the governor’s desk for a signature.    This bill could put a huge chill on the biotech industry in California.  With little to no evidence that payments for services or meals lead to more prescribing the myth of "gifts" is still promoted throughout legislatures.

May 17, 2017

Whack a Mole: Pricing Bills Keep Popping Up Everywhere


Over the last several years, the pharmaceutical industry has seen a steady increase in state legislation targeting the cost of prescription drugs. Although the cost of prescription drugs account for a small fraction of healthcare costs within the United States, the industry cannot escape being the number one target. The 2017 legislative session makes it clear that pharmaceutical manufacturers remains surrounded on all fronts. This article examines those states that succeeded in 2016, legislation that has been introduced in 2017, and the rough road ahead.

While the debate on prescription drug prices is not a new phenomenon, the growing chorus from federal and state legislatures, the health care industry, lobbyists and organizations, and most importantly, consumers, has led to an onslaught of legislation targeting the pharmaceutical manufacturers and prescription drug costs. Since 2015, the number of states putting forth legislation has increased over 170% (see Chart 1), whereas the amount of legislation introduced by states has increased over 400% (see Chart 2). Currently, nineteen states have introduced over forty pricing transparency and disclosure bills.

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May 16, 2017

Florida Has a Transparency Database


We have long been known to deride the national Open Payments database, believing that it does more harm than good. Recently, it was brought to our attention that the State of Florida has their own transparency database. is a website run by the Florida Agency for Health Care Administration (AHCA) and attempts to provide patients with healthcare provider information. The website has been around since 2000 and has continued to be updated and expanded, gaining national recognition as a leader in health care transparency. Through health care quality comparison tools, the health encyclopedia, and many other resources, Floridians can use this website to learn about medical conditions, compare health care facilities and providers, find health care resources, and much more.

Hospital and Ambulatory Surgery Comparison Tool

The Hospitals and Ambulatory Surgery Centers comparison tool provides performance data for over 150 medical conditions and procedures in Florida's hospitals and ambulatory surgery centers.

This tool includes a range of charges, as well as the number of hospitalizations and the number of visits at ambulatory surgery centers. For hospitals, it also includes the average length of stay as well as rates for readmission, mortality, infections and complications. The hospital data includes a separate section for pediatric data and the results of a patient satisfaction survey.

For either type of facility, the user can make a selection based on health care conditions or procedures, facility name, and/or the geographic location of the facility. This information is updated on a quarterly basis.

Other Comparison Tools

There are other comparison tools available, including a physician comparison tool (allows consumers to compare physicians by the number of surgeries performed during one year, for: total hip and total knee replacement, coronary artery bypass graft (CABG), percutaneous transluminal coronary angioplasty (PTCA) and spinal fusion), an assisted living facility comparison tool, nursing home guide, and a link to compare prescription drug prices.

Quality Measures Displayed

  • Readmission Rates: The hospital readmission rates are based on patients readmitted to the same facility or another short term acute care hospital within 15 days of the original admission for the same or related condition. This rate is assigned to the hospital that first admitted the patient regardless of where the patient is readmitted.
  • Mortality Rates: These measures reflect the quality of care given in hospitals. They include measures of mortality for selected medical conditions and surgical procedures; utilization of procedures for which there is overuse, underuse and misuse; and volume of procedures for which there is some evidence that a higher volume of procedures is associated with lower mortality.
  • Complication and Infection Rates: These measures help identify potentially preventable complications and infections that may occur during hospitalization. These indicators provide an initial measure of inpatient complications following surgeries, medical procedures, and childbirth.
  • Pediatric Measures: These measures provide a perspective on quality of pediatric healthcare. Specifically, they screen for problems that pediatric patients experience as a result of exposure to the healthcare system and that may be amenable to prevention by changes at the system or provider level.


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