New Jersey recently joined the ranks of other states, such as Massachusetts and Vermont, by limiting pharmaceutical manufacturers’ interactions with prescribers.
In October 2017, the New Jersey State Attorney General proposed a regulation, “Limitations on and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers” to limit prescribers from receiving or accepting payments and other transfers of value from a pharmaceutical manufacturer.
The final regulation, which went into effect on January 16th, 2018, significantly limits pharmaceutical manufacturers’ interactions with licensed prescribers (physicians, podiatrists, physician assistants, advanced practice nurses, dentists and optometrists) and agents (contract sales organizations, marketing vendors, speaker program vendors, etc.). This regulation currently applies only to pharmaceutical companies and does not create any limitations on medical device companies.
What does the regulation say?
The regulation includes three key provisions:
- A “modest” meal limit of $15 US per person/per meal;
- A $10,000 USD per year per healthcare provider (HCP) cap on “bona fide services” for all New Jersey licensed prescribers– which includes being a speaker at promotional activities (e.g., speaker programs), advisory board participation and consulting arrangements; and
- An exception that permits reasonable payment/compensation to job candidates for travel, lodging, etc. that is related to recruitment.
While the final rule imposes the above restrictions, it also recognizes that prescribers should be permitted to receive items that provide a direct benefit to patients. Below is a summary of these exceptions:
- Research assessing the safety or efficacy of prescribed products is excluded from the $10,000 USD cap.
- Educational Events. The $10,000 USD cap does not apply to payments for educational events. Educational events are defined as those that are dedicated to disseminating objective scientific and educational discourse, and are held in a venue conducive to informational communication are considered “educational events.”
- Royalties and Licensing Fees. Royalties and licensing fees are excluded from the $10,000 USD cap as they are distinct from promotional activities. However, the final rule requires an attestation that the prescriber’s decision to render the services is not “unduly influenced” by a pharmaceutical manufacturer’s agent.
- While meals provided to prescribers may not exceed the $15 USD cap per meal, the rule does not limit the frequency of these meals.
- The final rule permits reasonable payment or remuneration to job candidates for travel, lodging and other personal expenses associated with recruitment.
- Other gifts and benefits. The final rule prohibits prescribers from accepting gifts and benefits such as items with a company logo or cash and cash equivalents. Educational items and registration fees at continuing educational events are still permitted under the final rule. Samples are also permitted under the final rule, as long as they are intended to be used for the benefit of patients and the prescribers do not charge for the samples.
How does this affect you?
Strictly speaking, the law only creates penalties for prescribers, but manufacturers will also need to change how they engage with prescribers. Pharmaceutical manufacturers will need to revisit and revise policies, processes, systems and daily activities to make sure that they are not providing newly prohibited financial or in-kind benefits. For example, planned speaker programs or in-office meals within the state of New Jersey after January 16th, 2018 must be cancelled if they are not within the $15 per physician threshold.
While the onus is on prescribers to track how much money they receive, pharmaceutical manufacturers will still want to track this for them. HCPs are not accustomed to tracking their payments, whereas manufacturers are better positioned to track payments as they are already doing so for prescribers in many other states. This will involve amending an aggregate spend tool or tracking tools to include additional fields, such as consulting fees, meals, travel expenses, etc. for New Jersey prescribers. For companies that have both pharmaceutical and medical device divisions, the payments should be tracked separately as the final rule does not apply to the medical device industry.
Additionally, companies will need to update their policies, procedures and training materials to reflect these new restrictions. Companies should also review how they categorize events as education or promotional, as the latter is subject to the cap (per the above). You can learn more about this legislation by clicking here.
In conclusion, the New Jersey law, coupled with legislation in Vermont, Massachusetts, and other states, may suggest a possible trend of regulation across the country that bears watching.
Polaris’ transparency experts continually monitor transparency changes around the world, keeping our solutions and clients up-to-date with all legislation and codes. To learn more about how Polaris can work with you, visit our website or contact us.