You asked a series of questions about bills in other states to ban pharmaceutical and medical device company gifts to health care providers or require disclosure of such gifts, the effects of existing bans in Massachusetts and Minnesota, and Connecticut's bioscience industry. Specifically, you wanted:

1. a summary of SB 1049 (sent separately);

2. the status of similar bills in Maryland, Washington, Montana, Utah, Colorado, New Mexico, Illinois, and Mississippi;

3. the economic impact of Massachusetts' pharmaceutical gift ban, specifically its effect on convention business;

4. the trend in prescription drug costs in Minnesota since that state banned gifts; and

5. a list, by town, of Connecticut pharmaceutical, bioscience, and medical device companies and their total sales and employment.

SUMMARY

Pharmaceutical gift ban and disclosure bills in Mississippi and New Mexico have died; bills in Colorado, Illinois, Maryland are stalled.

Massachusetts' gift ban regulations do not take effect until July 1, 2009. But since the underlying law was adopted in 2008, one medical conference scheduled for Boston in 2012 has been cancelled, while other sponsors have said they would not hold future conferences there. The cancelled conference will result in a loss of 15,380 room nights and about $464,000 in direct tax benefits.

We could not find consistent trend data on prescription drug expenditures in Minnesota since the state imposed a gift ban and disclosure law in 1993. Spending on prescriptions appears to have increased nearly 500% since then, a trend quite similar to national trends.

Connecticut has 425 pharmaceutical, bioscience, and medical device firms according to data from the Department of Economic and Community Development. They employ nearly 30,000 people and their combined sales near $26 billion annually.

STATUS OF GIFT BAN BILLS IN OTHER STATES

Gift ban and disclosure bills in Mississippi and New Mexico have died; bills in Colorado, Illinois, and Maryland are stalled. We were unable to locate any such bills in Montana, Utah, and Washington filed in 2009.

The Colorado Senate's Business, Labor and Technology Committee voted to postpone consideration of SB 09-166 on February 18, 2009. The bill prohibits a drug, biological product, or medical device manufacturer that participates in a state health program from giving health care practitioners any economic benefit. It exempts payments for conferences, honoraria, and product samples. Manufacturers must disclose to the State Board of Pharmacy: (1) the value, purpose, and recipient of any gifts, fees, or other economic benefit provided to health care providers; (2) advertising and marketing expenditures; and (3) annual expenditures for executive pay, lobbying expenses, and charitable contributions.

Illinois HB 322 was referred to the House Rules Committee on March 13. It requires drug manufacturers and labelers selling prescription drugs in Illinois to disclose to the Public Health Department, with some exceptions, any gift, payment, subsidy, or other economic benefit provided in marketing its products to physicians, pharmacists, health plan administrators, hospitals, and nursing homes.

Maryland SB 196 was reported unfavorably by the Senate Finance Committee on March 16. It requires drug manufacturers to disclose certain payments to physicians to the Maryland Health Care Commission.

New Mexico SB 99 was not reported out of committee. It would have required makers of drugs, biotechnology products, and medical devices sold or consumed in the state to disclose the value, nature, and purpose of gifts, payments, and economic benefits provided in connection with their marketing activities.

Mississippi HB 811 died in the House Public Health and Human Services Committee. It would have required drug makers to disclose payments to physicians and nurse practitioners or their immediate family members.

According to a March 2009 report by the Health Policy Tracking Service, gift ban or disclosure bills are currently pending in New Jersey, Oregon, and Texas.

GIFT BAN EFFECT IN MASSACHUSETTS

Massachusetts passed its gift ban in December 2008, but implementing regulations were adopted only in March 2009 and do not take effect until July 1, 2009. Consequently, any broad economic effects of the ban cannot be determined at this time. But the American Academy of Allergy, Asthma and Immunology (AAAAI) recently cancelled its 2012 conference in Boston, and the American Society of Gene Therapy has said it will not hold a conference there, both as a result of the new law, according to Justin Holmes, the Massachusetts Convention Authority's government relations director. The authority estimates that losing the AAAAI conference will result in a loss of 15,380 room nights and about $464,000 in direct tax benefits. Since 2005, Holmes reports, the authority has hosted 70 medical events generating nearly $550 million in “total economic impact” for the state. Holmes did not define what revenues are included in “total economic impact.”

Patrick Moscaritolo, president of the Boston Convention Bureau, stated that the city hosted 2,500 medical conventions between 2006 and 2008 resulting in $130 million in hotel revenue and $16 million in state taxes. In addition to the two conferences noted above, he said that the Heart Rhythm Society was re-thinking its plan to hold five meetings in Boston between 2009 and 2021 (“Medical Meeting Falloff Feared,” Boston Globe, 1/24/09).

GIFT BAN EFFECT IN MINNESOTA

Minnesota was the first state, in 1993, to ban pharmaceutical company gifts and payments to medical practitioners. Its ban does not cover (1) drug samples; (2) items valued at up to $50 a year; (3) payments to sponsors of medical conferences, professional meetings, and educational programs and honoraria and reasonable expenses for practitioners who serve as faculty at such meetings; (4) payments for substantial consulting services; and (5) publications and educational materials. The law also requires companies to report to the Pharmacy Board all payments, honoraria, reimbursements, and other compensation allowed under the ban and identify, by practitioner, the nature and value of any payments over $100. This information is available to the public (MN Stat. 151.461 and 151.47).

We were unable to find consistent trend data on prescription drug sales and costs in Minnesota from 1993 to the present. Data from 1991 estimated retail drug sales at $548 million, while 2007 data show $3.2 billion in sales at pharmacies. It is not clear if the data are fully comparable.

These figures are not adjusted for inflation. The increase from $548 million to $3.2 billion represents a 488% rise. It appears to be in line with national trends. The Kaiser Family Foundation reports that total expenditures for prescription drugs rose nationally by more than 500% between 1990 and 2006.

A 1994 report by the Minnesota Health Department on the prescription drug industry in the state estimated that retail prescription drug purchases in 1991 totaled $548 million. Adding drugs used in hospitals, nursing homes, and other institutional settings raised the estimate to approximately $1 billion. The report stated that Minnesotans spent about 12% per capita less on prescription drugs than the rest of the nation (MN Department of Health, Prescription Drug Study, April 1994).

In 2007, Minnesotans spent $3.2 billion in pharmacies on prescription drugs, according to the Kaiser Family Foundation. This represented nearly 53 million prescriptions or 10.2 per capita, which is about 12% less per capita than the rest of the nation (Kaiser Family Foundation (KKF), State Health Facts).

Kaiser notes several factors that drive changes in prescription drug costs: the number of prescriptions dispensed, price changes, and changes in the types of drugs used. It reports that from 1997 to 2007:

● the number of prescriptions purchased in the US increased 72%, compared to an 11% national population growth;

● nationally, the average number of retail prescriptions per capita increased from 8.9 to 12.6; and

● retail prescription prices (which reflect both price changes for existing drugs and use of newer, higher-priced drugs) increased an average of 6.9% a year.

Other factors that influenced drug expenditures during this period include direct-to-consumer advertising and insurance coverage for prescription drugs, particularly the introduction of coverage through Medicare (KKF, Prescription Drug Trends, 9/08).

CONNECTICUT BIOSCIENCE INDUSTRY

Table 1, prepared by the Department of Economic and Community Development, shows 425 pharmaceutical, bioscience, and medical device firms in Connecticut in 2008. They employ nearly 30,000 people and have combined annual sales near $26 billion.

Table 1: Connecticut Pharmaceutical, Bioscience, and Medical Device Companies

Source: Department of Economic and Community Development, April 2009

SS:LC:JLR:ak