Public Health Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-270

Title:

AN ACT CONCERNING THE ESTABLISHMENT OF A REGIONAL POLICY ON THE PROHIBITION OF CERTAIN GIFTS FROM PHARMACEUTICAL AND MEDICAL DEVICE MANUFACTURING COMPANIES TO HEALTH CARE PROVIDERS.

Vote Date:

3/24/2010

Vote Action:

Joint Favorable Substitute To Floor

PH Date:

3/1/2010

File No.:

SPONSORS OF BILL:

Public Health Committee

REASONS FOR BILL:

To adopt in this state the recently enacted Massachusetts standards concerning restrictions on gifts and payments from pharmaceutical and medical device manufacturing companies to health care providers.

Substitute Language:

The substitute language replaces “The Department of Public Health” in Section 1 and 8 to “The Department of Consumer Protection.” In Section 1, (14) the wholesale drug distributor has to be registered with the department pursuant to section 21a-70 of the general statutes.

In Section 2, adds that a pharmaceutical or marketing device manufacturing company adopts a marketing code of conduct on or before July 1, 2011 and annually thereafter submits to the department a description of its training program to provide regular training to appropriate employees. (2), adds that each pharmaceutical and medical device manufacturing company shall certify to the department that the company has external verification procedures in place to monitor compliance with the provisions of section 1 to 8, inclusive, of this act.

Section 4 deletes “provides payment directly to a health care provider”.

Section 5 subsection (4) was deleted.

Section 5 (b), adds a new subsection 3 and subsection 6 and 8 and renumbers Section 5.

The entire substitute language bill changes “pharmaceutical manufacturing company” to “ pharmaceutical or medical device manufacturing company.”

RESPONSE FROM ADMINISTRATION/AGENCY:

Wendy Furniss Branch Chief, Health Care Systems Branch, Department of Public Health (DPH): The DPH opposes Senate Bill 270. The proposed legislation is intended to improve transparency and ethical standards in the pharmaceutical and medical device sales industry. While this bill would certainly impact entities licensed under DPH, enforcement of the newly required measures would not fall under the existing regulatory charge of the agency. Also, no data processing infrastructure exist within DPH to handle the type of information described.

Implementation of this initiative would result in significant fiscal impact to the DPH. Additional funding would be required to support the development and maintenance of an electronic tracking system to carry out the necessary activities. Although a fee of $2,000 would accompany each annual submission, it appears that the DPH does not receive this money to meet the DPH's resource needs for the additional information technology and staffing required.

Richard Blumenthal, Attorney General: I urge favorable consideration of Senate Bill 270. This proposal creates the same standards, reporting requirements and prohibitions regarding gifts and compensation from pharmaceutical and medical device companies as passed in

Massachusetts in 2008. The detailed regulations are designed to balance the need for information and interaction between manufacturers and the medical community.

Six states restrict industry gifts and compensation to health care providers. Passage of SB 270 will provide a level playing field for all manufacturer representatives in Connecticut and Massachusetts.

This legislation prohibits egregious gifts and forms of compensation while allowing drug and medical device representatives to provide: (a) reasonable compensation to health care providers for services; (b) peer-reviewed academic, scientific and clinical journals; (c) medical device demonstration and evaluation units; (d) rebates or discounts; and (e) modest food and beverage when associated with an office visit regarding the provision of product information.

Importantly, the proposal allows pharmaceutical and medical device company sponsorship of events and professional meetings as long as it meets standards for such compensation established by a conference's relevant accreditation committee.

While certain pharmaceutical drug companies may be taking steps toward self-reform, we cannot rely solely on such efforts.

A state law readily enforceable by our state agencies would protect the physician-patient relationship from drug company influence.

Kevin P. Lembo, Office Of The Healthcare Advocate (OHA): Prescription drug spending rose 500% between 2000 and 2005. Nearly one-third of the increase is attributed to marketing efforts.

Research shows that the latest and “greatest” drug is often not the best, but always the most expensive adding unnecessary cost to the system. This is the case of a powerful commercial influence being wielded over prescribers and consumers.

The bill adopts the successful provisions of the successful Massachusetts law prohibiting almost all gifts from pharmaceutical and medical device companies to health care providers and their employees. Samples and payments for participating in clinical trials would still be permitted. This is especially important for those who do not have insurance and for medical research.

It also requires the pharmaceutical and medical device companies to disclose to the DPH the value, nature, purpose, and recipient of any fee, payment, subsidy or other economic benefit of fifty dollars or more, that the company provides, directly or through its agents, to any covered recipient in connection with the company's sale and marketing activities.

As healthcare costs continue to skyrocket, we must allow more scrutiny of all healthcare related expenses. I urge your support for the passage of this consumer protection bill.

NATURE AND SOURCES OF SUPPORT:

Charles W. F. Bell, Programs Director, Consumers Union of U.S., Inc.: This legislation is badly needed to address rapidly escalating commercial pressure on health care providers in Connecticut. Pharmaceutical companies spend hundreds of millions of dollars each year to influence physicians to prescribe new high-cost, brand name drugs when equally effective, less expensive and often safer older brand name and generic version may be available. These practices are adding to health care cost inflation and can put patients in harms way.

State law requires disclosure of campaign contributions and lobbying expenditures, a similar requirement should be enacted for drug companies attempting to influence physician prescribing decisions. This simple disclosure would be extremely cost-effective, and provide valuable information for consumers, physicians, state health officials and other policymakers.

When marketing, rather than objective and unbiased information shape prescribing patterns, the cost of prescription drugs for consumers, government and health insurers will continue to rise faster than the general rate of inflation. Gifts to doctors undermine the doctor-patient relationship by creating the appearance of impropriety.

Bob Rodman, AARP: SB 270 places restrictions on excessive marketing costs that should reduce the price of prescription drugs, but more importantly creates transparency and accountability. AARP believes all individuals should get the right drug, at the right time, for the right cost. And, we are committed to promoting evidence-based, unbiased prescribing and access to appropriate and affordable prescription drugs.

Everyone will benefit from a continued valuable and appropriate collaboration between providers and the industry. Consumers have a right to know about those relationships and the state has a right to ensure that compensation is reasonable and not influenced by inappropriate arrangements.

Jean Rexford, Executive Director, Connecticut Center For Patient Safety: Based on the experience in Massachusetts where similar gift band legislation was enacted in 2008 there is no data to suggest that either scientists or research dollars have declined. Despite difficult economic times, there is evidence of expansion in several areas within the Massachusetts life science sector. These signs of growth and expansion directly and convincingly rebut the industry's claims that laws limiting the marketing influence of companies on physicians and doctors are bad for business in the state.

The bill does not prohibit or impact any contracted research and/or clinical trial engagements with physicians. The bill does require open disclosure of such contracted partnerships. Disclosure will not prevent physicians from partnering with medical device or pharmaceutical firms to develop new products. It will simply make that interaction transparent and honest. The legislation continues to allow pharmaceutical companies to offer drug samples and for sales reps to visit providers' offices to provide information about their products and light refreshment.

Stephen R. Smith, M.D., Community Health Center of New London: The marketing practices of pharmaceutical and medical device representatives engender a sense of obligation on the part of the recipient that is repaid by prescribing the products being promoted by the sale representative. The result is that prescriptions are written for expensive brand-name drugs that offer no important clinical benefits over less expensive generic drugs. The taxpayers of Connecticut pick up the tab for these practices through higher premiums and higher taxes.

I am disappointed that the bill continues to permit free meals to be offered to health care professionals. Doctors are influenced by free meals, even if they aren't consciously aware of that influence.

Though I'm disappointed that SB 270 has been watered down from previous bills on this subject, it is still worth supporting and the National Physicians Alliance lends its support to the bill. Given the financial difficulties that Connecticut faces, it would be unconscionable not to pass this bill, both to achieve health care savings and better quality health care.

Marcia Hams, Director of Prescription Access and Quality, Community Catalyst: Pharmaceuticals and medical devices are central to modern health care, and academic-industry collaboration is vital for their development. At the same time, it is essential that the use of these products be guided by sound evidence and good science. Every patient deserves the safest, most effective and the most affordable treatment. Private health insurers, public programs and taxpayers are impacted by the cost of prescription drugs and have a vested interest in prudent purchasing and prescribing free from marketing influences.

A recent study in the New England Journal of Medicine found that 94% of U.S. physicians had some kind of financial relationship with the industry. Often it was the acceptance of free food or gifts. But 18% (almost 1 in 5) were being paid as consultants to one or more companies. Nearly as many again were being paid to give promotional talks for a particular

product. Only around 3% of the financial relationships were for enrolling patients in clinical studies.

A doctor choosing which drug to give his or her patient has a conflict of interest if he/she is being paid by the company that markets the drug.

Transparency statutes requiring disclosure by pharmaceutical, device and biotechnology manufacturers of payments to physicians or other prescribers are part of a national trend. The experience of other states adopting such provisions might reasonably be expected to be similar to that in Massachusetts. By addressing these issues Connecticut is part of a broad National effort to restore trust in the medical profession and protect patients and public programs.

Lori Pelletier, Secretary-Treasurer, Connecticut AFL-CIO: This is an issue of transparency and common sense legislation. When workers are deluged with commercial after commercial about pharmaceutical product, they are relying on their physician to have the truth about these products that they recommend. However, if the Physician is receiving gifts from one drug maker over another how does the patient know that the drug/device recommended is the best and not the favorite.

Ken Ferrucci, Vice President of Public Policy and Government Affairs, Connecticut medical Society (CSMS): We believe misperceptions exist regarding the magnitude of gifts from pharmaceutical companies to physicians as well as the impact activities of the industry have on care and prescribing patterns of physicians. The legislation before you today closely mirrors the standards implemented by the industry and would codify a significant number of the guidelines by which the industry currently abides. We wish to identify areas of the legislation that should be clarified to ensure that appropriate and legitimate interactions between physicians and the industry are not eliminated or negatively impacted.

Section 2 (c) allows pharmaceutical companies to continue to use prescriber data unrelated to the identity of a patient to facilitate communications with healthcare providers. This information can tremendously benefit public health and be used by prescribers to increase the quality of care provided. The CSMS publication Therapeutic Insights allows physician members 4 times a year the opportunity to review their prescribing tied to certain diagnoses and learn from the information.

Section 2 (c) does appropriately include a requirement that companies comply with requests from providers that their data not be made available to company sales representatives. CSMS offers its members this opportunity through our website, journal and newsletter publications. Therefore, we believe that language should clearly state that compliance with Prescriber Data Restriction Program (PDRP) is compliance with the language of the bill. We see no reason for the state to expend resources to recreate a system that is operational and effective.

Section 5 (b) lists certain legitimate and appropriate areas for which funding from pharmaceutical companies may be used and accepted. Section 5 (b) 4 includes the “purchase of advertising in peer reviewed academic, scientific or clinical journal.” Many

professional organizations such as CSMS also provide education and information to members through newsletters, pamphlets and brochures that are not peer reviewed. They provide valuable information to physicians and are often funded through advertisement or support of pharmaceutical companies. As non-profit organizations struggle with limited member dollars such appropriate funding allows further education and information to be provided to members. Indirect funding where there is not ability to influence prescribing patterns should not be prohibited. We ask that language be clarified to include this exception.

NATURE AND SOURCES OF OPPOSITION:

Randolph Frankel, Vice President, IMS Health: It is of great importance to us that the principles of data access and transparency guide healthcare reform going forward be protected and preserved today. That is why IMS is against Section 2C of the bill. We believe data transparency and access for vital functions would be impacted by this Section as a result of:

● Unnecessary duplication of existing methods for physician participation and likely confusion between a state program and a successful, voluntary, and national program already underway and supported by State Medical Societies, the AMA, and the PDRP. PDRP offers a simplified and less costly means to address the concern of Section 2C.

Having both a state and national program to address the same issue would create duplication of functions likely leading to higher administration costs for providers, manufacturers and businesses working in Connecticut.

Thomas Tremble, Associate Vice President State Government Relations, Advanced Medical Technology Association (AdvaMed): AdvaMed strongly supports ethical collaborations among industry and health care professionals and supports appropriate disclosure of relationships between medical technology companies and physicians. We recognize that strong ethical standards are critical to ensuring the valuable collaboration between the medical device industry and health care professionals.

However, SB 270 is not the right approach because it threatens beneficial relationships necessary to ensure patient safety and the advancement of medical technology. This would be burdensome to comply with and would provide little or no benefit to consumers.

Boston Business Journal article (February 26, 2010) outlined findings on the impact the Massachusetts gift ban has had on physicians, patients and jobs:

● Tufts Medical Center Cardiologist said the gift ban has “put a real chill on Massachusetts doctors' opportunities to take part in training and clinical research on

medical devices”, and some educational programs on new procedures have been stopped.

● Fewer clinical trials are being conducted in the state, resulting in less jobs for research staff.

● Companies are no longer involving Massachusetts physicians in pilot programs of new devices to avoid the complication and expense of filing reports.

● Indications are that device manufacturers are more likely to conduct research in other states.

In addition, we understand from our members that the passage of the Massachusetts gift ban has led to: Massachusetts providers being excluded from company provided educational programs at national conferences; reluctance to locate national seminars in the state; reluctance to use state providers in conducting market research. Expensive new compliance frameworks have had to be established that are difficult to administer.

We believe it is preferable to have a single source of disclosed relationships under a federal framework. A patchwork of state laws with different standards of what types of payments must be disclosed, different details provided, in different formats and for different time periods would be confusing for patients to interpret and place unreasonable burdens on companies.

Kenneth A. Miller, M.D., Vice President, Connecticut Rheumatology Association: The Association has concerns about the expansion of restrictions from the agreed upon PhRMA guidelines that have been adhered to on a national level by almost all pharmaceutical companies and physicians. There is no data to support that reduction of these biopharmaceutical industry interactions with physicians is a cost saving measure.

Cooperative research with companies for clinical trials would be impacted because many providers would not want to be submitted to the scrutiny that accompanies disclosure of information, especially when labeled as a gift. Clinical research is not a gift and payments for clinical researchers for services rendered are currently paid for by either commercial or Medicare or Medicaid type insurance plans. Clinical research studies require a great deal of expenditures, both space and staff requirements. The implication that revenues generated by performance of clinical research trials represent a PhRMA gift is erroneous and misleading and would lead to both diminished participation on behalf of patients and physicians in research trials.

The bill could prevent companies from providing research grants to physicians.

The disclosure and publication requirement would make Connecticut a less desirable place to host clinical trials and other consultant-driven research as affiliated practitioners may not be comfortable having their names and compensation published on the state's web site for other interactions with pharmaceutical companies. This could decrease the number of clinical trials available to patients in Connecticut. Patients participating in clinical trials gain access to new therapies and for those underinsured or uninsured it provides them access to medical care.

Paul R. Pescatello, President, Connecticut United for Research Excellence (CURE): Where is the public outcry? There isn't a public outcry because there aren't any gift harms

being perpetrated. There are urban legends about lavish entertainment, but that's all they are, conjured up fiction.

It takes the typical biotech almost 15 years and $1.5 billion to bring one project from proof of concept to FDA approved drug. Duplicative, unnecessary regulation in SB 270 could cause biotech to divert an employee from research and development to compliance. The bill places no less than 23 duties and actions on Connecticut Biopharmaceutical companies.

There is a lot more clamoring to increase the pace of medical innovation than there is about biopharmaceutical sales rep sales practices. Patients want to encourage physician interaction with sales representatives. They understand that doctors often receive critical up to date information about treatments and side effects through their interactions with sales representatives.

It is na´ve to think the approach in this bill doesn't register negatively with companies as they make choices about where to invest and grow. The bill is duplicative, wholly unnecessary and, ultimately, hugely counter productive.

Dr. Tanya R. Bilchik, MD, Hartford Headache Center: Clinical trials have produced invaluable data, which has lead to some of the most effective treatment options for ailments across multiple medical disciplines. Currently there are more than 3,000 clinical trials being conducted in Connecticut. I'm worried that this legislation would negatively impact the progress of clinical trials and impede opportunities for Connecticut physicians to conduct small initial studies and pre-clinical research. Without the ability to have regular interactions with pharmaceutical representatives our academic and clinical knowledge and analyses of new products and devices are severely diminished.

Paula Newton, Vice-Chairman, New England Biotechnology Association (NEBA): NEBA respectfully disagrees with the premise that more needs to be done and submits that stigmatizing the legal transfer of technology and medical information between physicians and biopharmaceutical manufacturer is an unsound practice potentially harmful to patients, physician knowledge, and one that threatens the growth of the state's dynamic biopharmaceutical industry.

Since implementing its legislation, Massachusetts is realizing no attributable cost savings and it is fair to wonder if the stigma imposed on physician interactions is not having a deleterious impact on patients whose doctors may or may not be aware of the latest information available on new therapies.

Boehringer Ingelheim: While we appreciate the intent of the Committee in putting this legislation forward, we feel strongly that this legislation is burdensome, duplicative and over-reaching and will significantly and negatively impact our business here in the state of Connecticut. The state wants to be “competitive”; however, this bill does not send that message to our company or our industry.

The industry has recognized that some former practices are not tolerable in today's world. That is why we police ourselves and developed a rigorous Code of Conduct. In addition to the Code, there are a number of laws already in place to deal with many of the scenarios or practices contemplated to prohibit in this legislation.

For a company such as ours, that is headquartered here but has facilities in numbers of states the price tag associated with different compliance rules is incredible and problematic. Legislation such as this increases our costs significantly and can tip the scales in terms of where to invest in growth or relocate divisions.

Howard Fienberg, PLC, Director of Government Affairs, Marketing Research Association (MRA): The reporting requirement of SB 270, unfortunately could include payment s to provides for participation in marketing research studies (referred to as incentives by the profession) sponsored by manufacturers, even though such payments are made by independent survey and independent research companies and the manufacturers are not aware of which providers participated nor can they market to them through the payment or study.

The reporting scheme proposed would effectively cease all marketing research with doctors and prescribers in Connecticut, whose participation is often tied to sizeable research incentives because of the high demands on and value of their time.

Marketing research is not part of the problem of rising healthcare costs; it is part of the solution. Studies with providers are an integral part of the fight to control healthcare costs.

MRA suggest the following changes to SB 270:

Section 1, insert a new definition:

● “Bona fide Marketing research” means the collection and analysis of data regarding opinions, needs, awareness, knowledge, views and behaviors of a population, through the administration of surveys, interviews, focus groups, polls, observation, or other research methodologies, in which no sales, promotional or marketing efforts are involved and through which there is no attempt to influence a participant's attitudes or behavior.

Section 6, under “ “Sales and marketing activities” does not include”, insert new provision (IV):

● Bona fide marketing research conducted by a third party with covered recipients, where payments for participation are made by that third party and the sponsoring manufacturer is unaware of the identity of the covered recipient.

Pharmaceutical Research and Manufactures of America (PhRMA): SB 270 would onerously regulate relations between biopharmaceutical companies and healthcare providers. Restricting these interactions and requiring disclosure of certain payments to healthcare providers could chill research and development as well as patient access to clinical trials.

The bill could jeopardize the 53,584 jobs in Connecticut (2006) supported by the biopharmaceutical industry. The wages are estimated to be $1.2 billion resulting in an

estimated $314.7 million in federal taxes and $54.2 million in state taxes paid by employees. The message is that the biopharmaceutical is unwanted in Connecticut.

Dr. Michael Tarnoff, Vice President Medical Affairs, Covidien Surgical Devices: It is my belief that this legislation would have a chilling impact on the medical industry in Connecticut. The legislation is burdensome and unnecessary.

The bill requires that companies disclose the nature and purpose of consulting arrangements entered into with Connecticut health care providers, related to product development and research and development projects. As a result, we will be forced to reveal trade secrets that diminish our ability to be successful as a company in Connecticut and worldwide. This would disproportionately hurt the work we do in Connecticut as we are the only medical device company that has a significant presence in Connecticut. Moreover, we may be forced to move our product development and R&D work out of Connecticut to states where such proprietary information need not be disclosed publicly.

Connecticut Restaurant Association: While we do not disagree with the goals of this bill, the unintended financial consequences on the restaurant and catering industry in Connecticut will be devastating. Limiting pharmaceutical and medical device companies' ability to purchase meals for health care professionals will cause a major decrease in routine business to many restaurants, resulting in reduction of hours for employees, loss of potential new customers, and most importantly, will decrease the bottom line in an industry that operates on a very slim margin. Restaurant and caterers simply cannot afford to lose this type of business.

Jonathan Jennings, Vice President, Connecticut Caterers Association: Putting limitations on where and how meals can be provided by pharmaceutical representatives to doctors and medical staff will directly impact the financial health of many of our members, most of whom are small, family run companies. The restriction or elimination of this type of business will result in job losses and negative growth in an industry already suffering in a down economy.

Phil Barnett, Partner, The Hartford Restaurant Group: The Group estimates about $75,000 per year in revenue due to the meals purchased by pharmaceutical and medical device manufacturing companies for health care providers. Several Connecticut restaurants and caterers rely on the pharmaceutical and medical device business.

Steven Kassman, General Manager and partner, Rein's NY Style Deli-Restaurant: We agree that health care providers should not be swayed or coerced by extravagant gifts; however, providing modest lunches in the normal course of business activities is justifiable. Often, lunch time is the only opportunity for sales representatives to present new products or procedures to a busy health care office.

Reported by: Randall Graff

Date: 3/31/2010