Massachusetts Passes New Sales and Marketing Rules

Mar 18, 2009

The Massachusetts Public Health Council last Wednesday passed new rules for both pharma and medical device companies, making it the state with the most comprehensive marketing and disclosure code.

The rules specifically mandate disclosure of fees, payments, and other compensation to doctors; ban promotional items such as pens and mugs; and restrict meals to those provided at training or educational events. Payments for research and clinical trials, rebates and discounts, prescription drugs provided for patient use, and demonstration units for charity care are exempt. All other payments of $50 or more must be disclosed.

The new rules will take effect on July 1, 2009, and companies must provide compensation reports by July 1, 2010. The information will then be posted to the Massachusetts Department of Public Health Web site, and will become public record. Massachusetts is the eighth state (including the District of Columbia) to enact these types of regulations, but the only state to require both pharmaceutical and medical device companies to report and publicly disclose payments.

Reason to Worry?
While the industry has set rules and promised disclosure of its own—like the new PhMRA guidelines and the soon-to-come Pfizer, Lilly, Merck, and GlaxoSmithKline payment reports—the Massachusetts rules go a step further with enforcement and proof of compliance. And that has some Massachusetts biotechnology leaders worried.

“The regulations will create an additional burden and an additional layer of reporting that’s unique to Massachusetts,” said Bob Coughlin, president and CEO of the Massachusetts Biotechnology Council. “Massachusetts has always been known as the super-cluster for innovation in biotechnology and biopharmaceuticals, and it’s unfortunate that these regulations will make us the most unfriendly state in the nation.”

At the federal level, the Physician Payments Sunshine Act of 2009, a national law that could potentially require all pharma and biotech companies to report payments of more than $100, is currently pending Congressional approval. How exactly state and national laws will fit into a post-Wyeth v. Levine regulatory world has yet to be determined, but according to Jennifer Colapietro, director in PricewaterhouseCoopers’ Pharmaceutical and Life Sciences practice, as it currently stands, federal law will not supersede state law.

“When the new Sunshine bill came out, the wording said it will preempt any similar state disclosure requirements. But it included a provision saying that you still have to comply with any additional requirements of the states,” said Colapietro. “In all eight cases [to date], every single state has a stricter or additional requirement beyond what the federal Sunshine bill is looking for.”

The Missing Link
With so many rules and regulations to comply with, Bill Buzzeo, vice president and general manager of Cegedim Dendrite's Compliance Solutions, says the key is consolidating data and creating business value out of the information.

“One of the biggest challenges is that these laws just don’t deal with the promotional expenses between the sales rep and the healthcare practitioner. This is advertising, marketing, clinical, CME,” Buzzeo said. “You have to move from a manual spreadsheet-type process to an automated process. Companies will have to make an investment—whether it’s a system they build, a system they purchased, or a service to consolidate all this data and report on it. But there are other added benefits on the business side of being able to do an analysis of what you promotionally spend across the country.”

According to Colapietro, the most worrisome unanswered question is how publicly disclosed information will be used. “I think that’s the scariest part of all of this, and it’s prompting manufacturers to get ahead of it, so they know what data is going to be posted and they’ll be able to react appropriately.”