This week's Sunshine Act Forecast addresses both the Massachusetts FY 2013 budget and new "sunshine" rules in Australia.  The Massachusetts budget – signed into law by Governor Deval Patrick yesterday and now headed back to the legislature for veto overrides – includes significant changes for the pharmaceutical and medical-device industry, such as loosening the restrictions on the venues of HCP meals and adding new reporting requirements. In Australia, a revised code of conduct for drug companies poses tough transparency rules and cracks down on gifts to physicians. 

Massachusetts Budget Amends Gift Law, Not the Boon to Manufacturers Some Hoped For? 

On Sunday, July 8, the governor of Massachusetts signed into law a $32.5 billion FY 2013 budget that significantly changed the state's conduct and gift ban law for pharmaceutical and medical device manufacturers (codified at MGL 111N). In the FY2013 Budget (published on the Massachusetts Executive Office for Administration and Finance website), seven Outside Sections amend the law, effective July 1, 2012. 

Some of the amendments merely bring the state reporting requirements in line with the Federal Sunshine Act preemption provisions (by not requiring manufacturers to disclose to Massachusetts data already disclosed to CMS under the Federal Sunshine Act). Other amendments are more significant. For example:

• Undoing the requirement that a vendor's purchase contract for a medical device include provisions to pay for reasonable expenses necessary for technical training on the use of that medical device before reimbursing these expenses. That provision of the law had caused much confusion in the industry, and many manufacturers found it difficult to implement using common contracting forms.
• Loosening the restriction on where meals may be provided. While the law currently bans meals provided outside a health care practitioner's office or hospital setting, the amended law will let manufacturers provide or pay for modest meals and refreshments in connection with "non-CME educational presentations." FY2013 Budget, Outside Sections, Section 111. These  "non-CME educational presentations" must be for the purpose of "educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information," and the venue and manner of the presentations and meals must be "conducive to informational communication." Id. These amendments align the Massachusetts gift ban more closely with industry practices, standards, and codes (such as the AdvaMed Code § VII). 

The provisions, however, do not appear to be self implementing — for example, the Massachusetts Department of Public Health needs to define "modest meals and refreshments" through regulation. Further, the FY2013 Budget codifies a new significant administrative burden: manufacturers providing modest meals and refreshments in connection with non-CME educational presentations will have to file quarterly reports detailing all non-CME educational presentations that involved meals or refreshments.  FY2013 Budget, Outside Sections, Section 112.  These reports will have to include:

• The location of the non-CME presentation;
• A description of any pharmaceutical products, medical devices, or other products discussed at the presentation; and
• The total amount expended on the presentation and an estimate of the amount spent per participant (factoring any meals, refreshments, or other items of economic value provided at the presentation).

Note that the requirement of reporting non-CME meals calls for disclosure of the  "total amount expended" rather than any "fee, payment, subsidy or other economic benefit" provided to covered recipients at the presentations — as the law currently requires for transfers of value exceeding $50. Manufacturers will have to follow guidance from the Department of Public Health closely on this issue, because the Department will not likely have the authority to undo that statutory provision. Also, it is unclear how exactly the total amount spent on these presentations is relevant – especially if no meals or other economic benefits are provided to attendees. 

On top of the additional administrative burden, the Department may require payment of a new fee to pay the costs of administering the new reporting section. 

Fulbright will be following and publishing updates on the new law, including any implementing regulations and guidance from the Massachusetts Department of Public Health. 

Australia Cracks Down on Gifts, Proposes Tough Transparency Rules

Last week, Australia's pharmaceutical industry updated "sunshine" rules in its code of conduct that will require member drug companies to disclose payments made to health care professionals and consumer groups, and that will also ban certain types of payments – including any personal gifts to physicians.

Medicines Australia, the country's self-regulator for the pharmaceutical industry, has updated its code of conduct so that member companies must report aggregate payments made (1) to compensate health care professionals as consultants or advisors, (2) to sponsor health care professionals at medical conferences and educational events, (3) to pay speakers at educational events, and (4) to sponsor individual consumer organizations each year – including the value of nonmonetary support. The first report is slated for publication in June 2013.

The updated code of conduct also bans certain types of compensation to health care professionals — such as competition prizes to health care professionals and any personal gifts to doctors, including flowers or chocolates. Also, drug companies must notify patients of any payments made to health care professionals relating to patient support programs. According to Medicines Australia, these new rules are based on 18 months of consultation with consumer groups, academics, peak doctor groups, and other stakeholders.

To read Medicines Australia's press release on these changes click here. The self-regulator for the device industry – the Medical Technology Association of Australia, which has a code of conduct similar to the AdvaMed Code – has not yet adopted similar measures. Fulbright will continue to report on international developments that show a global interest in ensuring public transparency in relationships with physicians, along with efforts to shape the nature of these relationships by eliminating behavior that is perceived to exercise an undue influence on medical decisions. 

This article was prepared by Jeffrey Layne (rlayne@fulbright.com or 512 536 4593), Benjamin Koplin (bkoplin@fulbright.com or 512 536 2439) and Selina Coleman (scoleman@fulbright.com or 202 662 4536) from Fulbright's Health Care Practice Group.  

Learn more about Fulbright's Sunshine Act Task Force.