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August 19, 2008

New Mass. Law Irks Industry, As Focus Shifts To Reg Implementation

Full article reprinted from "The Gray Sheet" - August 18, 2008

Find out what device industry advocates are saying about a new Massachusetts law that requires all device and drug companies doing business in the state to abide by a strict marketing code of conduct.

Full article reprinted from "The Gray Sheet" - August 18, 2008

New Mass. Law Irks Industry, As Focus Shifts To Reg Implementation

Device industry advocates are pushing to minimize what they say could be substantial burdens of a new Massachusetts law that requires all device and drug companies doing business in the state to abide by a strict marketing code of conduct.

State industry lobbyists say there is wiggle room in the statute that can be exploited in upcoming regulatory implementation efforts. They are currently trying to secure meetings with state health department leaders.

Democratic Massachusetts Gov. Deval Patrick signed the "Act to Promote Cost Containment, Transparency and Efficiency in the Delivery of Quality Health Care" into law Aug. 10 despite heavy lobbying from the device and drug industries, who say the legislation could decrease research and development pacts and other collaborations with physicians in the state, put companies' proprietary information at risk and potentially add substantial administrative burdens, particularly for smaller firms.

The law, containing an array of broad-based provisions aimed at improving the cost, quality and availability of health care in the state, takes effect Jan. 1, 2009 (see chart: "1Facts About the New Law"). It is intended to provide extra cost savings needed to fund Massachusetts' sweeping 2006 health care reform package that requires state residents to purchase health insurance.

Among its provisions, the new statute mandates the Massachusetts Department of Public Health to issue regulations establishing a code that is "no less restrictive" than the most recent versions of AdvaMed's 2"Code on Interactions with Healthcare Professionals" and the Pharmaceutical Research and Manufacturers of America's industry 3code.

It also requires companies to annually report to the government, for public posting on a Web site, the value, purpose and recipient of any payment or other economic benefit transfer made to a practitioner that is valued at $50 or more.

These provisions will "help ensure health care providers make choices about prescription drugs and medical devices for their patients based on therapeutic benefits and cost-effectiveness," Governor Patrick said.

And, Patrick affirms, "I am confident the Department of Public Health, pursuant to its regulatory authority, will safeguard the confidentiality of companies' trade secrets and proprietary information and protect against roadblocks to medical research or the education of health care providers."

Several other states, including California, Maine and Minnesota, already have marketing practice compliance laws including limits or disclosures of physician payments or gifts, and, in some cases, requirements to adopt marketing codes. But all except California, and now Massachusetts, have focused exclusively on the drug industry (4"The Gray Sheet" June 26, 2006, p. 5).

The Massachusetts law does not say exactly what the code-of-conduct regulation should look like, but it does mandate certain restrictions and certain allowances.

For instance, the code cannot allow companies to pay for a health care practitioner's meals outside of the doctor's office or a hospital. It also cannot allow financial support for the "costs of travel, lodging or other personal expenses of non-faculty health care practitioners" attending an educational or training event or conference "except in cases as determined by the [health] department." Further, the code will not allow firms to compensate practitioners for time spent participating in any continuing medical education event or conference.

The code must, however, allow compensation for consulting services in connection with a "genuine research project or clinical trial" and "payment for reasonable expenses necessary for technical training on the use of a medical device if that expense is part of the vendor's purchase contract," according to the bill.

Companies will be required not only to adopt the statewide code, but also to establish an internal training program; conduct annual audits; and have policies in place to investigate and correct noncompliance. Manufacturers will also need to annually submit to the state their policies.

Violations of the code of conduct or disclosure requirements will be enforced by the attorney general, a district attorney or the Department of Public Health. Fines can go as high as $5,000 for each transgression.

Full Impact Will Depend On State Regulations

The device industry has three overarching complaints about the statute: that the code-of-conduct prohibitions are overly broad and don't take into consideration differences between the device and drug industries; that the payment disclosure requirement will prematurely release a company's proprietary information; and that such marketing compliance requirements should be addressed on the federal level to avoid a confusing patchwork of state mandates.

But Massachusetts Medical Device Industry Council (MassMEDIC) President Thomas J. Sommer suggests there is still time to assuage some of these issues.

"It's too early to tell what negative impact this will have with any assurance," he said. "We are really going to have to see what the regulations look like.

"What we are hoping is that we will be working with the Massachusetts Department of Public Health... to develop regulations that will address some of these concerns and allow us to resolve some of these seemingly very difficult issues," Sommer said in an interview.

MassMEDIC plans to meet with the Commissioner of the state's health department and Massachusetts' Secretary of Health and Human Services to find out more about the timetable and how industry can provide input on the regulations, he said.

Device Reps: Don't "Force-Fit" Us With Pharma

Device manufacturers necessarily have close and substantive working relationships with physicians, a fact that is not fully considered in the Massachusetts law, industry advocates say.

AdvaMed says devices and drugs should not be "force-fit" into a single code of conduct that rests on assumptions that interactions between companies and doctors are generally straightforward sales interactions.

"Unlike other segments of the health care sector, medical technology is often developed and refined based on input from physicians who have direct and constant feedback from their patients," AdvaMed CEO Steve Ubl said.

There is also typically a more intensive physician training requirement for devices compared to drugs.

According to MassMEDIC's Sommer, industry will focus part of its discussions with state regulators on provisions in the law that ban payments for meals outside of a doctor's office or hospital and put restrictions (left up to the department) on paying travel expenses for continuing medical education sessions or other training events.

"For device companies this is a very big issue because we tend to provide training and educational events for health care professionals at a corporate training center or at another site that's not in the doctor's office or the hospital setting," he said.

Further the bill does not allow payment for expenses related to technical training prior to point of sale, "so there is no allowance for health care professionals to test-drive medical equipment prior to making an educated choice about which device they choose, which device they select for their office, their clinic, their hospital," Sommer asserted.

Information Made More Vulnerable?

The $50-or-more payment disclosure requirement also has industry worried. Manufacturers have increasingly begun to post physician payments, including consulting arrangements with doctors, though most often due to requirements set out in legal settlements (5"The Gray Sheet" Oct. 1, 2007, p. 3).

Generally, companies acknowledge the need for more transparency in their relationships with practitioners, but they have laid out specific demands to avoid what they say would be a cooling effect on innovation.

A top industry priority is that information, particularly payments for consulting or research agreements, is not disclosed at a time point when competitors can gain an advantage.

In the highly competitive device industry, it is important that there be "delayed disclosure for certain research arrangements," said Christopher White, general counsel for AdvaMed. The registry provision is "very, very broad," White said in an interview. "It does not have the type of exceptions that we deem critical to the promotion of advanced medical technology."

Industry was able to convince the U.S. Congress of these types of exceptions in 2007 with the passage of the FDA Amendments Act, including a clinical trial public registration requirement that excepts device study information from being posted until after the product is cleared or approved.

Lobbyists have also apparently persuaded Sens. Chuck Grassley, R-Iowa, and Herb Kohl, D-Wis., to include the delayed disclosure concept in the most recent version of the Physician Payments Sunshine Act, a payment disclosure bill that has been introduced in the Senate (6"The Gray Sheet" May 26, 2008, p. 14). "We don't see that here in Massachusetts, and that's of great concern to us," White said.

Federal Law Preferred By Industry

Some manufacturers are pushing for the Grassley/Kohl bill to supplant any state requirements.

In the most recent incarnation of the Sunshine bill, which AdvaMed supports, companies would be required to disclose on a federal government Web site transactions of $25 or more with health care practitioners who receive more than $500 from a firm in one year.

The legislation would not require adoption of a specific marketing code of conduct and would not take effect for three years following enactment. Importantly for industry, the bill would also pre-empt state disclosure laws.

"If every state has its own database that has different reporting elements, different exclusion elements, different inclusions, different reporting thresholds, for example different labels associated with the amounts that are reported, it will only confuse patients and it will not promote the goals of the legislation," White said.

Although only a few states have payment or gift disclosure requirements right now, about 20 more have such legislation pending.

If "you have to go into each state and look at their legislation and you have to keep a running tab in each state of what's going on ... that is a resource-intensive thing," said Lindquist & Vennum attorney Sheva J. Sanders, a former counsel for Medtronic.

And small businesses, which make up a majority of the device industry, will be hit the hardest, she said.

Impact On Massachusetts Research Infrastructure?

AdvaMed's White said industry is also concerned "that physicians in Massachusetts will be discouraged from collaborations with the medical device industry, and that, in essence, would drive a lot of clinical research out of the state."

The proximity to research institutions and the 16 teaching hospitals that are in Massachusetts are a selling point of the region for the expansion and location of medical device companies, Sommers noted.

"They provide access to new technology and opportunities to develop new products with some of the most noted practitioners in the world, and that is going to be altered in a very significant way because of this bill."

- Ingrid Mezo

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