Massachusetts Tweaks Code of Conduct in Final Rule

March 12, 2009

By Bryon F. Powell

On March 11, 2009, the Massachusetts Department of Public Health ("DPH") Public Health Council unanimously approved a final rule on Pharmaceutical and Medical Device Manufacturer Conduct.  This vote came just seven months after Massachusetts’ Governor Deval Patrick signed into law Senate Bill 2863, which required DPH to establish a pharmaceutical and medical device marketing code of conduct, and imposes compliance and reporting requirements on pharmaceutical and medical device companies that employ a person to sell or market prescription drugs or medical devices in Massachusetts.  We reported on the enactment of the statute (here) and the December 2008 proposed regulation (here).

The final regulation, which will go into effect on July 1, 2009, largely mirrors the proposed rule.  However, there are some notable changes in the final rule, which we discuss below.

• Payments:  The restrictions on payments to health care practitioners remain the same.  However, in response to industry comments, the list of activities explicitly permitted has been expanded to include the provision of medical device demonstration and evaluation units, charitable donations not tied to purchases, and, importantly, reasonable compensation for all bona fide services.  The proposed rule explicitly permitted reasonable compensation only for bona fide services in connection with research.  On the other hand, the definition of “bona fide services” has been revised to exclude situations where the retention of a health care practitioner is “unduly influenced” by sales personnel.

• CME:  The CME provisions of the rule have been narrowed by deleting a proposed provision permitting subsidies for health care professionals-in-training to attend educational conferences.  In a nod to the Massachusetts hospitality industry and the Boston Convention Center, the rule specifically permits the use of hotels, convention centers, and other special event venues for CME and other professional conferences.

• Prescriber Data:  Restrictions on the use of prescriber data have been refined.  Before using prescriber data for marketing purposes, a manufacturer must now give health care practitioners the opportunity to request that their prescriber data be withheld from company sales representatives and not be used for marketing purposes.  However, the rule now specifies that manufacturers are not prohibited from using prescriber data to provide safety and risk information to providers, to conduct research, to comply with FDA mandated risk management plans, or to track adverse events.

• Reporting:  In response to consumer group comments, the definition of “sales and marketing activities” subject to annual reporting now includes any research project that is “designed or sponsored by the marketing department . . . or has marketing, product promotion, or advertising as its purpose.”  However, reportable sales and marketing activities do not include “clinical trials and genuine research, particularly where the primary purpose is to generate new data in support of an application filed with the FDA,” or clinical trials registered with  Other new exclusions from reportable “sales and marketing activities” are drug samples, demonstration units of devices, in-kind items used for charity care, and contractual price concessions.  The final rule includes a clarification requested by industry that the $50 threshold for reporting fees, payments, subsidies, or other economic benefits is calculated on an individual transaction basis rather than aggregated.

• Enforcement:  The $5,000 penalty provision has been revised to add an intent element:  violations must be “knowing and willful.”  The final rule also adds that the Attorney General, the relevant District Attorney, or DPH may enforce the regulation and adds provisions for a notice and informal hearing procedure and judicial review.

The rule will go into effect on July 1, 2009, by which time companies will need to have adopted the state code of conduct, submit required administrative information, and pay the $2,000 fee.  The initial disclosure report covering the period from July 1, 2009 through December 31, 2009 is due July 1, 2010.

Redlined Final Rule noting changes from the Proposed Rule

Massachusetts’ Executive Office of Health and Human Services Pharmaceutical and Medical Devices Conduct Questions/Answers

Memorandum summarizing the proposed rule, public testimony and comments, and responses to the testimony and comments