New Jersey Finalizes New Limits on Pharmaceutical Manufacturer Gifts and Payments to Prescribers

January 17, 2018By Serra J. Schlanger & Alan M. Kirschenbaum

As we previously reported, in October 2017, the New Jersey Attorney General and Division of Consumer Affairs issued a proposed rule in response to concerns about the amount of money being paid to prescribers in the state of New Jersey. On December 22, 2017, the Attorney General finalized the rule, which is entitled “Limitations On and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers” (N.J.A.C. 13:45J). The rule applies to all New Jersey prescribers (i.e., physicians, podiatrists, physician assistants, advanced practice nurses, dentists, and optometrists). It became effective on January 16, 2018, and does not apply to contracts entered into on or before January 15, 2018.

To assist our readers, we provide here the text of the final rule, which is compiled from the proposed rule and the revisions that were published in the New Jersey Register.

Under the final rule, New Jersey prescribers may not accept the following from pharmaceutical manufacturers or manufacturer’s agents:

  • Any financial benefit or benefit-in-kind, including, but not limited to, gifts, payments, stock, stock options, grants, scholarships, subsidies, and charitable contributions, except as specifically permitted by the rule.
  • Any entertainment or recreational items, such as tickets to theater or sporting events, or leisure or vacation trips.
  • Items of value that do not advance disease or treatment education, including, but not limited to,
    • Pens, note pads, clipboards, mugs, or other items with a company or product logo;
    • Items intended for the personal benefit of the prescriber or staff, such as floral arrangements, sporting equipment, artwork;
    • Any payment in cash or cash equivalent; and
    • Items that may have utility in both the professional and non-professional setting, such as electronic devices.
  • Any payment or travel expenses for attending an education event or promotional activity as non-faculty.

Under the final rule, New Jersey prescribers may accept the following permitted gifts and payments from pharmaceutical manufacturers or manufacturer’s agents:

  • Items designed primarily for educational purposes for the patients or prescriber that have minimal or no value to the prescriber outside of his/her professional responsibilities. Items that may have independent value to the prescriber may only be accepted if the items are used by patients and remain in the common area of the prescriber’s office.
  • A subsidized registration fee at an education event, if that fee is available to all participants.
  • Modest meals, worth no more than $15 per prescriber, provided by the event organizer at an education event, if the meals facilitate the educational program to maximize prescriber learning.
  • Modest meals, worth no more than $15 per prescriber, provided by a manufacturer to non-faculty prescribers at a promotional activity.
  • Compensation, based on fair market value, for providing bona fide services as a speaker or faculty organizer or academic program consultant for an education event or promotional activity, or for participation on advisory bodies or under consulting arrangements. A prescriber may also accept reasonable payment for travel, lodging, and other expenses associated with such services.
  • Reasonable payment for travel, lodging, and other expenses in connection with research activities.
  • Reasonable payment to prospective applicants for travel, lodging, and other expenses in connection with employment recruitment.
  • Royalties, licensing fees, or other arrangements regarding the purchase of intellectual property rights from a prescriber.
  • Sample medications intended to be used exclusively for the benefit of the prescriber’s patients.

The rule imposes a limit of $10,000 per calendar year on the amount of compensation that a single prescriber may receive in the aggregate from all pharmaceutical manufacturers for speaking at promotional activities, participation on advisory boards, and consulting arrangements. Payment for speaking at education events are not subject to the $10,000 cap but must be fair market value and set forth in a written agreement. In addition, payments for research activities, royalties and licensing fees are not subject to the $10,000 cap. Under the final rule, research includes pre- and post-market activities that study or assess the safety or efficacy of prescribed products as well as scientific advising on the development, testing, and evaluation of prescribed products.

Although many commenters expressed concern about the $15 per prescriber limit for meals, the Attorney General declined to eliminate or revise this limit, and disagreed with the commenters’ assessment that $15 is an unreasonable limitation on the cost of meals provided to prescribers.

As we previously noted, this rule does not impose penalties on, or otherwise increase the state’s authority over, pharmaceutical manufacturers and wholesale distributors (who are included in the definition of pharmaceutical manufacturer). Rather, the rule provides the various New Jersey prescriber licensing boards with authority to take enforcement action against prescribers who accept prohibited gifts or payments from pharmaceutical manufacturers.

Even though the state’s authority over pharmaceutical manufacturers has not expanded, the limitations in the final rule will impact how manufacturers interact with prescribers licensed by New Jersey. Under the rule, prescribers are responsible for independently monitoring their payments from pharmaceutical manufacturers to ensure compliance with the rules. However, prudent manufacturers may want to ensure that the payment limits in the rule are not exceeded in order to prevent their prescriber speakers, advisors, and consultants in New Jersey from incurring sanctions.

For the same reason, pharmaceutical manufacturers will want to ensure that their written agreements with prescribers for bona fide services comply with the rule by:

  • Specifying the services to be provided and the dollar value of the prescriber’s compensation based on the fair market value of the services;
  • Specifying that meetings held in association with bona fide services occur in venues and under circumstances conducive to the services provided and that the activities related to the services are the primary focus of the meeting; and
  • Identifying the following:
    • The legitimate need for services in advance;
    • The connection between the competence, knowledge, and expertise of the prescriber and the purpose of the arrangement;
    • How participation of the prescriber is reasonably related to achieving the identified purpose;
    • The manner by which the prescriber will maintain records concerning the arrangement and the services provided by the prescriber; and
    • An attestation that the prescriber’s decision to render the services is not unduly influenced by a pharmaceutical manufacturer’s agent.