States Boost Oversight Of Rx Marketing; In Vt., Reps Must Discuss “Alternatives”

As of next year, pharmaceutical companies will face tougher restrictions on their marketing activities in Vermont and Nevada, and naturally, the climate in New England will be chillier: The Vermont bill is the more rigorous and comprehensive measure.

Vermont's S. 115 protects physician prescribing information by allowing prescribers to opt in to having their information used by health insurers and others. When pharmaceutical companies make use of that data, their detailers must provide information about the benefits or risks of alternative drugs. The legislation also mandates that manufacturers pay a fee to fund state initiatives which would encourage use of generic drugs.

The Nevada measure, meanwhile, requires drug and device wholesalers and manufacturers to adopt a written marketing code of conduct. The bill notes that companies can satisfy this requirement by adopting the Pharmaceutical Research and Manufacturers of America's most recent Code on Interactions with Healthcare Professionals. That code specifies that lavish meals, entertainment and expensive gifts are inappropriate.

These laws are the latest efforts by states to make prescription drug pricing and marketing more transparent.

Vermont Representative Harry Chen, D-Mendon, said S. 115 "will protect prescriber privacy, protect consumers and hopefully lower the cost of prescription drugs for every Vermonter." The law is to go into effect no later than Jan. 1, 2008.

Chen said one of the provisions that generated the most controversy was that pertaining to physician prescribing data. In May, a New Hampshire law banning the commercial use of physician prescribing information was thrown out by a district judge, who ruled it violated the First Amendment (¹ (Also see "New Hampshire Prescribing Data Law Shot Down; Other States Pursuing Bills" - Pink Sheet, 7 May, 2007.), p. 28).

Chen said he and his colleagues tailored their bill by making it an opt-in measure and limiting it to cover the use of data rather than the collection of information. It may thus avoid the controversy generated by New Hampshire's outright ban on use of such data.

Chen said legislators also wanted to assure that if drug representatives used the prescribing data they did so in a balanced way. Therefore, sales reps must include information about alternative treatments in their pitches.

"When a pharmaceutical marketer engages in any form of prescription drug marketing directly to a physician or other person authorized to prescribe prescription drugs," the bill states, the marketer shall disclose evidence-based information "describing the specific health benefits or risks of using other pharmaceutical drugs, including drugs available over the counter; which patients would gain from the health benefits or be susceptible to the risks described; the range of prescription drug treatment options; and the cost of the treatment options."

Among other provisions, the Vermont law requires the state health department to establish an evidence-based prescription drug education program for health care professionals. And it requires the department to establish a pilot project to distribute vouchers for a sample of generic drugs.

Another provision, which Chen said was controversial, requires companies to pay a fee to fund this program and other state initiatives. "Annually, each pharmaceutical manufacturer or labeler of prescription drugs that are paid for by the office of Vermont health access for individuals participating in Medicaid, the Vermont Health Access Program, Dr. Dynasuar, VPharm, or Vermont Rx shall pay a fee to the agency of human services," the bill states.

"The fee shall be 0.5 percent of the previous calendar year's prescription drug spending by the office and shall be assessed based on manufacturer labeler codes as used in the Medicaid rebate program," it adds.

The money will be used to fund collection and analysis of information on pharmaceutical marketing activities and analysis of prescription drug data needed for enforcement actions by the attorney general's office, as well as the evidence-based education program.

The Vermont measure also narrows a loophole in the physician payment disclosure law by allowing individuals to challenge a company's claim that its payments are trade secrets.

A study in the Journal of the American Medical Association earlier this year revealed the limitations of physician disclosure laws. Looking at the experiences of Vermont and Minnesota, researchers found that many companies do not submit the required information or provide sufficient data as to who is receiving the payments (² , p. 22).

They particularly criticized Vermont's trade secret provision, which JAMA co-author Peter Lurie, deputy director of Public Citizen, characterized as the "'we don't want to comply' exemption."

Under S.115, if someone requests information designated as a trade secret, the state attorney general must notify the company. And the company will have 30 days to respond to the requester and the attorney general either consenting to release the information or certifying the reasons that it is a trade secret.

"Any requester aggrieved by the company's response may apply to the superior court of Washington County for a declaration that the company's claim of trade secret is invalid," the bill states.

The Vermont law also requires companies to disclose their unrestricted grants for continuing medical education programs; that information was previously exempt from disclosure.

The measure also specifies how pharmacy benefit managers should conduct themselves. It states that PBMs must disclose to health insurers when they receive a benefit or payment for dispensing a more expensive substitute drug for a prescribed drug. And it requires PBMs to pass on to insurers any payment or benefit received for dispensing drugs based on volume of sales for certain drugs or classes of drugs.

While the Vermont bill covers a variety of issues, the Nevada measure, AB 128, focuses solely on assuring that companies adopt a code of conduct. As part of that effort, the measure requires companies to implement a training program for their sales and marketing staff and other employees to assure compliance with the code.

The Nevada law is less restrictive than a similar law that went into effect in California in 2005. The California measure requires pharmaceutical companies doing business in the state to set a specific dollar limit on the gifts and promotional materials they plan to give to doctors in the state (³ (Also see "Marketing Spending Limits Under California Law Vary Widely Between Firms" - Pink Sheet, 11 Jul, 2005.), p. 19).

Several companies have tinkered with the amount of their spending limits in the past year. Forest, for example, had the highest spending target of $7,440 per physician in 2005 and the following year the figure was cut to $3,000 per physician. Pfizer and Merck, meanwhile, boosted their spending limits. Pfizer's ceiling went from $960 per physician in 2005 to $2,500 in 2006 and Merck's went from $900 to $2,000. Other companies, including AstraZeneca, J&J, Roche and Sanofi-Aventis, kept their spending limits at the same level from one year to the next.

Other states are pursuing their own measures to reign in drug marketing and pricing. Sharon Treat, executive director of the National Legislative Association on Prescription Drug Prices, says 18 states have pending physician payment disclosure bills. Several states are also pushing ahead with legislation to ban the commercial use of physician prescribing information.

Congress is also calling for closer scrutiny of industry support of physicians. At a recent hearing by the Senate Aging Committee, Sen. Herb Kohl, D-Wis., said he was drafting legislation to create a national registry of pharmaceutical company funding for continuing medical education programs and other support to physicians (⁴ (Also see "National Registry of Drug Industry CME Will Be Proposed By Sen. Kohl" - Pink Sheet, 2 Jul, 2007.), p. 11).

Asked about the new Vermont law, PhRMA provided a statement on state pharmaceutical marketing laws. Focusing on Vermont and Minnesota, which require disclosure of payments to physicians, PhRMA said these states "do not recognize that safeguards already exist to make sure the information provided by company representatives is accurate and well-substantiated."

- Brenda Sandburg ([email protected])