Massachusetts Loosens Gift Ban Law

16 July 2012 Publication
Author(s): Lawrence W. Vernaglia Judith A. Waltz Alexis Finkelberg Bortniker

Legal News Alert: Health Care

On July 8, 2012, as part of the 2013 budget process, Governor Deval Patrick signed into law a bill amending the Massachusetts Pharmaceutical and Medical Device Gift Ban Law (M.G.L. § 111N, the Gift Ban Law), one of the most prohibitive laws of its kind in the nation. The amendments will modestly loosen the restrictions on pharmaceutical and medical device companies in their interactions with Massachusetts licensed health care providers, and bring the Commonwealth’s law into conformance with the Federal Sunshine Act’s preemption provisions. The 2013 Massachusetts budget, and as a result the amendments to the Gift Ban Law, became effective July 1, 2012.

The Gift Ban Law was passed in 2008, and has been controversial ever since, as evidenced by multiple attempts by the legislature to repeal the law. It is significantly more restrictive than the federal provisions passed as part of the 2010 health care reform law (42 U.S.C. § 1320a-7h), which do not include a gift or other ban but rather include broad manufacturer reporting requirements for payments or transfers of value in excess of $10 (or, if less than $10, aggregated to $100 per calendar year). The federal Centers for Medicare and Medicaid Services (CMS) have issued proposed regulations to implement these new federal provisions, but have not yet finalized them.

Massachusetts now allows payment for “modest meals.” Most notably, the recent revision to the Massachusetts law loosens the restriction on providing meals to health care practitioners outside of the practitioner’s office or a hospital setting. The statute now permits “the provision of or payment for modest meals and refreshments in connection with non-CME educational presentations 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, provided that such presentations occur in a venue and manner conducive to informational communication.” This amendment now allows pharmaceutical and medical device companies to pay for practitioners’ meals at restaurants. This amendment was supported by industries far afield from pharmaceutical and medical device companies; the Massachusetts Restaurant Association and the Greater Boston Convention and Visitors Bureau also supported the amendment, arguing that the ban costs millions in foregone revenue.

The new allowance for restaurant meals is not wholly unqualified. The meals provided must be “modest,” and the statute has left the definition thereof to the Massachusetts Department of Public Health (DPH). The allowance for modest meals aligns the provisions of the Gift Ban Law with the PhRMA Code on Interactions with Health Care Professionals and the AdvaMed Code of Ethics on Interactions with Health Care Professionals, both of which allow for the provision of modest meals in conjunction with educational presentations. Neither the PhRMA nor AdvaMed Codes define the term “modest,” relying instead on local standards. The federal law specifically includes food within the items considered to be a payment or transfer of value, which must be reported if in excess of $10 (or if the annual aggregate is more than $100). As a result, the DPH will have some leeway in defining the term of art. Patient advocates in the Commonwealth have promised to lobby DPH to assure that “modest means modest.”

Furthermore, a new section of the statute requires that pharmaceutical and medical device companies report the provision of these modest meals and refreshments on a quarterly basis. The reports must include “(1) the location of the non-CME presentation; (2) a description of any pharmaceutical products, medical devices or other products discussed at such presentation; and (3) the total amount expended on such presentation and an estimate of the amount expended per participant, factoring any meals, refreshments or other items of economic value provided at such presentation.” The statute does not express a requirement that the name of the practitioner be reported. However, if the meal is valued at more than $50 per person, the name of the recipient will need to be reported under the existing Gift Ban Law and Sunshine Act reporting requirements. The amendments do not specify when the reporting is required to begin.

Expenses in connection with technical training no longer need to be only following a purchase contract. In addition to the restaurant meal allowance, the statute now allows pharmaceutical and medical device companies to pay health care practitioners for reasonable expenses necessary for technical training on the use of a medical device, without requiring that such payments be provided for in the contract for the purchase of such device. The loosening of this restriction will provide additional flexibility for pharmaceutical and medical device companies whose products require significant training.

Disclosure requirements will comply with the Sunshine Act preemption requirements. Finally, the statute now provides that pharmaceutical and medical device companies will no longer be required to make certain disclosures to the Commonwealth, so long as the information is disclosed to a federal agency as required by federal law (i.e., the transparency reporting requirements referenced above), therefore eliminating certain duplicative reporting requirements. This change is intended to comply with the preemption requirements of the Sunshine Act, and allow a common report of most expenditures that are mandated by the federal law. Among other things, reports that will continue to be required by Massachusetts will include payments made to health care practitioners who do not fall within the federal definition of covered recipient (including payments made to physician assistants and nurse practitioners who prescribe prescription drugs).

The amendments to the Gift Ban Law, while still requiring some further clarification from DPH, provide greater flexibility to pharmaceutical and medical device companies when interacting with health care practitioners. Particularly in the context of meals and refreshments, the strict gift ban prohibitions still remain in effect.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our health care clients and colleagues. If you have any questions about this Alert or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals:

Lawrence W. Vernaglia
Boston, Massachusetts

Judith A. Waltz
San Francisco, California

Alexis Finkelberg Bortniker
Boston, Massachusetts

Torrey K. Young
Boston, Massachusetts

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