Rule Proposal

VOLUME 49, ISSUE 19
ISSUE DATE: OCTOBER 2, 2017
RULE PROPOSALS
LAW AND PUBLIC SAFETY
DIVISION OF CONSUMER AFFAIRS

Proposed New Rules: N.J.A.C. 13:45J

Click here to view Interested Persons Statement

Limitations on and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers
 
Authorized By: Christopher S. Porrino, Attorney General of New Jersey.
 
Authority: N.J.S.A. 45:1-17.b.
 
Calendar Reference:  See Summary below for explanation of exception to calendar requirement.
 
Proposal Number: PRN 2017-248.

In connection with this notice of proposal, the Attorney General will hold a public hearing to take testimony from interested parties to gather facts to inform the proposed rulemaking and to afford ample opportunity for the receipt of public comment from the regulated communities, industry representatives, and the public at large. The public hearing will be held on Thursday, October 19, 2017. The public hearing will be held beginning at 10:30 A.M. in the Monmouth Room at the Division of Consumer Affairs, 124 Halsey Street, 7th floor, Newark, NJ 07101. A court reporter will be present to record the proceedings. Requests to speak should be submitted in writing to Maryann Sheehan, Director of Legislative and Regulatory Affairs, Division of Consumer Affairs, PO Box 45027, Newark, NJ 07101 no later than October 10, 2017. Specific presentation times will be assigned. Those who do not pre-register to speak will be given an opportunity to do so only as time permits. Written comments are also encouraged and should be forwarded to Maryann Sheehan, Director of Legislative and Regulatory Affairs, New Jersey Division of Consumer Affairs, PO Box 45027, 124 Halsey Street, 7th floor, Newark, New Jersey 07101, no later than October 10, 2017.
 
Submit written comments by December 1, 2017, to:
 
   Maryann Sheehan, Director, Legislative and Regulatory Affairs
   Division of Consumer Affairs
   124 Halsey Street, 7th Floor
   PO Box 45027
   Newark, New Jersey 07101
   or electronically at: www.njconsumeraffairs.gov/Proposals/Pages/default.aspx
 
The agency proposal follows:
 
Summary

The Attorney General in accordance with his statutory authority under N.J.S.A. 45:1-17.b is proposing new rules, N.J.A.C. 13:45J, concerning limitations on and obligations associated with the acceptance of compensation from pharmaceutical manufacturers. Because prescribers, including physicians, podiatrists, physician assistants, advanced practice nurses, dentists, and optometrists, as part of their scope of practice, may establish financial relationships with pharmaceutical manufacturers, and there is concern that these relationships influence prescriber treatment decisions, the Attorney General proposes rules to strengthen enforcement efforts to address prescriber acceptance of items of value from drug manufacturers.

In 2013, the national database located at www.cms.gov/openpayments, was established to bring greater transparency and public awareness of financial relationships between physicians and teaching hospitals and drug and device manufacturers. In July 2017, the database was updated to include payments made during calendar year 2016. Analysis of that database, which now contains all amounts paid in each year from 2013 through 2016, revealed that, over the last year alone, prescribers in New Jersey received a total of $ 69 million from drug and device manufacturers. More disturbing, the top 300 of the 30,000 New Jersey doctors listed received two-thirds of $ 69 million, in a median amount of $ 62,500. Thirty-nine doctors were reported as having been paid at least $ 200,000. Pharmaceutical company marketing practices -- paying for consulting arrangements, speaking engagements, and food, beverage, and travel -- are increasingly coming under scrutiny and [page=3331] appropriately so. In particular, there is widespread concern that the treatment decisions of prescribers are being influenced by these payments.

Currently, the Board of Medical Examiners has a rule addressing the issue. N.J.A.C. 13:35-6.17(e)1, operative April 15, 1992, provides that physicians, podiatrists, and physician assistants "shall not, directly or indirectly, give to or receive from any licensed or unlicensed source a gift of more than nominal (negligible) value, or any fee, commission, rebate or bonus or other compensation however denominated, which a reasonable person would recognize as having been given or received in appreciation for or to promote conduct by a licensee including: purchasing a medical product, ordering or promoting the sale or lease of a devise or appliance or other prescribed item, prescribing any type of item or product for patient use or making or receiving a referral to or from another for professional services." That rule, however, contains a broad exclusion from the prohibition. Licensees of the Board of Medical Examiners may receive "reasonable payment for bona fide participation as a speaker at a professional workshop or seminar" or "attendance by non-faculty licensees" at accredited continuing medical education programs where "commercial sources have been utilized in calculating the registration fees to be charged to all participants." The Board of Dentistry's rule, N.J.A.C. 13:30-8.13(d), provides broadly that "dentists shall not receive, solicit, offer or pay any remuneration as an inducement to make a referral or as compensation for a referral of a patient for a service, product, drug or device or to purchase, prescribe or recommend a product, drug or device." "Remuneration" includes gifts and free goods or services, among other payments. The Board of Optometry also has a regulation, N.J.A.C. 13:38-1.3(e), that includes a broad prohibition on receiving remuneration as an inducement to make a referral or as compensation for a referral of a patient for a service, product, drug, or device or to purchase, prescribe, or recommend a service, product, drug, or device. Such a violation is deemed professional misconduct.

Given the exponential growth in the amount of money that is being paid to prescribers, the Attorney General believes that the time is ripe to strengthen and clarify the existing limitations for licensees of the Boards of Medical Examiners, Dentistry, and Optometry and extend those strengthened standards to all prescribers to better address the economic realities of the current healthcare marketplace. The proposed rules establish principled standards to minimize the potential for conflicts of interest between prescribers and pharmaceutical manufacturers to ensure that patient care is guided by the unbiased, best judgment of the treating prescriber.

The proposed prohibitions closely mirror those set forth in the Pharmaceutical Research and Manufacturers of America (PhRMA) Code of Ethics for their member companies with respect to gifts to prescribers. Similar to these voluntary guidelines, the proposed rules specifically recognize that prescribers should be permitted to receive items that provide a direct benefit to patients--such as samples or anatomical models for use in examination rooms and items of value that indirectly benefit patients by advancing prescriber learning. By making prescribers accountable for the receipt of things of value from pharmaceutical manufacturers, this chapter provides objective measures to address two areas where the PhRMA Code of Ethics leaves member companies latitude. The PhRMA Code of Ethics makes clear that when a manufacturer provides meals, they should be "modest by regional standards," whether offered by a company representative in-office or in-hospital, or at promotional activities or continuing educational events. This chapter gives prescribers guidance on what will be deemed a "modest" meal in New Jersey. In addition, the PhRMA Code of Ethics provides:

Any compensation or reimbursement made to a healthcare professional in conjunction with a speaking arrangement should be reasonable and based on fair market value. Each company should, individually and independently, cap the total amount of annual compensation it will pay to an individual health care professional in connection with all speaking arrangements. Each company also should develop policies addressing the appropriate use of speakers, including utilization of speakers after training and the appropriate number of engagements for any particular speaker over time. (Emphasis added.)

This provides further clarification to heathcare prescribers and the chapter puts an annual cap on bona fide services (save for speaking at continuing education events) at $ 10,000.

In broad overview, the chapter limits the "things of value" that prescribers (physicians, podiatrists, physician assistants, advanced practice nurses, dentists, and optometrists) can accept from pharmaceutical manufacturers. It delineates prohibited items (cash, gift cards, entertainment, and recreational items, things for prescriber's personal use, payments supporting non-faculty attendance at promotional activities, and continuing education events) but establishes some exemptions from these prohibitions where the purpose is for the benefit of patients or prescriber education (samples, education materials). It allows for and gives definition to the value and frequency (four times each year) of "modest" meals that can be provided in different settings. When company representatives seek to provide information about a product in in-office or in-hospital settings, any food or beverage that is provided should not exceed $ 15.00 per prescriber at a presentation. At promotional activities and at continuing education events, modest meals should not exceed $ 15.00 for each prescriber.

This proposed chapter also sets standards for agreements by which prescribers are paid for bona fide services (speaking at promotional activities and continuing education events, participation in advisory bodies, and under consulting arrangements). The terms must be in a writing, with dollar amounts, and an articulation of the prescriber's expertise. Significantly, picking up on the PhRMA admonition above, the rule caps the compensation for bona fide services (except speaking at continuing education events) from all pharmaceutical manufacturers at $ 10,000 every calendar year.

A subsection-by-subsection summary follows.

Proposed new N.J.A.C. 13:45J-1.1 establishes the purpose of the chapter to regulate the acceptance of items of value by licensed prescribers.

Proposed new N.J.A.C. 13:45J-1.2 sets forth the definitions used within the chapter. The following terms are defined: "bona fide services," "continuing education event," "modest meals," "non-faculty," "pharmaceutical manufacturer," "'pharmaceutical manufacturer's agent' or 'manufacturer's agent,'" "prescriber," and "promotional activity." The definition of "prescriber" establishes that the rule applies to physicians, podiatrists, physician assistants, advanced practice nurses, dentists, and optometrists -- all of the New Jersey prescribers authorized to prescribe medications. The definitions also distinguish between "promotional activities" and a "continuing education event," and the definition of "bona fide services" identifies three activities to which the limitations apply: speaking engagements, participation on advisory bodies, and consulting arrangements. The definition identifies the content of the written agreements pertaining to these services that will be required under the proposed rule.

Proposed new N.J.A.C. 13:45J-1.3 delineates the items of value, unless otherwise exempt, that prescribers are precluded from accepting from any pharmaceutical manufacturer or manufacturer's agent that are intended for the prescriber's personal benefit. Proposed subsection (a) concerns all manner of financial benefit or benefit-in-kind, including payments, gifts, stock, scholarships, and charitable contributions. Proposed subsection (b) prohibits acceptance of entertainment and recreational items. Proposed subsection (c) concerns any item of value including pens, mugs, or other items with a company or product logo; items for the personal benefit of the prescriber or staff, such as floral arrangements and items that have utility in both the professional and non-professional setting; cash or its equivalent; and any payment to a non-faculty prescriber associated with attending any continuing education event or promotional activity. Proposed subsection (d) limits the dollar amount that prescribers can accept for meals in the office, at commercial establishments, or at a promotional activity. In addition, as set forth in proposed subsection (e), these items of value cannot be accepted by members of the prescriber's immediate family, which is defined.

Proposed new N.J.A.C. 13:45J-1.4 sets forth the attributes of those items of value that render them appropriate for acceptance. These items [page=3332] include compensation at fair market value for bona fide services, items that benefit patients, and modest meals. The rule specifically places limits on the value of the meals that can be accepted: $ 15 for each prescriber. Speakers are permitted to accept compensation, including travel and lodging, at fair market value for bona fide services at continuing education events and promotional activities. Non-faculty prescribers are not permitted to accept such compensation. Items of value, such as electronic devices, which may be designed primarily for education of patients or the prescriber but that also have an independent value to the prescriber outside of his or her professional responsibilities, may also not be accepted. This prohibition, however, does not include electronic devices used by patients and that remain in a common area of the prescriber's office.

Proposed new N.J.A.C. 13:45J-1.5 excludes from the chapter's prohibitions sample medications that are intended for the exclusive benefit of the prescriber's patients, provided the prescriber does not charge the patient for such samples. Prescribers must also satisfy any dispensing standards of their respective licensing board.

Proposed new N.J.A.C. 13:45J-1.6 establishes a $ 10,000 cap on the dollar amount that a prescriber can accept from pharmaceutical manufacturers in a calendar year for bona fide services. Fair market payments for speaking engagements at continuing education events are excluded from this cap.

Proposed new N.J.A.C. 13:45J-1.7 requires prescribers who speak at continuing education events and promotional activities to disclose orally or in writing the acceptance of payments for bona fide services from the sponsoring pharmaceutical manufacturer within the preceding five years.

Proposed new N.J.A.C. 13:45J-1.8 specifies that prescribers employed by a pharmaceutical manufacturer who also provide patient care are required to comply with the disclosure requirements of proposed N.J.A.C. 13:45J-1.7, but are not subject to the compensation prohibitions of the chapter.

The Attorney General has determined that the comment period for this notice of proposal shall be 60 days; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice is excepted from the rulemaking calendar requirement.
 
Social Impact

The proposed new rules will have a positive social impact on patients by reducing incentives for treatment decisions to be influenced by payments from drug manufacturers, which will encourage prescribers who prescribe to focus on the patient's best interests. The proposed new rules will also have a positive social impact on prescribers by providing clear guidance as to the compensation that they may accept from pharmaceutical manufacturers and to minimize the potential for conflicts of interest to ensure that patient care is guided by the unbiased, best judgment of the treating prescriber.
 
Economic Impact

The proposed new rules will have an economic impact upon prescribers to the extent that, except for bona fide services or unless specifically allowed under the proposed rules, they will not receive compensation, financial benefits, or any items of value from drug manufacturers. To the extent healthcare providers are not incentivized to prescribe and/or dispense highly marketed drugs and, where appropriate, there is a greater use of generic products, there may be an overall diminution of costs to the healthcare system. In addition, vendors who supply items of value to the manufacturers may lose revenue. The Attorney General believes that any economic costs are greatly outweighed by assuring that patients' treatment decisions are based upon prescribers' unbiased judgment about the patients' best interests.
 
Federal Standards Statement

A Federal standards analysis is not required because the proposed new rules are governed by N.J.S.A. 45:1-17.b and are not subject to any Federal standards or requirements.
 
Jobs Impact

The proposed new rules will not result in an increase or decrease in the number of jobs in the State.
 
Agriculture Industry Impact

The proposed new rules will have no impact on the agriculture industry in the State.
 
Regulatory Flexibility Analysis

Currently, the Division of Consumer Affairs licenses 62,500 prescribers. If these are considered "small businesses" within the meaning of the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq., then the following analysis applies.

The proposed new rules will impose various recordkeeping and compliance requirements upon licensees. These requirements are discussed in the Summary above. The proposed new rules do not impose any reporting requirements, and no additional professional services will be needed to comply with the proposed new rules. The rules will require prescribers to track the value of meals they accept from pharmaceutical companies and the payments for bona fide services. The costs of compliance with the proposed new rules are discussed in the Economic Impact statement above. The Attorney General believes that the proposed new rules should be uniformly applied to all licensees in order to ensure the welfare of the general public in the provision of healthcare services. Therefore, no differing compliance requirements for any licensees are provided based on the size of the business.
 
Housing Affordability Impact Analysis

The proposed new rules will have an insignificant impact on the affordability of housing in New Jersey and there is an extreme unlikelihood that the new rules would evoke a change in the average costs associated with housing because the proposed new rules concern limitations on and obligations of prescribers associated with the acceptance of compensation from pharmaceutical manufacturers.
 
Smart Growth Development Impact Analysis

The proposed new rules will have an insignificant impact on smart growth and there is an extreme unlikelihood that the new rules would evoke a change in housing production in Planning Areas 1 or 2, or within designated centers, under the State Development and Redevelopment Plan in New Jersey because the proposed new rules concern limitations on and obligations of prescribers associated with the acceptance of compensation from pharmaceutical manufacturers.
 
Full text of the proposed new rules follows:
 
CHAPTER 45J
LIMITATIONS ON AND OBLIGATIONS ASSOCIATED WITH PRESCRIBER ACCEPTANCE OF COMPENSATION FROM PHARMACEUTICAL MANUFACTURERS
 
SUBCHAPTER 1.    LIMITATIONS ON AND OBLIGATIONS ASSOCIATED WITH PRESCRIBER ACCEPTANCE OF COMPENSATION FROM PHARMACEUTICAL MANUFACTURERS
 
13:45J-1.1     Purpose
 
The rules in this chapter regulate the receipt and acceptance by prescribers of anything of value from pharmaceutical manufacturers to ensure that such relationships do not interfere with prescribers' independent professional judgment.
 
13:45J-1.2     Definitions
 
The following words and terms when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise:
 
"Bona fide services" means those services provided by a prescriber pursuant to an arrangement formalized in a written agreement including, but not limited to, presentations as speakers at promotional activities and continuing educational events, participation on advisory boards, and consulting arrangements. The written agreement shall specify the services to be provided, the dollar value of the consideration to be received by the prescriber, based on their fair market value of the services, and identify the following:
 
1. The legitimate need for services in advance;
 
2. The connection between the competence, knowledge, and expertise of the prescriber and the purpose of the arrangement;
 
[page=3333] 3. How participation of the prescriber is reasonably related to achieving the identified purpose;
 
4. The manner by which the prescriber will maintain records concerning the arrangement and the services provided by the prescriber;
 
5. The venue and circumstances of any meeting in which the prescriber participates, if applicable, addressing how it is conducive to the services provided and advances the primary focus of the meeting; and
 
6. An attestation that the prescriber's decision to render the services is not unduly influenced by a pharmaceutical manufacturer's agent.
 
"Continuing education event" means a continuing education event, third-party scientific or educational conference, professional meeting, U.S. Food and Drug Administration required education and training, or any other gathering where responsibility for and control over the selection of content, faculty, educational methods, materials, and venue belongs to the event's organizers in accordance with the standards of a nationally recognized accrediting entity, held in a venue that is appropriate and conducive to informational communication and training about healthcare information, where:
 
1. The gathering is primarily dedicated, in both time and effort, to promoting objective scientific and educational activities and discourse (one or more educational presentation(s) should be the highlight of the gathering); and
 
2. The main purpose for bringing attendees together is to further their knowledge on the topic(s) being presented.
 
"Modest meals" means a food and/or refreshment, where its fair market value does not exceed $ 15.00 for each prescriber.
 
"Non-faculty" means a prescriber who does not serve as a speaker or provide actual and substantive services as a faculty organizer or academic program consultant for a continuing education event or for a promotional activity.
 
"Pharmaceutical manufacturer" means any entity that:
 
1. Is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drugs or biologics, by extraction from substances of natural origin, or independently by means of chemical synthesis; or
 
2. Is directly engaged in the packaging, repackaging, labeling, relabeling, or distribution of prescription drugs or biologics, provided, however, that "pharmaceutical manufacturer" or "manufacturer" shall not include a healthcare facility licensed by the Department of Health, or a pharmacy holding a permit issued by the Board of Pharmacy.
 
"Pharmaceutical manufacturer's agent" or "manufacturer's agent" means a person who, while employed by, or under contract with, a pharmaceutical manufacturer, engages in detailing, promotional activities, or other marketing of prescription drugs or biologics to any prescriber authorized to prescribe, dispense, or purchase prescription drugs, biologics, healthcare facility, or pharmacist, but shall not include a prescriber or pharmacist when acting within the ordinary scope of the practice for which he or she is licensed.
 
"Prescriber" means a physician, podiatrist, physician assistant, advanced practice nurse, dentist, or optometrist licensed pursuant to Title 45 of the Revised Statutes. "Prescriber" does not include a licensee who is an employee, as defined in N.J.A.C. 18:35-7.1, of a pharmaceutical manufacturer who does not provide patient care.
 
"Promotional activity" means any unaccredited activity, meeting, or program organized or sponsored by a pharmaceutical manufacturer, or the manufacturer's agent, that is directed at prescribers to promote the prescription, recommendation, supply, administration, use, or consumption of the manufacturer's products through any media or medium.
 
13:45J-1.3     Prohibited gifts and payments
 
(a) A prescriber shall not accept, directly or indirectly, 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 permitted under N.J.A.C. 13:45J-1.4, from any pharmaceutical manufacturer or manufacturer's agent.
 
(b) A prescriber shall not accept, directly or indirectly, any entertainment or recreational items, such as tickets to theater or sporting events, or leisure or vacation trips, from any pharmaceutical manufacturer or manufacturer's agent.
 
(c) Except as permitted under N.J.A.C. 13:45J-1.4, a prescriber shall not accept from any pharmaceutical manufacturer or manufacturer's agent any item of value that does not advance disease or treatment education, including:
 
1. Pens, note pads, clipboards, mugs, or other items with a company or product logo;
 
2. Items intended for the personal benefit of the prescriber or staff, such as floral arrangements, sporting equipment, artwork, or items that may have utility in both the professional and non-professional setting, such as electronic devices;
 
3. Any payment in cash or cash equivalent, such as a gift certificate;
 
4. Any payment or direct subsidy to a non-faculty prescriber to support attendance at, or as remuneration for time spent attending, or for the costs of travel, lodging, or other personal expenses associated with attending any continuing education event or a promotional activity.
 
(d) A prescriber shall not accept meals from any pharmaceutical manufacturer or manufacturer's agent, except as provided in N.J.A.C. 13:45J-1.4.
 
(e) Unless an immediate family member is employed by a pharmaceutical manufacturer and receives, as part of the usual and customary employment relationship, compensation, financial benefit, or other item of value, the prohibitions listed in this section shall also apply to the prescriber's immediate family.
 
1. For purposes of this rule, "immediate family" means an individual's spouse, civil union partner, or domestic partner, or the individual's or spouse's, civil union partner's, or domestic partner's parent, child, brother, sister, aunt, uncle, niece, nephew, grandparent, grandchild, son-in-law, daughter-in-law, stepparent, stepchild, stepbrother, stepsister, half-brother, or half-sister, whether the relative is related to the individual or the individual's spouse, civil union partner, or domestic partner by blood, marriage, or adoption.
 
13:45J-1.4     Permitted gifts and payments
 
(a) Consistent with the requirements of this chapter, a prescriber may accept the following from a pharmaceutical manufacturer or manufacturer's agent:
 
1. Items designed primarily for educational purposes for the patients or the prescriber that have minimal or no value to the prescriber outside of his or her professional responsibilities. Examples of educational items include anatomical models for use in an examination room or other information and materials in any form directly related to patient care or prescriber education. Items that may have an independent value to the prescriber outside of his or her professional responsibilities, such as electronic devices, may only be accepted if they are used by patients and remain in a common area of the prescriber's office.
 
2. A pharmaceutical manufacturer subsidized registration fee at a continuing education event, if that fee is available to all event participants.
 
3. Modest meals provided through the event organizer at a continuing education event, provided the meals facilitate the educational program to maximize prescriber learning.
 
4. Modest meals provided to non-faculty prescribers through promotional activities no more than four times in a calendar year from the same manufacturer.
 
5. Compensation, based on fair market value, for providing bona fide services as a speaker or faculty organizer or academic program consultant for a continuing education event. A prescriber serving in this capacity may also accept reasonable payment and remuneration for travel, lodging, and other personal expenses associated with such services. A prescriber may be granted continuing education credit for participation in such activities, if the continuing education requirements of the prescriber's professional licensing board are satisfied.
 
6. Compensation, based on fair market value, for providing bona fide services as a speaker or faculty organizer or academic program consultant for a promotional activity, consistent with such caps as set forth at N.J.A.C. 13:45J-1.6. A prescriber serving in this capacity also may accept reasonable payment or remuneration for travel, lodging, and [page=3334] other personal expenses associated with such services. A prescriber may not claim continuing education credit for participation in such activities.
 
7. Compensation, based on fair market value, for participation on advisory bodies or under consulting arrangements, consistent with such cap as set forth at N.J.A.C. 13:45J-1.6.
 
13:45J-1.5     Sample medications
 
A prescriber may accept sample medications or devices that are intended to be used exclusively for the benefit of the prescriber's patients, provided the prescriber does not charge patients for such samples, and provided all dispensing standards, as applicable, set forth in the prescriber's licensing board rules are satisfied.
 
13:45J-1.6     Bona fide services cap
 
A prescriber shall not accept more than $ 10,000 in the aggregate from all pharmaceutical manufacturers in any calendar year for the bona fide services of presentations as speakers at promotional activities, participation on advisory boards, and consulting arrangements. Payments for speaking at continuing education events are not subject to this cap, but must be for fair market value and set forth in a written agreement.
 
13:45J-1.7     Disclosure requirements
 
A prescriber serving as a speaker at a continuing education event or for a promotional activity shall directly disclose to attendees either orally or in writing at the beginning of the presentation that the prescriber has accepted payment for bona fide services from the sponsoring pharmaceutical manufacturer within the preceding five years.
 
13:45J-1.8     Prescribers employed by pharmaceutical manufacturer
 
A prescriber who is employed by a pharmaceutical manufacturer and who also provides patient care shall disclose to patients either orally or in writing his or her employment by the pharmaceutical manufacturer, but is exempt from the compensation prohibitions of this chapter.