States Expand Transparency & Disclosure Requirements

Just as biopharma companies are mastering the complexities of the five-year-old federal Open Payments program, state governments are enacting a host of additional marketing and disclosure rules and restrictions on industry interactions with health care professionals (HCPs). This stepped-up action on the local level undermines a main promise of the federal program:  to avoid a proliferation of diverse state and local reporting requirements that would be difficult and costly for companies to meet.

A main thrust of state disclosure laws is to curb spending on drugs and medical products. Nearly 30 states and the District of Columbia have enacted or are considering new laws to limit pharma marketing activity, require licensure of sales reps, expand clinical trial disclosures, restrict drug advertising, and limit price increases, reported Amie Phillips Pablo, associate director for compliance operations at Novo Nordisk, at CBI’s annual Transparency and Aggregate Spend Conference in Washington, D.C. this week. A new law in Nevada requires detailed data from manufacturers of “essential diabetes drugs” to justify and curb prices. California now requires advance notification of price hikes greater than 16% a year and sets limits on payments for new specialty drugs. Similar measures are emerging as gubernatorial races are heating up in nearly 40 states. Drug take-back programs, disclosures related to co-pay cards and rebates, more stringent gift bans, and requirements to adopt marketing codes of conduct are also prominent.

A “big new area” for states, added John Oroho, executive vice president at Porzio Life Sciences, is to require local licensure or registration of pharmaceutical sales reps. Chicago leads this trend with a recent law requiring pharma reps that interact with HCPs to obtain a license and disclose contacts with medical personnel and the transfer of samples, gifts or other materials. Similar requirements for registering pharma lobbyists raise questions about whether sales reps fall under the “lobbyist” definition.

Prohibitions or limitations on gifts to HCPs have been enacted in about ten states, including Vermont, California, Colorado, new Jersey and Massachusetts, and are pending in New York and Pennsylvania, Oroho noted at the Transparency conference. Connecticut has stiff penalties for violating its marketing disclosure law or failure to adopt a code of conduct, and several states require manufacturers to comply with marketing codes

Drug samples are a rising target, as more states require reports on the distribution of drug samples to doctors’ offices. States vary in how they define “samples,” some including coupons and vouchers in this category.

Federal reporting declines

At the same time, the latest report on the federal “Sunshine” Act indicates a notable drop in number of reports from manufacturers and in total dollars spent in all categories in 2017 compared to 2016, as analyzed by Tom Sullivan in Policy & Medicine. The Centers for Medicare and Medicaid  Services (CMS) reports that industry submitted data on 11.5 million transactions involving $8.4 billion in payments to doctors and other HCPs and teaching hospitals last year, as published in June 2018. More than half of that amount ($4.6 billion) involves research payments related to clinical research. Marketers also paid $2.8 billion to doctors and other medical personnel for speaker, consulting, meals, and travel and lodging.

Analysts speculate that the decline may reflect reduced marketing activity by opioid makers, but are waiting to see if the lower numbers reflect a trend or a one-time drop. And Congress may expand the Open Payments program as part of broader legislation to curb the nation’s opioid epidemic. Proposed measures would increase the range of HCPs subject to reporting and require greater disclosure of payments and relations between manufacturers and patient advocacy groups.

CMS continues to refine the program to avoid erroneous and duplicative submissions, streamline the dispute resolution process, and reduce the reporting burden on all parties, explained to Robin Usi, director of the Division of Data & Informatics in CMS’ Center for Program Integrity. Usi described a range of planned “system enhancements” for 2019 at the Transparency conference: CMS is encouraging physicians to more actively review reports on their interactions with pharma companies, as analysts continue to tap Open Payments data to assess links between industry payments and doctor prescribing activity.

Meanwhile, new state laws and regulations create major challenges for manufacturers tracking and compliance efforts, as rules vary on which HCPs are covered by differing marketing restrictions and disclosure rules. Penalties can add up for violations. And information reported to states may be used by investigators and prosecutors to build cases alleging bribery and fraud. To deal with this expansion in transparency requirements, companies need effective systems to track all payments to HCPs, John Oroho advised, and to assess what are reasonable interactions, fees and payments to providers.