State Pharma

Over the past decade, the pharmaceutical meetings landscape had gotten considerably more difficult to navigate. Most recently, a number of state legislators have been crafting rules to limit pharmaceutical marketing -- and, by extension, related meeting planning -- at the state level. Though the intention has been good (i.e., lower marketing costs could help lower the price of prescription drugs), the result for those who must comply with the regulations has been a mountain of paperwork and a mounting uncertainty over what the rules require them to do.
    “It started in California, and it’s spreading like cancer,” says Fred Wilson, category manager of CME at the Procter & Gamble Health Care Research Center in Mason, Ohio. “It’s a nightmare.”

California’s big step
Most meeting planners who work for pharmaceutical companies adhere to the PhRMA Code, a voluntary program limiting marketing and gifts to physicians, proposed in 2002 by the Pharmaceutical Research and Manufacturers of America, the largest association of such companies in the United States.
    But the code is voluntary, after all, and after its adoption some industry observers continued to complain that pharmaceutical companies’ marketing practices still needed to be reined in. (The Food and Drug Administration put out regulations in 1997 to prevent the companies from promoting unapproved uses for medications, but that only affects the content, rather than the amount, of marketing.) In response, the U.S. Office of the Inspector General issued a “guidance” to prevent the practice of using gifts and plush trips as kickbacks to doctors based on prescribing practices.
    The concept of a guidance is relatively new. In 2003, to lower the costs of policing various companies, the government laid down loose guidelines for good behavior and expected individual firms to form their own compliance programs. Companies whose programs were not up to snuff would be investigated, warned and sometimes fined.
    In 2004, the California legislature decided this guidance was not enough. Every penny spent on pharmaceutical marketing inflates the price of medications, went the reasoning. In addition, it was recognized that drug companies have an interest in pushing the newest, most expensive medicines, which could influence doctors to prescribe those when cheaper alternatives would do. With the intent of keeping prescription-drug prices down, the California legislature made the voluntary PhRMA Code and the suggested OIG guidance into law as of July 1, 2005.
    The legislation has created its own problems, however. First, the PhRMA Code and the OIG guidance were not conceived as precisely delineated laws. There is a margin of error built into both measures in allowing individual companies to decide for themselves how best to market their medications while avoiding conduct that could be construed as a bribe.
    “The PhRMA Code has a lot of shalls and shoulds and this-would-be-a-good-idea,” explains Natasha Nelson, Esq., chief ethics and compliance officer for the U.S. branch of Sankyo Pharma Inc., based in Parsippany, N.J. “Did the California law change every verb to ‘must’? That’s the way most pharma companies have interpreted it.”
    Second, it becomes a challenge for the planner to figure out which seminars are affected by the law. Is it only for companies with an office in California? For meetings held in California? Or for doctors who practice in California, regardless of where they attend a meeting? What about doctors with practices in two states attending a meeting in a third?

Other states jump in
To complicate matters, some states have passed laws that limit or require companies to disclose the price of gifts given to physicians. Jurisdictional questions are perhaps simplified (a record is kept for every doctor who practices in those states), but they are replaced by other gray areas. For example, is a dinner at an informational meeting considered a gift?
    “Right now, most of the regulations are designed to keep a sense of impropriety out of physicians’ prescribing habits,” says James Montague, chairman and owner of PMPN, a nationwide pharmaceutical meeting planning network based in Durham, N.C. “I think the whole thing is ludicrous, but some people think a free stethoscope is going to sway doctors to prescribe one thing over another.”
    Vermont was one of the first states to pass such a law (in 2002), requiring companies to report any gift to a physician worth more than $25. A few items, such as unrestricted educational grants, were exempted -- meaning, for example, that at an association meeting (by nature educational), supported at least in part by grants from pharmaceutical companies, meals consumed by physicians are not considered gifts.
    But in other states, where similar laws have been passed, the rules are slightly different. In Minnesota, for example, gifts worth more than $50 cannot be given to doctors, and education is not exempt. Furthermore, the state requires pharmaceutical companies to report the names of physicians who are given gifts, along with how much was spent on each person. Similar bills are being fought over in a dozen other state legislatures.
    “All the states like to copy each other,” notes Jeffrey Mittleman, a Boston-based attorney who specializes in the health-care industry at the law firm of Holland & Knight, LLP. “It would be more surprising if we didn’t see more copycats.”
    In Hawaii, a disclosure bill was defeated this spring; in Colorado, the bill was awaiting the governor’s signature at press time. Both Illinois and Massachusetts might pass laws as well. Most state legislatures won’t be in session again until next year, so the storm has abated for the moment.
    Keeping track of which states have passed what legislation has become a full-time job. Or at least it has for Sharon Treat, the Hallowell, Maine-based executive director of the National Legislative Association on Prescription Drug Prices, a coalition of lawmakers working to keep drug prices down and expand access to them. Treat works with various members of Congress to push reform legislation, and she lists victories and defeats on her website, www.nlarx.org. (A more exhaustive list can be found on the National Conference of State Legislatures’ site, at www.ncsl.org/programs/health/drugbill06.htm. For a chart depicting cur-rent legislation, see “Where the States Stand,” below.)
    Then there’s the issue of trying to decipher the specifics of each law. Assuming compliance departments and meeting planners have the time to get their hands on all of them, figuring out which activities are exempt and which aren’t can be frustrating.
    “These laws are especially problematic because there are elements that are not entirely clear,” says Eric Allen, executive vice president of the Healthcare Convention & Exhibitors Association, based in Atlanta. “What will be the impact on [pharmaceutical companies’] activities? What will be the reporting burdens? Things may be open to interpretation.”
    If all the laws were the same, it would be a simple matter to follow them, but each is different in meaningful ways. For example, rulings in Maine and Vermont require some free medication samples to be reported, while other states don’t have such provisions. In New Hampshire, a measure has been passed that prevents pharmaceutical firms from using doctors’ prescribing practices to set a marketing plan, a big blow to the companies’ promotional efforts in that state. On the other hand, a pharmaceutical marketing law enacted this spring in West Virginia took no action regarding gifts to physicians -- news that is probably welcome to many meeting planners in that state.
    So far, says Mittleman, there have been no high-profile, state-level investigations, nor has a big fuss been made over specific gifts to specific doctors. “No one’s been appointed to enforce controls,” he says, “but it’s going to come. Someone’s going to cross the line.”
    This only makes pharmaceutical companies and planners all the more uncertain. If no bar has been set to describe improper behavior, nobody is sure exactly how to behave.

Worth the effort?
In general, pharmaceutical meeting planners see the regulations as an unnecessary hassle.
    “It’s adding a whole new level of complexity to an already tough area,” complains James Montague of PMPN. “Trying to weed through the PhRMA and OIG guidelines is tough enough. The state laws are more detailed and will be more cumbersome than even the federal regulations.”
    Yet, the laws are there for a reason, says Chris McCoy, MD, legislative affairs director for the American Medical Students Association, based in Reston, Va. “Drug companies are spending about $10,000 on gifts and marketing, per physician, per year,” he says. “Where is that money going?”
    McCoy hopes that the added hassle of bookkeeping will convince pharmaceutical companies to give reprints of journal articles instead of pens and dinners. “A fancy dinner doesn’t help anyone be a better doctor,” he notes.
    Ethics compliance officer Natasha Nelson of Sankyo is sympathetic to both sides. “I think that the laws are good,” she says, “and I think the laws are effective in making public how much companies are spending on a per-doctor basis.”
    Still, every new law that crops up forces a change in Sankyo’s policies, and it’s not easy to keep track of what the regulations mean in each state. To simplify matters, the company has a strict nationwide compliance code that covers almost all of the state-level regulations.
    Still more difficulty arises when multiple representatives marketing different drugs want to bring the same physician to multiple promotional meetings.
    “Now we have to divide up the money between those competing products and representatives,” explains Nelson. “Before, it was like they were a single child in the family; now they’re the Brady Bunch.”

*  Physician-marketing legislation in place (California, District of Columbia, Maine, Minnesota, New Hampshire, Vermont)

*  Physician-marketing legislation pending (Arkansas, Illinois, Iowa, Maryland, Massachusetts, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Washington, Wisconsin)

*  Marketing legislation defeated or not applicable to physicians (Alaska, Colorado, Hawaii, West Virginia)

Following the rules
Marketing laws are, not surprisingly, an incredible burden for meeting planners, not to mention pharmaceutical companies. Most third-party pharmaceutical planners contacted for this article didn’t know much at all about state-level regulations. But ignorance is not acceptable in today’s litigious climate. Even providers of continuing medical education, who are so far unaffected by this type of legislation, need to remain vigilant in the event a state passes a disclosure law that does not exempt unrestricted educational grants, agree experts.
    “These laws have come so quickly and are so varied from state to state that meeting planning companies have not realized they have to be legal specialists in setting up meetings,” notes Nelson.
    If the laws are so diverse, how is any well-intentioned meeting planner to follow them all?
    “Ultimately, the onus is on the pharmaceutical company,” says James Montague, “but someone else is going to have to collect that data.”
    The job of the meeting planner, therefore, is to pay careful attention to what the pharmaceutical company considers the rules to be, and follow them to the letter. Here are some tips.
    Schedule a meeting. PMPN’s James Montague advises his employees to sit down with the client’s compliance department and get a feel for exactly how the rules need to be followed. “With all the regulations being enacted, we have to take each individual state and say, ‘What’s different about this?’” he says.
    To keep up with inconstant guidelines, Rick Molchan, MBA, reads everything he finds on the subject and expects pharmaceutical companies to fill him in on late-breaking changes. “We work closely with compliance,” says Molchan, senior account executive at Eventcom International by Marriott, based in Rosemont, Ill. (For more about Eventcom, see “How the Experts Do It,” above.) “Obviously the pharmaceutical company does not want to get in trouble.”
    Track the doctors. Because it is important that doctors are not treated to too many meetings from the same company, planners need to preregister with their company any activities that involve a health-care professional, as well as seek approval for the menu, any speakers and the location of the event.
    Special attention also must be given to doctors who practice in multiple states, explains Nelson. The doctor is under the jurisdiction of states where she is licensed, not where she lives. In addition, if that doctor travels to a third state for the meeting, the rules that affect meetings in that state must be followed for everyone in attendance. If a doctor is licensed in two states, that’s when the paperwork gets most tricky, and special pains must be taken to avoid double-counting her.
    “We have one-and-a-half people whose full-time job it is to track this,” Nelson says. “And we’re a small company. I can’t begin to imagine what a company with 100,000 reps is doing.”
    Budget gingerly. Because the states are heavily concerned with dollars and cents, Eventcom’s Rick Molchan advises being very careful about the bottom line. Hotels used for pharmaceutical meetings are very rarely luxury brands and are almost never resorts, except in destinations where all the major properties are resorts. Sometimes Molchan avoids hotels entirely and arranges events at museums or theaters. Also, meals are kept simple. “We never serve lobster or steak,” he says. “It’s always rubber chicken.”
    Create exacting reports. After the event, following the rules generally requires careful tabulating and reporting. Molchan makes a spreadsheet and ensures every dollar spent on doctors, including money spent on meals, is counted.
    Reporting all spending is rarely easy, however. Ideally, the meeting planner would divide the total bill by the number of attendees and write up receipts for the doctors to take home. But that, too, could be problematic, says Montague. What if one doctor wanted an extra appetizer? What if one wants the total reduced because he didn’t eat anything at all? These issues must be hashed out beforehand with the sponsoring company.
    Gift wisely. Some states dictate that any presents must be of help to patients. Even in states that don’t restrict gifts to doctors, Montague suggests being sensitive about what is given. “We don’t want a doctor to go home with a bagful of goodies, and then spike up as having received the most gifts in the past month. We want to make sure that if he’s got to report it, he won’t mind reporting it.”
    Thus, reference books and stethoscopes make popular presents, whereas a leather wallet would not. Even pens might not be welcome for long.
    “If companies have to buy $5 pens and $50 dinners, that money is coming indirectly from our patients,” says Chris McCoy. “More concerning to us is the perception of bias it creates. When patients come to the office with pens bearing a company name, it creates the perception of an undisclosed tie to the company.”
    Give a little. Eric Allen deems it wise for planners simply to be aware that the marketing environment for pharmaceutical firms currently is the most uncertain it has ever been. “Understand that this is a new reality for your customers,” he advises. “Anything you can do to make dealings with them easier at a time like this would probably be appreciated.”
    Watch and wait. “We’re all fumbling around right now till pharmaceutical firms figure out what they want,” says Montague. “It’s just going to be a nightmare, but we have to take what comes.”