Device manufacturers should begin tracking gifts given to physicians in anticipation of increased state regulation of marketing and promotional activities, according to Kyphon Chief Compliance Officer Bert Johnson.

During a June 21 presentation at CBI's "Fraud & Abuse Compliance" workshop in Washington, D.C., Johnson said that a growing number of states have enacted laws with specific reporting and certification for the pharmaceutical industry.

While the majority of the existing state legislation is limited to drug manufacturers, he said that the laws are likely to expand to regulate marketing in the medical device industry, which has recently gained attention from the Department of Justice. Several subpoenas related to promotional activities were served to orthopedic and cardiac device companies last year (¹ Also see "Cardiac Rhythm Management Firms Targeted By DoJ Fraud Investigation" - Medtech Insight, 31 October, 2005., p. 3).

Medical device advertising and promotion oversight generally is handled by FDA. To address peripheral concerns, many medical device manufacturers have adopted standards outlined in AdvaMed's code of ethics and the HHS Office of Inspector General's standards on effective compliance programs.

However, some state lawmakers contend that the industry's voluntary code of ethics isn't enough.

According to Johnson, five states - California, Maine, Minnesota, Vermont and West Virginia - plus the District of Columbia have laws requiring gift reporting by pharmaceutical firms. Medical devices may be subject to provisions in the California sales and marketing compliance law (² Also see "Looming Calif. Law Still Mystifies Device Makers; Watchdog Targets Pharma" - Medtech Insight, 27 June, 2005., p. 11).

Moreover, approximately 20 states, including Hawaii, Illinois, Mississippi, New York, Ohio and Pennsylvania have pending legislation, he noted.

Most of the proposed legislation and current state laws are aimed at increasing transparency on gifts and remuneration given to hospitals and physicians.

For example, pharmaceutical marketing laws in Maine, Minnesota, Vermont and Washington, D.C., require companies to report to the state's attorney general all gifts to doctors and hospitals of $25 or more.

Some states, including West Virginia, also call for firms to disclose detailed information from their advertising budgets.

In California, device and pharmaceutical companies must set a specific annual dollar limit for gifts or activities associated with healthcare professionals. The law also mandates that firms adopt a comprehensive compliance program that adheres to the OIG's Compliance Program Guidance for Pharmaceutical Manufacturers and PhRMA's "Code on Interactions with Healthcare Professionals."

In general, the state laws typically exclude compensation and reimbursement for bona fide clinical trial activities from reporting requirements. Reasonable honoraria for physician consulting arrangements and unrestricted grants for continuing medical education also are excused by most state legislation.

Meanwhile, the American Medical Association on June 14 called for a moratorium on direct-to-consumer advertising of new prescription drugs and implantable medical devices.

Along the same lines, a proposal passed by the state Senate in Massachusetts seeks to ban all gifts to medical professionals from the pharmaceutical industry.

The bill, introduced by Sen. Mark Montigny (D-Mass.) as an amendment to the state budget, would impose criminal penalties on pharmaceutical firms for providing entertainment, gifts, payments or travel to doctors, healthcare facilities or public officials.

The measure also would make Massachusetts the first state to license drug company sales representatives. According to the bill, pharmaceutical representatives would be required to complete training and participate in continuing education.

West Virginia also has proposed a licensing requirement. Sales reps would be required to achieve a bachelor's degree in pharmacy, chemical or biological science to be eligible to for the position, Johnson said.

- Katherine Thomas

State Drug Advertising Laws Foreshadow Future Device Regulation

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