Massachusetts Relaxes Laws on the Offering of Prescription Drug Coupons and Meals to Health Care Practitioners

By Nisha P. Shah –

On July 8, 2012, Massachusetts Governor Deval Patrick signed H. 4200, which, in part, relaxes: (1) the state anti-kickback law to permit the offering of coupons for prescription drug and biological products, and (2) the marketing laws to allow prescription drug and medical device manufacturers to provide meals to health care practitioners (HCPs) consumed outside of a health care setting.   

All-Payor Anti-Kickback Law

Massachusetts is one of a few states to have an all-payor anti-kickback statute that prohibits, in part, a person from offering any remuneration (including rebates) to induce the purchase or order of any good, facility, service, or item that is paid in whole or in part by a health care insurer.  Mass. Gen. Laws ch. 175H, sec. 3.  Under this law, manufacturers have been prohibited from providing coupons or rebates that are offered by manufacturers to patients insured by any health care plan (not just Medicare, Medicaid, or other government health care program) to offset the costs or co-payments associated with prescription drug or biological products.  Manufacturers offering such coupon programs typically have excluded all residents of Massachusetts from benefiting from the coupon program.

Sections 128 to 130 of H. 4200 add an exception to the all-payor anti-kickback statute to allow, among other things, pharmaceutical manufacturing companies (as defined in the marketing law, Mass. Gen. Laws ch. 111N) to provide a discount, rebate, voucher, or other reduction in a patient’s out-of-pocket expenses (including co-payments and deductibles) on a biological product or prescription drug.  However, the law specifically prohibits a pharmaceutical manufacturer from offering such coupons for a prescription drug that has an AB rated generic equivalent as determined by FDA.  Additionally, the coupon must be given to a patient directly or electronically or through a point of sale or mail-in rebate, or through similar means.  The phrase “similar means” was not defined, and it is not clear how broadly this should be construed (for example, whether coupons could be provided to HCPs to give to patients).  This coupon exception will not apply if a pharmaceutical manufacturer excludes or favors any pharmacy in the redemption of such coupon. 

Sections 128 to 130 went into effect immediately and are scheduled to sunset on July 1, 2015.  By December 31, 2014, the Division of Health Care Finance and Policy (Division), in consultation with the Department of Public Health (DPH), must complete an analysis of the impact on health care costs of the use of such coupons for biological products and prescription drugs from August 1, 2012 to July 31, 2014.  The statute authorizes the Division to require manufacturers of biological products and prescription drugs to report on the number and types of coupons that the manufacturers have issued and that have been redeemed in Massachusetts.

Marketing Law

In H. 4200, the Massachusetts legislature also relaxed the marketing laws that prohibit the provision of meals outside of the hospital or medical office setting.  In 2008, Massachusetts enacted a law that imposes compliance and reporting requirements on pharmaceutical and medical device companies that employ a person to sell or market prescription drugs or medical devices in Massachusetts (see our blog post here).  See generally, Mass. Gen. Laws ch. 111N.  The original law prohibited a company from providing meals to HCPs that are part of a recreational event, offered without an informational presentation, consumed outside of a health care setting, or for a HCP’s spouse or other guest. 

According to Section 111 of H. 4200, manufacturers are now permitted to provide or pay for “modest meals and refreshments” in connection with non-continuing medical education (CME) presentations for the purpose of educating HCPs about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information, as long as the presentation occurs “in a venue that is conducive to informational communications.”  DPH must define in regulation what constitutes “modest meals and refreshments” and also determine whether companies must pay a fee to pay for the costs of administering the new requirements.  Companies must file quarterly reports detailing all non-CME educational presentations at which such meals or refreshments are provided.  The reports must include the following information: (1) the location of the non-CME presentation; (2) a description of any pharmaceutical products, medical devices or other products discussed at the presentation; and (3) the total amount spent on the presentation and an estimate of the amount spent per participant. 

Additionally, Section 111 of H. 4200 also permits the payment of reasonable expenses for the technical training on the use of a medical device.  Section 113 of H. 4200 instructs DPH to no longer require reporting by pharmaceutical and medical device manufacturers of any information that has been disclosed to the federal government that may be obtained by DPH.  This follows the federal preemption requirement under section 6002 of the Patient Protection and Affordable Care Act (PPACA) (see our blog posts here and here).  Finally, DPH will be required to make data submitted by companies in annual reports publicly available and in a searchable format on DPH’s web site not later than 90 days following receipt of the information.