New Jersey Proposes New Limits on Manufacturer Gifts and Payments to Prescribers

On October 2, 2017, the New Jersey Attorney General and Division of Consumer Affairs published Proposed New Rule N.J.A.C. 13:45J, Limitations On and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers.  According to the preamble, the proposed rule responds to a concern about the “exponential growth in the amount of money that is being paid to prescribers.”  The preamble cites information about payments to prescribers in New Jersey that is available in the federal Open Payments database.

In order to “minimize the potential for conflicts of interest between prescribers and pharmaceutical manufacturers [and] to ensure that patient care is guided by the unbiased, best judgment of the treating prescriber[,]” the proposed rule would amend New Jersey’s health care professional licensing regulations to limit the gifts that may be received from pharmaceutical manufacturers by New Jersey providers authorized to prescribe medications: physicians, podiatrists, physician assistants, advanced practice nurses, dentists, and optometrists.

Under the proposed rule, New Jersey prescribers could not accept the following from pharmaceutical manufacturers:

• Any financial benefit or benefit-in-kind, including, but not limited to, gifts, payments, stock, stock options, grants, scholarships, subsidies, and charitable contributions.
• Any entertainment or recreational items, such as tickets to theater or sporting events, or leisure or vacation trips.
• Items of value that do not advance disease or treatment education, including, but not limited to,
  • Pens, note pads, clipboards, mugs, or other items with a company or product logo;
  • Items intended for the personal benefit of the prescriber or staff, such as floral arrangements, sporting equipment, artwork; and
  • Items that may have utility in both the professional and non-professional setting, such as electronic devices.

Under the proposed rule, New Jersey prescribers could accept the following permitted gifts and payments from pharmaceutical manufacturers:

• Items designed primarily for educational purposes for the patients or prescriber that have minimal or no value to the prescriber outside of his/her professional responsibilities. Items that may have independent value to the prescriber may only be accepted if the items are used by patients and remain in the common area of the prescriber’s office.
• A subsidized registration fee at a continuing education event, if that fee is available to all participants.
• Modest meals, worth no more than $15 per prescriber, at a continuing education event.
• Modest meals, worth no more than $15 per prescriber, at a promotional activity, no more than four times in a calendar year.
• 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 or promotional activity. A prescriber may also accept reasonable payment for travel, lodging, and other expenses associated with such services.
• Compensation, based on fair market value, for participation on advisory bodies or under consulting arrangements.
• Sample medications or devices intended to be used exclusively for the benefit of the prescriber’s patients.

The rule would impose a limit of $10,000 per calendar year on the amount of compensation that a single prescriber may receive in the aggregate from all pharmaceutical manufacturers for speaking at promotional activities, participation on advisory boards, and consulting. Payment for speaking at continuing education events would not be subject to the $10,000 cap.

The proposed rule is modeled on the Pharmaceutical Research and Manufacturers of America Code on Interactions with Health Care Professionals (“PhRMA Code”), but includes certain limitations that are more stringent than the PhRMA Code. For example, under the PhRMA Code, manufacturers may provide modest meals to physicians on an occasional basis, but “modest” is not defined and there is no dollar limit.  In contrast, the New Jersey rule would limit the value of meals to $15 per prescriber.

Similarly, the PhRMA Code permits fair market value compensation and expense reimbursement for consulting services with no specified cap, whereas the New Jersey proposed rule would impose a $10,000 aggregate limit on the amount a prescriber could receive from all pharmaceutical manufacturers in a calendar year for providing bona fide services as a speaker at promotional activities, for participation on advisory bodies, and under consulting arrangements.

Importantly, the proposed rule would not specifically exempt compensation for serving as an investigator in a clinical trial or otherwise conducting bona fide research. Even if such research payments were considered “consulting arrangements,” they would be subject to the $10,000 aggregate annual cap applicable to each prescriber.  Unless a specific research exemption is added to the final regulation, participation of New Jersey physicians in studies sponsored or funded by drug manufacturers will be severely restricted, and clinical trials in which New Jersey prescribers currently serve as investigators could be adversely affected.

The proposed rule would provide the various New Jersey prescriber licensing boards with authority to take enforcement action against prescribers who accept prohibited gifts or payments from pharmaceutical manufacturers. Although the proposed rule would not impose penalties on, or otherwise increase the state’s authority over, pharmaceutical manufacturers, the limitations in the proposed rule could dramatically impact how manufacturers interact with prescribers in New Jersey.

A public hearing about the proposed rule was held on October 19, 2017. Written comments may be submitted to the Division of Consumer Affairs by December 1, 2017.  We will continue to monitor this proposed regulation.