The Vermont Legislature has enacted legislation (S.48) that prohibits
drug and medical device manufacturers from offering gifts to health care
providers and imposes broad financial relationship reporting requirements. The
legislation expands and toughens the state’s existing physician gift ban and
disclosure law. While the existing law only applies to pharmaceutical
manufacturers, S.48 applies to both drug and device manufacturers. Under the new
legislation, drug and device manufacturers must publicly disclose certain
allowable expenditures made to doctors, nurses, medical staff, pharmacists,
health plan administrators and facilities. The types of gifts S.48 prohibits
include any type of payments, food, entertainment, travel, subscription,
advance, service, and virtually anything of value provided to a health care
provider for free.
The legislation exempts certain items from the general gift ban. Exempted
items include samples, loans of medical devices for a short term trial period,
the provision of medical devices for demonstrative or evaluative purposes, the
provision of articles or journals serving a genuine educational function,
scholarship, labels approved by the Federal Food and Drug Administration, and
rebates and discounts. The legislation also allows manufacturers to make certain
expenditures to health care providers. Allowable expenditures include, but are
not limited to, payments for bona fide clinical trial and payments to the
sponsors of a significant educational, medical, scientific, or policy-making
conference or seminar.
Manufacturers providing allowable expenditures or exempted gifts to health
care providers must make an annual disclosure of the payment’s value, nature,
purpose, and recipient information. Manufacturers must also designate a person
who will be responsible for their compliance with S.48 and disclose such
individual’s name and address. Notably, the new legislation eliminates a
previously existing exemption that restricted disclosure of trade secret
S.48 will take effect on July 1, 2009. A manufacturer violating S.48 may face
a civil penalty up to $10,000 per violation. The Vermont Attorney General will
be responsible for establishing reporting forms and enforcing this law.
Many legislatures around the nation are engaged in similar efforts to bring
transparency to the drug and device manufacturer’s marking practices. A number
of states, including Texas and Connecticut, have pending legislation that would
ban certain gifts to health care providers and require disclosures of payments.
Congress is also considering the Physician Payments Sunshine Act, which, if
passed, may preempt certain state regulations and laws that require disclosure
of information covered by the Federal legislation.
McGuireWoods LLP has formed a state compliance consortium to assist medical
device manufacturers in complying with new state marketing compliance rules that
have been passed in California, Massachusetts, and Nevada, the new Vermont law,
and legislation pending in a number of additional states. The consortium will
help medical device manufacturers keep abreast of these new laws and receive
practical guidance to comply with the laws. This consortium will not be a
lobbying effort but instead an effort to provide specific, practical guidance to
help clients comply with the laws.