February 25, 2020

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February 24, 2020

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Chicago Ordinance Requires Licensing of Pharmaceutical Representatives

The City of Chicago has amended its municipal code to add “pharmaceutical representative” to the long list of business activities requiring occupational licensing. In the face of strong industry opposition, the City Council approved an ordinance amending Chicago Municipal Code § 4-6-010(c)(30) on November 16, 2016.

Set to take effect July 1, 2017, the ordinance requires all individuals who market or promote pharmaceuticals to health care professionals to pay an annual licensing fee of $750. Id. at § 4-5-010(36). The ordinance defines “pharmaceutical” as “a medication that may legally be dispensed only with a valid prescription from a health care professional,” with “health care professional” defined as a “physician or other health care practitioner who is licensed to provide health care services or to prescribe pharmaceutical or biologic products.” Id. at § 4-6-310(a). Given the definition of “pharmaceutical,” the ordinance does not apply to medical device company representatives. Pharmaceutical representatives who conduct business in the City of Chicago (“City”) for fewer than 15 days per calendar year are exempted. Id. at § 4-6-310(b)(1).

To obtain a license, an individual must submit an application to the Commissioner of Business Affairs and Consumer Protection. Id. at § 4-6-310(d). The application must include a description of the type of work in which the applicant will engage. Id. at § 4-6-310(d)(2).

Prior to applying, an individual must complete a professional education course that will be determined by rule by the Commissioner of Public Health. Id. at § 4-6-310(b)(2). A licensed pharmaceutical representative also must complete at least five hours of continuing professional education prior to renewal. Id. at §§ 4-6-310(b)(3) & (f)(1). Topics may include ethics, pharmacology, and pharmaceutical marketing laws and regulations. Id. at § 4-6-310(f)(1). Institutions and courses that satisfy the educational requirements may be designated by the Commissioner of Public Health. Id. at § 4-6-310(f)(3). A pharmaceutical representative’s employer is prohibited from serving as a professional education provider. Id.

In addition to the educational requirements, the ordinance includes onerous disclosure requirements. Id. at § 4-6-310(g). Upon request, or at time intervals established by the Commissioner of Public Health, a pharmaceutical representative must provide the following information to the Commissioner or his or her designee:

  • All contacted healthcare professionals within the City of Chicago;

  • number of times such professionals were contacted;

  • location and duration of the contacts;

  • promoted pharmaceuticals;

  • value of product samples, materials, or gifts provided; and

  • if and how compensation for contact was provided.

Id. at § 4-6-310(g)(1).

In addition, licensed pharmaceutical representatives will have to abide by an as-yet-to-be determined list of Commissioner of Public Health-established ethical standards. Id. at § 4-6-310(h) (providing for ethical standards to be incorporated into the rules and disseminated on the City’s website). Licensed pharmaceutical representatives are also barred from (1) engaging in deceptive marketing, “including the knowing concealment, suppression, omission, misleading representation, or misstatement of any material fact”; (2) using a misleading title to suggest they are licensed to practice medicine or other medical-related profession; or (3) attending patient examinations absent patient consent. Id. at § 4-6-310(h)(1)-(3). Violations can lead to the suspension or revocation of licenses. Id. at § 4-6-310(j).

Penalties can range from $1,000 to $3,000 per offense, and an individual commits a new offense every day he or she is not in compliance with the ordinance. Id. at § 4-6-310(k).

The City claims that the new licensing requirement will help combat an increase in opioid abuse. According to the Chicago-Cook County Task Force on Heroin, 403 people accidentally died in Chicago last year from opioid overdoses. The licensing scheme is expected to raise an estimated $1 million annually, which will be utilized to administer the program and treat addiction.

In the coming 18 months, the Chicago Commissioners of Public Health and Business Affairs and Consumer Protection will be adopting a number of regulations to implement aspects of the new ordinance, such as regulations concerning the required continuing professional education and ethical standards for pharmaceutical representatives. Id. at §§ 4-6-310(i).

With this ordinance, Chicago becomes the second major city – after the District of Columbia – to adopt a municipal ordinance regarding the licensing of pharmaceutical sales representatives. We understand that other cities are considering similar ordinances.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.


About this Author

Jesse Witten, Drinker Biddle Law Firm, Washington DC, Healthcare and Litigation Attorney

Jesse A. Witten defends health care providers, pharmaceutical manufactures and other clients in the health industry against fraud and abuse matters in government investigations and litigation, particularly False Claims Act matters. Jesse also assists clients in internal corporate investigations and self-disclosures to the government of regulatory violations and Medicare/Medicaid overpayment. He counsels clients on compliance with Anti-Kickback Statute and Stark Law and laws governing the sale and marketing of medical devices and pharmaceutical products...

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