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New Jersey Bans and Caps Certain Manufacturer Gifts and Payments to Prescribers

Summary

On January 16, 2018, New Jersey’s new regulations limiting gifts and payments from prescription drug and biologics manufacturers to prescribers were issued in the New Jersey Register and became effective. After receiving significant input from manufacturers, hospitals and health care organizations, multiple revisions were reflected in the final rule, amended from the December 2017, “Limitations on and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers.” Notably, the regulations no longer apply to devices nor cap compensation for research activities as part of the cap on bona fide services.

In Depth

On Tuesday, January 16, New Jersey’s new regulations limiting gifts and payments from prescription drug and biologics manufacturers to prescribers were issued in the New Jersey Register and became effective. The former attorney general adopted “Limitations on and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers” in December 2017, after receiving significant input from manufacturers, hospitals and health care organizations. Industry representatives submitted 79 written comments on the October 2017 proposed regulations and participated in an October public hearing at which more than a dozen entities testified. These stakeholder interactions appear to have resulted in revisions to the version of the regulations now in effect. Notably, the regulations no longer apply to devices nor cap compensation for research activities as part of the cap on bona fide services.

The rules were proposed, in part, to curb opioid abuse by restricting prescribers’ relationships with manufacturers and sales representatives. In response to the public’s comments that the proposed rules would not accomplish this goal, the former attorney general clarified that the rules are intended to regulate the receipt by prescribers of anything of value from pharmaceutical manufacturers and to ensure that patient care is guided by the prescriber’s independent judgment. The regulatory definition of “prescriber” is broad and includes physicians, podiatrists, physician assistants, advanced practice nurses, dentists and optometrists licensed under the state’s laws. Under the rules, prescribers—and, with some exceptions, the prescribers’ immediate family members—are prohibited from accepting certain gifts and payments from a pharmaceutical manufacturer or a manufacturer’s agents. “Pharmaceutical manufacturers” include entities engaged in various aspects of manufacture, production, packaging, repackaging, labeling, relabeling and distribution of prescription drugs and prescription biologics. “Manufacturer’s agents” include persons who, while employed by or in contract with a pharmaceutical manufacturer, engage in detailing, promotional activities or other marketing activities to authorized prescribers. The term “manufacturer’s agent” does not include prescribers or pharmacists acting within their respective ordinary scopes of practice.

The general prohibitions in the new regulations include:

  • Meals with a fair market value of $15 or more
  • Any financial benefit or benefit in kind (e.g., stock options, grants, subsidies)
  • Any entertainment or recreational items (e.g., tickets to theater or sporting events)
  • Any item of value that does not advance disease or treatment education, such as:
    • 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 (e.g., artwork);
    • Items that may have utility in both the professional and non-professional setting (e.g., electronic devices);
    • Any payment in cash or cash equivalent (e.g., gift certificates); and
    • Any payment or direct subsidy to a non-faculty prescriber to support attendance at, as remuneration for time spent attending, or for the costs of travel, lodging or personal expenses associated with attending any education event or promotional activity.

Some gifts and payments are permitted as exceptions to the aforementioned blanket prohibitions, such as items designed primarily for educational purposes, subsidized registration fees, modest meals provided at certain educational events and promotional activities, and fair market value compensation for providing bona fide services. Notably, bona fide services do not include services provided by a prescriber in connection with “research”—a defined term. Bona fide services must be provided pursuant to a written agreement that meets the requirements of N.J. Admin. Code § 13:45J-1.2. Prescribers may not accept more than $10,000 in aggregate from all pharmaceutical manufacturers in any calendar year for bona fide services including promotional speaking activities, participation on advisory boards and other consulting arrangements. Payments for speaking at education events, research activities, and royalties and licensing fees are not subject to this cap, but other requirements apply.

The rules also allow prescribers to accept and distribute samples intended to be used exclusively for the benefit of a patient if the prescriber does not charge the patient and applicable rules are satisfied. Finally, the rules mandate disclosure of certain information at education events, promotional activities and, if the prescriber is an employee of a pharmaceutical manufacturer and provides patient care, to patients.

The rules do not apply to arrangements with providers entered into on or before January 15, 2018. Unlike other similar state transparency and disclosure laws, these rules: (1) were not the result of the legislative process, (2) affirmatively apply directly to prescribers as opposed to the pharmaceutical industry, (3) do not distinguish between prescribers that regularly practice in the state and prescribers licensed by the state of New Jersey, and (4) do not address payments or gifts from device manufacturers. As the new regulations were proposed and adopted by the now-former attorney general, prescribers and pharmaceutical manufacturers and their agents should monitor comments from the new attorney general, Gurbir S. Grewal, to glean insights into how his office intends to enforce the regulations. Prescribers and pharmaceutical manufacturers should evaluate any new written arrangements or renewals of existing contracts to ensure that they comply with the provisions for bona fide services agreements.

© 2018 McDermott Will & Emery

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About this Author

Veleka Peeples-Dyer, McDermott Will Emery, life sciences industry, FDA attorney, drug safety lawyer, health care fraud counsel,
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Veleka Peeples-Dyer is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm's Washington, D.C., office. She is an experienced attorney with an extensive background in the Life Sciences Industry, including Food and Drug Administration (FDA) regulation, clinical trials, manufacturing and supply, drug safety, licensing, product acquisition due diligence, health care fraud and abuse and compliance matters. Additionally, Veleka’s experience includes conducting internal investigations, developing and implementing legal and compliance...

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Shelby Buettner is an associate in the law firm of McDermott Will & Emery and is based in the Firm’s Chicago office. She focuses her practice on general health law matters.

Shelby previously coordinated clinical trials at an academic medical center, managed biomedical development projects with the Department of Defense and National Aeronautics and Space Administration, and conducted research with the United Nations Environmental Programme. She has been published in American Journal of Surgery, Journal of Robotic Surgery, Urologic Clinics of North America, Surgical Endoscopy, and Administrative Theory & Praxis.

Shelby received her J.D., cum laude, from Northwestern University School of Law in 2015. She completed a fellowship at Duke University and earned her M.P.A. and her B.S in political science, magna cum laude, both from University of Nebraska.

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Vanessa K. Burrows is an associate in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Washington, D.C., office.  She focuses her practice on health care law, with an emphasis on medical device, food and drug, and pharmacy law. Her broad-based experience also includes HIPAA compliance, health privacy and security laws, and public health law. She advises health care entities and their contractors on compliance, regulatory, data-sharing, licensing, and enforcement matters.

Previously, Vanessa served as the HIPAA Privacy...

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