State Laws: Preemption, Enforcement, and Continued Requirements
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1 9th Annual Forum on Transparency & Aggregate Spend State Laws: Preemption, Enforcement, and Continued Requirements August 18, 2015 Brian A. Bohnenkamp King & Spalding LLP
2 Today s Focus Overview of Sunshine Preemption, Practical Application, and Benchmarking State Authorities Review of Open Payments Data State Requirements Not Impacted by Open Payments Preemption What s Next? 2
3 State Law Dashboard CA CT DC MA MN NV NM TX VT COMPLIANCE PROGRAM MD/P MD/P MD/P MD/P SPENDING LIMITS MD/P P GIFT RESTRICTIONS GIFT AND COMPENSATION REPORTING PRICE DISCLOSURE AND REPORTING ADVERTISING COST REPORTING LICENSURE OF SALES REPS MD/P P MD/P P MD/P MD/P P MD/P P MD/P P P P P P P = Applies to pharmaceutical manufacturers MD = Applies to medical device manufacturers 3
4 Sunshine Preemption Excerpt from Sunshine statutory provisions: In the case of a payment or other transfer of value provided by an applicable manufacturer that is received by a covered recipient... on or after January 1, 2012, subject to subparagraph (B), the provisions of this section shall preempt any statute or regulation of a State or of a political subdivision of a State that requires an applicable manufacturer (as so defined) to disclose or report, in any format, the type of information... regarding such payment or other transfer of value 4
5 No Preemption of Additional State Requirements The Sunshine statute provides that the reporting requirements will not preempt state laws or regulations that require disclosure or reporting of information: 1. Not of the type required to be disclosed or reported under the Sunshine requirements 2. Related to items/payments/benefits, etc. listed as exclusions to the definition of payments or other transfer of value, except for the $10/$100 de minimus value exception 3. By entities other than applicable manufacturers 4. About persons or entities other than covered recipients 5. To a federal, state, or local governmental agency for public health surveillance, investigation, or other public health purposes or health oversight purposes 5
6 Applying Preemption General Considerations Preemption decisions need to be made on a case-by-case basis Generally speaking: 1. Any specific spend that is required to be included in a CMS Open Payments report should not also need to be reported under a state disclosure law 2. Any specific spend that is not required to be included in a CMS Open Payments report will likely need to be reported under a state disclosure law, if reportable under the state disclosure law 6
7 Applying Preemption General Considerations Common types of spend that are not preempted: Spend on non-physician HCPs (e.g., physicians assistants, nurse practitioners, advanced practice nurses, pharmacists, registered nurses, etc.) Spend on non-teaching hospital entities (e.g., clinics, nonteaching hospitals, professional associations and patient advocacy groups, academic institutions, etc.) Meals (and other things) provided to office staff Educational materials/items provided to physicians that are excluded under the federal Sunshine requirements, but not excluded under a state disclosure law (e.g., anatomical models) If textbooks and reprints would ever be excluded under Open Payments, then that would impact state law preemption 7
8 Benchmarking Our sense is that a growing number of companies are taking advantage of federal preemption of state transparency requirements, where available Minnesota s disclosure requirements are typically the only requirements where companies spend is likely to be completely preempted by Sunshine because Minnesota s scope of reportable spend is very narrow (both in terms of the types of spend that are reportable and the types of HCPs who are covered recipients) There were a number of companies that did not need to file Minnesota disclosure reports covering the 2014 reporting period because of preemption For purposes of other state disclosure laws (D.C., CT, MA, and VT), many companies will continue to have reportable spend, even considering preemption 8
9 Common Issues that Companies Face Confusion about how to approach reporting of meals and other reportable spend on office staff (mostly an issue for D.C. and Massachusetts, but also relevant for Vermont where office staff are covered recipients) Confusion about how to approach reporting of spend on physicians that is excluded from Sunshine reporting Concerns that Open Payments reports will appear different than state reports for the same physicians 9
10 State Authorities Review of Sunshine Data State enforcement authorities may review Open Payments reports for potential violations of gift bans and other restrictions Minnesota s $50 annual aggregate limit per prescriber Vermont s meal/gift ban State government ethics restrictions State consumer protection laws States with disclosure laws may cross-reference the list of manufacturers that reported under Open Payments with the list of manufacturers that reported under their requirements 10
11 State Laws Not Impacted by Sunshine Preemption California Compliance Program Law Connecticut APRN Disclosure Law Connecticut Compliance Program Law D.C. Pharmaceutical Detailer Licensing Requirement Massachusetts Marketing Code of Conduct (non-transparency provisions) Minnesota Gift Ban Nevada Compliance Program Law Vermont Gift Ban Vermont Price Disclosure Law (AWP Disclosure) Vermont Samples Disclosure Law (which includes coupons and vouchers) 11
12 Notable Recent State Law Updates D.C. Recently enacted a new exemption to its pharmaceutical detailer licensing requirements for individuals engaged in the practice of pharmaceutical detailing for less than 30 consecutive days per calendar year Connecticut pushed back the first reporting deadline for APRN disclosure reports to July 1, 2017, covering 2016 West Virginia repealed its disclosure law; the repeal took effect in June 2015 (Non-update) We are still waiting for guidance from Massachusetts regarding quarterly reports about out-of-office meals 12
13 A Few Notes on Connecticut s APRN Disclosure Law Reporting is required on an annual basis, not quarterly (the first reports are due July 1, 2017, covering calendar year 2016) The exclusions provided in the federal Physician Payments Sunshine Act are also expressly excluded from the Connecticut disclosure requirements The disclosure requirements are limited to APRNs who practice not in collaboration with a physician (i.e., APRNs who practice independently) The Connecticut Department of Public Health is required to annually publish by December 1 a list of APRNs who are authorized to practice not in collaboration with a physician More information available from the Connecticut Department of Consumer Protection, at 13
14 What s Next? We may see efforts in state legislatures to restrict or prohibit certain interactions based on states analysis of the federal Sunshine data More gift bans? More compliance program laws? Prescription drug cost transparency laws (e.g., pending bills in California, Massachusetts, etc.) that would require reporting of manufacturers costs to develop, produce, and market certain high priced drugs 14
15 Questions? Brian A. Bohnenkamp King & Spalding LLP
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