Possible Repeal of Massachusetts Ban: A Gift to Prescribers, Patients or Industry?

Photo by Tony the Misfit via Flickr

Next month marks the second anniversary of the enactment of the Massachusetts Pharmaceutical and Medical Device Manufacturer Code of Conduct, a law requiring pharmaceutical and medical device manufacturing companies to designate a compliance officer and implement a compliance program reflecting the commonwealth’s regulations on meals, CME sponsorship, use of non-patient identified prescriber data, gifts and other payments, etc.  The law, which went into effect on July 1, 2009, builds upon the Pharmaceutical Research and Manufacturers of America’s revised Code  on Interactions with Healthcare Professionals (”PhRMA Code“) and the Advanced Medical Technology Association’s revised Code of Ethics on Interactions with Healthcare Professionals (”AdvaMed Code“), two voluntary codes intended to eliminate any influence — perceived or otherwise — of the industry over healthcare professionals with respect to gifts, entertainment, recreation, educational programs, professional meetings, scholarships, and the like.

The Massachusetts law is more restrictive, however, than its PhRMA and AdvaMed counterparts.  It prohibits companies from sponsoring continuing medical education programs that do not meet Accreditation Council for Continuing Medical Education guidelines.  The PhRMA and AdvaMed Codes do not.  It prohibits any company employee from providing meals outside of a hospital or office setting.  The PhRMA Code only restricts sales representatives and their immediate supervisors to a hospital or office setting.  The AdvaMed Code does not impose any restrictions on the location of meals.

Furthermore, starting on July 1, 2010, the law requires companies to annually certify their compliance with commonwealth regulations and, among other things, to disclose any gifts or payments valued over $50 and given to anyone who can prescribe, purchase, or dispense drugs or devices.  Effectively, it’s a ban on all gifts to prescribers (and in so doing goes a step further than the PhRMA and AdvaMed Codes which make an exception for educational gifts).  Companies must also submit $2,000, payable to the commonwealth’s Department of Public Health, with each annual disclosure report.  Violations can result in penalties up to $5,000 per occurrence.  The first round of disclosures were due 16 days ago and covered activities for the July 1, 2009 to December 31, 2009 period.  Next year companies will be expected to report on their activities for the January 1, 2010 to December 31, 2010 period.  Or will they?

The Massachusetts House recently passed an economic development bill that repeals the disclosure requirement/gift ban (the bill also establishes a sales tax holiday and consolidates commonwealth economic agencies).  The Senate version of the bill does not include the repeal.  It’s a wait-and-see as to how the two chambers will work out the final bill through their conference committee.

Opponents of the gift ban claim it has adversely affected pharmaceutical clinical research as well as the restaurant and convention industries.  Almost two years ago, PhRMA Senior Vice President Ken Johnson expressed his disappointment over the law, saying:

[it is] very likely damaging for medical partnerships, clinical research and patients in Massachusetts….

Public disclosure of a pharmaceutical company’s arrangements with principal investigators of its clinical trials also could reveal sensitive, proprietary business information to a company’s competitors.  This could erode the independent decision-making of companies trying to bring science from research facilities to patient care setting….

The disclosure requirements subjects all of the physicians, academic institutions and hospitals involved in such trials to publicity in a form that may be difficult to understand and likely will generate unwanted and unnecessary public scrutiny.  This could make Massachusetts an unattractive place for academic scientists to live and work — and for pharmaceutical research companies to do business.  Such a policy clearly is not in the best interest of public health — and it flies in the face of the ongoing efforts to further cultivate the life sciences industry within Massachusetts.

Indeed, the Wall Street Journal and Boston Herald report that some medical groups either have threatened to take their annual meetings elsewhere or have actually done so in protest of the law.

Supporters of the law say otherwise.  Health Care For All, a Massachusetts-based advocacy organization, views banning gifts as a step in the right direction.  According to the organization:

[t]he pharmaceutical industry gives gifts to promote their drugs and make a higher profit.  Under the guise of promoting welfare for all, the industry maximizes their own revenue….

Experts living within the guidelines of the gift ban find that it is not interfering with their work or professional relationships according to Dr. David Coleman, Boston University School of Medicine.

‘The Massachusetts Gift Ban legislation is an important step in the process of reducing both biases in therapeutic decision-making and healthcare costs.  The Ban has not adversely impacted the important relationships of our physician-faculty with the pharmaceutical and device industries….’

Health Care For All also maintains there is no connection between the decrease in restaurant revenues and the law as:

[t]he Massachusetts Prescription Reform Coalition has researched the decrease in restaurant profits, and found sales are down across the country — including in states without a gift ban.   According to the trade paper, Restaurants & Institutions, sales at the nation’s top 100 independent restaurants were down 10% in 2009….

Massachusetts Senators, who recognize the value of the gift ban legislation, also see that these lost profits mirror similar recession-caused losses in the restaurant industry across the country.

Georgia Maheras, Private Market Policy Manager at the Massachusetts Prescription Reform Coalition, considers the current House bill to be a “significant step backward” in the fight to curb medical costs.

Massachusetts is not alone in attempting to reform pharmaceutical and medical device marketing practices.  Neighboring Vermont has a similar, and in fact more stringent, law which even allows the Attorney General’s office to track free samples given to physicians (though a reporter for the Times Argus, a Vermont newspaper, worries how a repeal in Massachusetts might have a ripple effect).  California, the District of Columbia, Maine, Minnesota, Nevada, and West Virginia also have some form of a marketing code.  The federal government’s Patient Protection & Affordable Care Act includes the Physician Payment Sunshine Provision (”Provision”) requiring disclosure of payments made to physicians and teaching hospitals by manufacturers of products covered under Medicaid, Medicare, and SCHIP (click here to read a summary).

So who has it right?  It would seem as though PhRMA and AdvaMed opened the door for state and federal government to codify modified versions of these industry codes.  From a compliance perspective, it must be quite inefficient — and headache inducing — to wade through state marketing disclosure laws that lack uniformity.  Starting January 1, 2012, the Provision will preempt state disclosure laws except for where the state requires additional information.  Maybe this will help, maybe it will add to the headache, or maybe this particular episode will no longer matter.   For now, though, from a patient perspective, a repeal of the Massachusetts disclosure requirement/gift ban, or that of any other state, would feel more like a gift to the industry and prescribers than a service to the “best interest of public health.”

The Center for Health & Pharmacy Law & Policy here at Seton Hall Law has issued two white papers addressing these issues: Conflicts of Interest in Clinical Trial Recruitment & Enrollment: A Call for Increased Oversight,” in which the Center proposes legal and policy changes to address conflicts of interest in the relationships between industry and doctors that can create unwarranted risks to trial participants and to the scientific integrity of research; and Drug and Device Promotion: Charting a Course for Policy Reform,” in which the Center proposes legal and policy changes to address conflicts of interest in the relationship of medicine and industry– including the recommendation “that industry funding for continuing medical education should be phased out, and replaced by an educational process driven by physicians.”

The Center has also recommended “the adoption of federal legislation to ban the use of gifts, meals, and other perks to promote drugs and devices. The states have taken the lead to date–Massachusetts, California, Minnesota, and the District of Columbia have passed laws to limit or ban gifts and meals that are now routine in marketing practices. Concluding that industry self-regulation is not sufficient, the Center calls for national legislation to create uniform practices by industry and physicians. As urged by Professor Boozang, ‘the benefits of drugs and devices should drive promotion and physicians’ decision to prescribe, not a marketing model that depends on gifts and meals.’”

Obviously, the adoption of additional federal standards in this regard will lessen the ability of industry to pit one state against another and make compliance easier. The Physician Payment Sunshine Provision is a step in that direction, the Massachusetts development bill is a step back.

Taking Steps Toward Reform

Should an imperfect health reform bill be passed?  Health reform should be about four things: 1) expanding coverage to all; 2) providing health security for those already insured; 3) ending the fragmentation of health care delivery in favor of sound coordination of care; and, 4) constraining cost to ensure that we can afford appropriate care in the future.

The House leadership bill (HR 3962) does a good job on the first, reaching a large proportion of the uninsured — although it will not achieve universal coverage.  It also gets good marks for reforming insurance regulations — although its weak version of the public plan will make true insurance reform more difficult to achieve.  It makes some tentative progress on care coordination, mostly through pilots and demonstrations in public insurance programs.  It provides some cost saving measures in Medicare and through encouraging alignment of financing systems — but cost containment is clearly the weakest aspect of the bill.   So, should the reform be passed, warts and all?

After months of criticism of the majority’s plans and promises of the production of a better plan, House Republicans proposed a substitute to the House leadership bill.   How does it stack up?  The CBO finds that the Republican substitute would reduce the deficit over the next ten years by about $68 billion, which is about $40 billion less than the reduction the CBO projects from the Democratic version.   The CBO also estimates that the Republican bill would reduce the number of uninsured over the next ten years by “about 3 million relative to current law, leaving about 52 million nonelderly residents uninsured,”  compared with its assessment that HR 3962 would reduce the number of nonelderly uninsured by 36 million during that time period.  So, the GOP substitute would do less to reduce the deficit, and cover 33 million fewer uninsured.   It includes some insurance reform provisions, many based on consumer-directed models that tend to further fragment, rather than coordinate care.  HR 3962 is far from perfect, and the CBO’s estimates have been subject to criticism, but the reports provide food for thought for those who hoped that the Republican plan would offer a meaningful alternative.

Sometimes proceeding in steps is necessary, particularly with complex systemic reform.  Massachusetts has in many ways been a model for drafters of federal reform plans, and stands as an example of incremental steps toward full reform.  It enacted sweeping health insurance reforms in 2006, creating a marketplace for regulated private insurance, the addition of public plans, and responsibility shared among businesses, individuals, and providers.  It has been remarkably successful at expanding access, driving the uninsurance rate down to 2.6% as of the spring of this year, and enjoying continuing strong support within Massachusetts.    Costs are a growing concern.  But the coalition of business, consumer, and provider groups behind the reform anticipated the need to circle back and tackle finance.  Cost concerns have only grown with the economic downturn, as tax receipts lag and countercyclical demand for Medicaid coverage strains budgets.  Resolve to push forward appears strong.  Representatives of several stakeholders reported last year that,

Since passage, all stakeholder groups have remained deeply engaged in implementation.  Despite news reports of higher-than-expected costs, the governor, legislative leaders, and stakeholders have repeatedly reiterated support for full implementation.  This consensus, crucial to enactment, has proved equally vital to implementation.

Massachusetts reformers made the decision to proceed in two steps: coverage first, cost control second.   While no one is proposing a two-step process for federal reform, expanding coverage and reforming insurance practices have been the overriding emphases in Washington.  And HR 3962 does advance the cause of care coordination for the chronically ill.  It was interesting to see the Dutch Health Minister in a recent interview emphasize coordinated care as a central feature of reform.  In describing his country’s reforms (from which some draw lessons for our country), he explained:

We are trying to make sure that no one receives health care that is not coordinated. And [we intend] that the general practitioners cannot negotiate any longer with insurance companies unless they are part of a coherent group that is offering coherent care.

What does the GOP bill do for people with chronic illness?   The CBO found that provisions in the proposed substitute would “tend to increase the premiums paid by less healthy enrollees.”   The substitute, then, entails fiscal benefits for the well at the expense of those who most need care and coverage.

HR 3962 reforms the insurance market to safeguard coverage for those who have it now; expands coverage for the uninsured; and begins the arduous task of shifting care delivery from fragmentation to coordination.  The GOP alternative covers one-twelfth as many uninsured, makes coverage for the chronically ill harder to maintain, and does less to reduce the deficit.  Common sense tells us that taking positive steps toward reform is vital, and that the GOP substitute is no reform at all.

Primary Care: Proper Implementation Crucial to Successful Health Reform

In reference to the House Bill, a recent post at The Health Care Blog stated that:

Sierpinski Fractal, Antonio Miguel de Campos

A big reduction in the number of uninsured with no new controls over costs carries its own risk. As Massachusetts–even with only a modest percentage increase in its covered population–discovered, making health care more accessible means a jump in demand, but with no corresponding increase in supply. The predictable results: higher prices and disenchanted consumers unable to obtain care.

This comment raises two interesting points, namely, how will the House bill  affect the demand for, as well as the supply of, health care? The health reform measures in Massachusetts have notably not included a public plan similar to the latest version of the House bill.  Ergo, a comparison of the House bill to the Massachusetts reform measures isn’t exactly comparing apples to apples. In Massachusetts, the private insurers do not have to worry about consumers (who are often simultaneously employers) choosing a public plan. However, in the House bill, this option will, theoretically, increase competition by making the private insurers work to keep their customers from going over to the public plan.  Thus, the addition of  a separate actor–in contradistinction to the MA plan–may lead to decreased cost, a trend I explored in a previous post.  Therefore, Roger Collier’s claim in The Health Care Blog that there will be no cost controls isn’t entirely correct if the public plan fosters competition sufficient to force private insurers to lower the costs of their own plans.

If the price does in fact decrease, demand will then (presumably) increase, and this is when we will encounter the real elephant in the room: supply.  It’s not the relationship between the public plan’s increase in demand that we should worry about, but rather it’s the relationship of it to the present supply. Thus, Collier may be on to something with regard to the inability to obtain care; however, he fails to point out why there may be a supply problem, and the problem is fairly obvious: the massive primary care supply shortage. As the President-elect of the American Association of Family Physicians  noted:

“Primary care has been described as the base of the health care workforce pyramid,” said Heim, who spoke during a hearing on physician workforce shortages. “But the U.S. physician profile is only 31 percent primary care and 69 percent (sub)specialty care.”

The pyramid metaphor has been mentioned by others. It describes a health care system as a pyramid whose base comprises basic health care delivery by primary care, which is the least costly, and which tapers to the more specialized care that is more costly, such as organ transplantation. At this point, our health pyramid is inverted. One need not have taken college level physics to appreciate that  an inverted pyramid’s center of gravity makes it prone to toppling. We also have a second pyramid–a socioeconomic pyramid–with a largely solidified base of lower-income Americans, tapering to the middle class and then rising to the upper income tier at the top– or pinnacle. Imagine these pyramids are side-by-side, yet one is inverted. Congress’s job is to make sure that these metaphorical pyramids co-exist stably. The picture above may be of some help.

The authors of the House bill were not oblivious to the teetering health care pyramid, and added specific provisions that they believed would ameliorate the growing problem. As MedNewsToday pointed out, the bill attempts to combat the shortage by:

• Increased Medicare payments to primary care physicians by 5%
• An additional 5% pay boost for primary care doctors in designated “health shortage” areas
• A restructured formula for calculating Medicare reimbursements each year
• Enlargement of the National Health Service Corps by “an amount sufficient to eliminate 40% of the estimated shortfall in primary care providers”
• New scholarships for medical students who choose primary care as a specialty

Luckily, the House bill has focused to some extent on the most important aspect of the primary care shortage, that of recruiting more students to enter primary care. Enlarging the National Health Service Corps is laudable (notably, Dr. Regina Benjamin, recently named by Obama to the Surgeon General post, is a former participant in the program), and would likely be helpful, but increasing it by an “amount necessary” to reduce a predicted short fall is somewhat amorphous. Also, the National Health Corps and the scholarships associated with them are offered in return for serving in certain areas that have shortages of services but these areas of need will almost certainly expand and alter as coverage is drastically expanded across the nation.

Thus, increasing the number of primary care physicians would in no way be a panacea– a point that is  highlighted by Atul Gawande’s New Yorker article. As the article made clear, health care delivery can be hamstrung after access is provided. I believe this underscores a point that many have noted, that is, that there is a difference between an increase in coverage (i.e. insuring more individuals) and health care reform (making sure that care is delivered effectively and efficiently).

Assuming that medical students are sufficiently enamored by the pay adjustments and scholarships –which is a big assumption–reforming how those new primary care physicians deliver care in response to increased demand is as important as increasing the supply.

Mergers In State Health Reform: Increased Efficacy or More Bureaucracy?

Photo by bigsurf via flickr

A health care coordination and consolidation proposal successfully made its way through the West Virginia Legislature last week and is currently awaiting the Governor’s signature.  The wide-ranging reform creates a cabinet-level office to coordinate health reform across West Virginia, consolidating many existing state agencies and programs– including public hospitals and the health reform efforts of state colleges and universities.  It even comes with a catchy acronym to boot– GOHELP: Governor’s Office of Health Enhancement and Lifestyle Planning.

State Delegate Don Perdue told the The Herald-Dispatch, “Health reform has been tried a number of times.  It fails because one agency is not talking to another, because the vision somewhere gets lost in the process.”  One might imagine Delegate Perdue to be referring to health reform in just about any state– and even the federal government.  Are West Virginia legislators so far ahead of our representatives in Washington?  Hopefully not.  As our blog reported last week (Obama Officially Establishes White House Office of Health Reform), President Obama recently signed an executive order with an arguably similar purpose: work with several federal executive branch agencies, states and local officials, and Congress to enact health reform and develop and implement strategic initiatives to strengthen the performance of the health care system.

In Massachusetts, Governor Deval Patrick isn’t having as much luck.  The Boston Globe reports of a letter the Governor wrote to the chair of the state’s Health and education Facilities Authority (HEFA) instructing the agency to merge with the state’s Development Finance Agency by July 1, 2009.  The Governor’s office maintains that the merge will enhance HEFA’s ability to provide tax-exempt financing for hospitals and health facilities (as well as state educational institutions).  Critics see the attempt as a “power grab” and an attack on the safeguards that keep HEFA, and other quasi-public authorities like it, safe from political pressure and “gubernatorial interference.” Read more