Act No. 59

(S.48)

Health; prescription drugs; medical devices; biological products; manufacturers; gifts; disclosure; corrections; generic drugs; substitution

This act establishes a ban on gifts from manufacturers of prescription drugs, medical devices, and biological products ("prescribed products") to a health care professional, hospital, nursing home, pharmacist, health benefit plan administrator, or anyone else authorized to dispense or purchase for distribution prescribed products in Vermont ("health care providers"), except for:

· samples of a prescribed product for free distribution to patients;

· the short-term loan of a medical device for evaluation and the provision of medical device demonstration and evaluation units;

· clinical articles, medical journals and other items that serve a genuine educational function for the benefit of patients;

· scholarships for medical students, residents, and fellows to attend major conferences;

· rebates and discounts provided in the normal course of business;

· labels approved by the Food and Drug Administration.

The act modifies Vermont's existing disclosure law, which only applied to pharmaceutical manufacturers and previously provided for a trade secret exemption. It requires manufacturers to disclose all allowable expenditures and permitted gifts made to health care providers to the attorney general annually on October 1. The following are exempt from the disclosure requirement:

· Royalties and licensing fees.

· Rebates and discounts.

· Samples of prescription drugs.

· Payments for clinical trials, which must be disclosed only after the earlier of the date of the approval or clearance of the prescribed product by the Food and Drug Administration or two calendar years after the date the payment was made. For these clinical trials, the manufacturer must identify to the attorney general the clinical trial, the start date, and the web link to the clinical trial registration on the national clinical trials registry.

The act requires manufacturers to disclose allowable expenses and all gifts made to academic institutions and professional, educational, or patient organizations representing or serving health care providers or consumers to the attorney general annually by October 1. The same exemptions from disclosure noted above apply. There are no restrictions on gifts to these entities. See the chart below for the impact of the gift ban and disclosure requirements on providers, institutions, and organizations.

Description	HC Professionals, Hospitals, Nursing Homes, Pharmacists, and Health Benefit Plan Administrators	Professional/Patient Organizations and Academic Institutions
Allowable Expenditures - Not Banned
Sponsorship of Conference or Seminars	Disclosed
Honoraria & Expenses for Faculty at Conference or Seminar	Disclosed
Gross Compensation for Clinical Trials	Disclosed after a blackout period, except the name, start date, and web link to national registry disclosed immediately
Gross Compensation for Research Projects	Disclosed
Royalties & Licensing Fees	Not Disclosed
Other reasonable fees, payments, subsidies at fair market value	Disclosed
Gifts
Payment, entertainment, meals, travel, subscription, etc. for less than fair market value	Banned	Allowed Disclosed
Samples	Allowed Drug samples not disclosed
Loans of medical devices for evaluation	Allowed Disclosed
Medical device demonstration or evaluation units	Allowed Disclosed
Peer-reviewed journals & other items that serve a genuine education function for the benefit of patients	Allowed Disclosed
Scholarships for medical students, residents, and fellows to attend conferences if independently selected	Allowed Disclosed
Rebates and discounts	Allowed Not Disclosed
Labels approved by the FDA	Allowed Disclosed

The act requires the office of the attorney general to report to the general assembly and the governor annually by April 1 on the disclosures it receives and to make the data used for the report publicly available and searchable through an Internet website. It also requires the office of Vermont health access to examine the data to determine whether and to what extent prescribing patterns by health care providers of prescribed products reimbursed under state health programs may reflect manufacturer influence, and to report its analysis annually to the general assembly and the governor by October 1. And the act directs the office of the attorney general to institute a $500.00 fee to be used for the collection and management of disclosed information and appropriates $40,000.00 from the fund to the office in fiscal year 2010.

The act requires the office of the attorney general, in consultation with the commission on health care reform, to review the advisability of manufacturers of prescribed products disclosing information about free samples given to health care providers and to report to legislative committees by December 15, 2009. It creates a therapeutic equivalent drug work group to recommend a sample list and a process for substitution of generic drugs in the same therapeutic class as prescribed brand-name drugs. The group must provide a report to legislative committees by January 15, 2010. And the act directs the office of Vermont health access, in consultation with the commissioner of corrections, to convene a work group to (1) review a report by the Heinz Family Philanthropies analyzing health care costs in the corrections system; and (2) identify ways to provide health services and prescription drugs using 340B pricing. They must report by July 31, 2009 to the commission on health care reform and the joint legislative corrections oversight committee.

Date Signed by the Governor: June 8, 2009

Effective Date: July 1, 2009, except:

· Pharmaceutical manufacturers must file by November 1, 2009 disclosures based on the law in effect on June 30, 2009 for the time period July 1, 2008 to June 30, 2009.

· Manufacturers of biological products and medical devices must file disclosures by October 1, 2010 for the time period January 1, 2010 to June 30, 2010.

· The section establishing a work group to examine health care costs in corrections takes effect on passage (Passage was June 8, 2009, the date on which the governor signed the bill).