Presentation by Pat Cerundolo, Partner, Foley Hoag LLP

MGL c. 111N - Pharmaceutical andMedical Device Manufacturer ConductSummary of the LawPat A. CerundoloJanuary 8, 2009© 2008 2009 Foley Hoag LLP. All Rights Reserved.

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Overview• Section 14 of Cost Containment Legislation, An Act to Promote CostContainment, Transparency, and Efficiency in the Delivery of Quality Healthcare• Signed into law on August 10, 2008• Inserted Chapter 111N of the General Laws, Pharmaceutical and Medical DeviceManufacturer Conduct• DPH is charged with regulating marketing in three primary waysI. Code of ConductII. Compliance RequirementIII. Disclosure Requirement• Enforcement© 2008 2009 Foley Hoag LLP. All Rights Reserved.Presentation Title | 3

I. Code of Conduct• Requires DPH to adopt a standard marketing code of conduct for all pharmaceuticalor medical device manufacturing companies that employ a person to sell or marketdrugs or devices in MA to health care practitioners– Only pharma and med device manufacturers that “participate in aCommonwealth health care program” are covered•“Commonwealth health care program” is undefined– Non-wholesale drug distributors are covered– Omits inclusion of medical device distributors• Code shall be “no less restrictive than the most recent version of the PhRMA andAdvaMed codes”– PhRMA and AdvaMed codes serve as the regulatory floor© 2008 2009 Foley Hoag LLP. All Rights Reserved.Presentation Title | 4

Code of Conduct - Prohibits• Payments to practitioners for meals that are– Part of an entertainment event– Offered without an informational presentation made by a marketing agent, orwithout the agent being present– Outside of the practitioner’s office or hospital “setting” (undefined)– Provided to spouse or other guest• Providing or paying for entertainment or recreation items of any value to anynonemployee practitioner• Sponsorships of CME seminars not accredited by ACCME• Cost of travel, lodging or other personal expenses of non-faculty at conferencesand meetings• Funding for time spent by practitioners participating in conferences• Direct payment for meals at conferences and meetings• Payments in cash or cash equivalents except as compensation for services• Grants, scholarships, contracts or practice items in exchange for prescribing drugsor using medical devices© 2008 2009 Foley Hoag LLP. All Rights Reserved.Presentation Title | 5

Code of Conduct - Allows• Provision of peer reviewed academic, scientific or clinical information• Advertising in journals• Drug samples for patients– Omits reference to medical device demonstration or evaluation units• Compensation for professional consulting services in connection with research andclinical trials• Expenses for technical training of a medical device if part of a purchase contract© 2008 2009 Foley Hoag LLP. All Rights Reserved.Presentation Title | 6

II.Compliance Requirement• Requires all PMDMCs that employ marketers to:– Comply with the DPH’s code– Adopt a training program on the code– Conduct annual audits to ensure compliance– Adopt policies and procedures to investigate noncompliance and totake corrective action– Identify a compliance officer– Submit annual reports to the DPH describing• Training program• Investigative policies• Identification of compliance officer• Audit and compliance certification© 2008 2009 Foley Hoag LLP. All Rights Reserved.Presentation Title | 7

III.Disclosure Requirement• Requires PMDMCs employing marketers to disclose annually the:–Value– Nature– Purpose–Recipient– of any fee, payment, subsidy, or other economic benefit with a value of at least$50 which the company provides, directly or through its agents– to any physician, hospital nursing home, pharmacist, health plan administrator,health care practitioner or other person in the commonwealth authorized toprescribe, dispense or purchase prescription drugs or medical devices in theCommonwealth.• All disclosed data is publicly available on the web• No guidance on how the $50 limit is calculated• No reference to confidential materials or trade secret protections– Public records law likely applicable to reported data without statutory exception© 2008 2009 Foley Hoag LLP. All Rights Reserved.Presentation Title | 8

Enforcement• Enforced by the Attorney General, the District Attorney with jurisdiction, or the DPH• Fine of $5000 for each transaction, occurrence or event that violates the statute© 2008 2009 Foley Hoag LLP. All Rights Reserved.Presentation Title | 9

Regulatory Process• Proposed regulations Issued and Notice of Public Hearing – December 10, 2008• First public hearing – January 9, 2009• Second public hearing – January 12, 2009– Oral testimony and written comments– DPH has broad flexibility in conducting the hearing and taking comments• Final Regulations issued TBD• Regulations take effect upon publication in the Massachusetts Register© 2008 2009 Foley Hoag LLP. All Rights Reserved.Presentation Title | 10