States require disclosure of relationship between physicians, companies

A lawsuit has drawn attention to additional reporting regulations handed down by five states and the District of Columbia.

Issue: July 1, 2006

ByAlan E. Reider, JD, MPH

For the past several years, there has been considerable focus on the relationship between physicians and the pharmaceutical industry. This focus has generated significant federal enforcement activity, and much of the concern has been directed at the promotion of drugs to physicians. In response, PhRMA, the national trade association of the pharmaceutical industry, has issued guidelines for the relationship between its members and the physician community.

How effective this guidance will be remains to be seen. Some states, however, have decided to take even more aggressive steps by imposing further restrictions on these relationships. Yet until a recent lawsuit was filed by Public Citizen, a private watchdog group, against the attorney general of Vermont, this development had largely flown under the radar screen. Specifically, last year, Public Citizen filed a lawsuit seeking detailed information about gifts, fees and other payments from drug companies to health care providers. The lawsuit was based on a 4-year-old statute that requires pharmaceutical makers to disclose to the attorney general information about any gift, fee, payment, subsidy or other benefit provided in connection with any detailing, promotional activity or marketing to any physician, hospital, nursing home or any person who can prescribe and dispense prescription drugs. Under the Vermont statute, the attorney general is required to report on the disclosures annually. Public Citizen sued to obtain information not contained in the attorney general’s annual report.

Alan E. Reider

Allison Weber-Shuren

Reporting requirements

This lawsuit served to alert the health care community to a requirement that few knew existed. Further investigation revealed that Vermont is not the only state with such a reporting requirement. California, Maine, Minnesota, West Virginia and the District of Columbia also have disclosure laws. And, according to sources, similar legislation is pending in up to 22 other states.

The six existing disclosure laws are similar in some respects but differ in others. Significantly, three jurisdictions (D.C., Vermont and Minnesota) require the identification of each physician who receives any payment, while the other three jurisdictions do not. Further, the trigger for making a disclosure is low in all of the states, generally $25, although some states make exception for certain payments, such as reasonable reimbursement for participation in bona fide clinical trials (Vermont, West Virginia, Maine and D.C.), payment for valid professional services (California and Minnesota) and the provision of samples (all jurisdictions, although some have restrictions) Penalties for violation of these laws range from no penalty to a $10,000 fine per violation imposed on the pharmaceutical company.

So what is the big deal to physicians, particularly if the only penalties are directed to the pharmaceutical companies? The answer to this question may be nothing. But those of us who have been around long enough may remember the days when local newspapers learned of other lists being created containing the names of the physicians who received the highest Medicaid payments in each jurisdiction. The newspapers immediately filed Freedom of Information requests and published the results. The effect of this disclosure was to cause embarrassment to those physicians identified. Could the same thing happen here? Public Citizen’s lawsuit suggests that it could. And the effect likely would be a reluctance by physicians to accept any payments that are reportable. Perhaps that was the real intent of the legislation in the first place.

For more information:

Alan E. Reider, JD, can be reached at Arent Fox PLLC, 1050 Connecticut Ave. NW, Washington, DC 20036; 202-857-6462; fax: 202-857-6395; e-mail: reider.alan@arentfox.com.