Transparency and the Avoidance of Corruption: Revisions to New Jersey’s Ban on Gifts From Pharmaceutical Companies

December 20, 2018

In October 2017, we had a post about a proposed regulation promulgated by the New Jersey Division of Consumer Affairs that would place limitations on payments from pharmaceutical companies to health care providers. The rule did not provide for enforcement or penalties to be assessed against manufacturers, but rather prohibited providers from “accepting” such payments.  The affected licensees were physicians, podiatrists, physician assistants, advanced practice nurses, dentists, and optometrists.  The proposed regulation became effective as of January 16, 2018 and is codified at N.J.A.C. 13:45J-1 et seq. The regulation was one of several initiatives taken by then Attorney General Christopher Porrino to combat the opioid epidemic.  Under the regulation, a New Jersey prescriber may not accept, directly or indirectly, any of the following from a pharmaceutical manufacturer or a manufacturer’s agent:

  • Any financial benefit or benefit-in-kind, including, but not limited to, gifts, payments, stock, stock options, grants, scholarships, subsidies, and charitable contributions, except as specifically permitted by the regulation.
  • Any entertainment or recreational items (e.g., tickets to theater or sporting events, or leisure or vacation trips).
  • Items of value that do not advance disease or treatment education, including, but not limited to:

Pens, note pads, clipboards, mugs, or other items with a company or product logo;

Items intended for the personal benefit of the prescriber or staff, such as floral arrangements, sporting equipment, or artwork;

Any payment in cash or a cash equivalent; or

Any payment or direct subsidy to a non-faculty prescriber to support attendance at, as remuneration for time spent attending, or for the costs of travel, lodging, or other personal expenses associated with attending, any education event or a promotional activity.

  • Any meals unless permitted as described in the regulation with a cap in the amount of $15.

Following Governor Phil Murphy’s election, in the Spring of 2018, the new administration assessed the operation of the rule and its dampening effect on physician participation in continuing education programs. Recognizing the purpose of the regulation as establishing uniform standard to minimize conflicts of interests between health care providers and pharmaceutical manufacturers so that patient care would be guided by the unbiased, best judgment of prescribers, Attorney General Gurbir S. Grewal proposed revisions to the regulation. These appeared in the August 6, 2018 New Jersey Register.  The changes are rather limited. They modify the definition of “modest meal” from a blanket $15 per prescriber to $15 for breakfast and lunch and $30 for dinner during the calendar year 2018 with the amount in future years tied to the consumer price index. Experience with the regulation had shown the absolute $15 limit was “unrealistic.” Another change is to remove the concept of “modest meals” and the limits when associated with educational events even where a manufacturer was the sponsor “provided the meals facilitate the educational program to maximize prescriber learning, including information about disease states and treatment approaches.” Any such meals are not counted in determining the annual cap of $10,000 on payments from pharmaceutical companies for services in connection with presentations as speakers at promotional activities, participation on advisory boards, and consulting arrangements established by the original regulation. The revisions further clarified that the regulation applied only to health care providers with active New Jersey licenses who were involved with patient care in New Jersey and would not apply to an employee of a pharmaceutical company.

The revisions to the New Jersey regulation are being considered when a spotlight is once more on the issue of conflicts of interest among prominent physicians and the pharmaceutical industry. On September 13, 2018, the New York Times reported the resignation of Dr. Jose Baselga, the chief medical officer of Memorial Sloan Kettering Cancer Center, for failure to disclose millions of dollars he had received from drug companies while publishing articles about these products in medical journals. The article included a comment that “Ethicists say that outside relationships with companies can shape the way studies are designed and medications are prescribed to patients, allowing bias to influence medical practice.  Reporting those ties allows the public, other scientists and doctors to evaluate their research and weigh potential conflicts.”

The same issue of the New York Times contained an Op-Ed piece by Marcia Angell, M.D. entitled “Transparency Hasn’t Stopped Drug Companies From Corrupting Medical Research.”  Dr. Angell had been the editor of the New England Journal of Medicine for over 20 years and was at the NEJM in 1984 when it became the first major journal to require authors to disclose financial ties to companies that could be affected by the publication of their research.  In her Times piece, Dr. Angell reviewed the reasons that manufacturers became financially involved with medical researchers and how financial ties could bias the work.  She concluded with these comments:

Disclosure is better than no disclosure, but it does not eliminate the conflict of interest. It’s simply a way of saying caveat emptor, and leaving it to readers to decide whether the research was biased.  But most people – even doctors and science reporters – aren’t really equipped to make those judgments, particularly when data are suppressed.

I would suggest two reforms. First, researchers at academic medical centers should not accept any payments other than research support from drug companies, and that support should have no strings attached – no control over the design, interpretation and publication of trial results.  We should go back to arm’s length grants.

Second, doctors should not accept gifts from drug companies, even small ones, and they should pay for their own meetings and continuing education, as is standard in other professions. They can afford it.

In the meantime, those of us who read these studies should remain skeptical about them until several different trials reach the same result.

These controversies have been present for a long time with various measures taken to protect patients and keep physicians focused on patient care. Some of that history was reviewed in an earlier blog post from 2014 with the commencement of the Obamacare Physician Payment Sunshine Act which encompasses more than research physicians.  In 2016, New Jersey ranked 11th in the nation for the most non-research payments to health care professionals based on the Open Payments data.[1]

The New Jersey Board of Medical Examiners has brought disciplinary proceedings against physicians for failure to make disclosures of payments received from medical product manufacturers. It has recently continued to bring disciplinary actions based on violation of its kickback rule, N.J.A.C. 13:35-6.17(c)(1), prohibiting licensees from receiving any form of compensation that “a reasonable person would recognize as having been given” to promote the prescribing of a product for patient use.[2]

The efforts of the New Jersey Attorney General to study and explore appropriate ways to deal with these conflicts of interests issues can be traced back to at least 2007 and such efforts are obviously continuing. This may be like the sound of one hand clapping or at least a voice crying in the wilderness.  But it should be noted that the Hippocratic Oath – dating back to the Fourth or Fifth Century B.C. and still administered to modern day physicians – includes a provision that “into whatever homes I go, I will enter them for the benefit of the sick, avoiding any voluntary act of impropriety or corruption.”

[1]  Helman, Farrar, Horton, Segobiano & Dingler, Physician, Feed Thyself: New Jersey’s Restriction On Pharmaceutical Payments (Jan. 24, 2018) available at //www.navigant.com/insights/life-sciences-consulting/2018/new-jerseys-restriction-on-pharmaceutical-payments

[2]   See, e.g., In the Matter of Kenneth Sun, M.D. (Aug. 27, 2018)(between 2013 and 2015 more than $117,000 in payments) available at  //www.njconsumeraffairs.gov/Actions/20180827_25MA06318400.pdf.



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