A Practical Guide to New Jersey’s Pharma "Gift Ban"

The New Jersey pharma “gift ban” is much more than a gift ban. It was enacted this past January and is formally known as “Limitations on and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers .”[1] Despite speculation that the state’s newly elected governor may modify it, if you are a prescriber or your role involves planning, coordinating, procuring, or reconciling life science meetings, you need to be familiar with the law’s inner workings.

Since the law passed, my company, BCD Meetings and Events, has hosted several trainings to educate our life science teams about how it works. We discuss some of the potential scenarios within meetings and events where compliance issues can arise as a result of this law. Additionally, we work with our clients to understand the guardrails they have put in place to support adherence. Here are a few of the things we’ve been talking about.

First, the law contains several key provisions, including
• a gift ban
• a cap on remuneration for bona fide services for certain types of arrangements with prescribers
• a recordkeeping requirement
• a disclosure component, and
• a cap on modest meals.

In this global environment, it is important to know that the law follows the prescriber outside of New Jersey. So, if a New Jersey prescriber attends an event outside the state that is hosted by a pharmaceutical manufacturer, the law continues to apply. One of the ways BCD M&E has approached this challenge is by flagging New Jersey prescribers much in the same way we flag our Minnesota and Vermont HCPs. As a result, we are alerted when a New Jersey prescriber registers for a program or is otherwise engaged.[2]

The gift ban is worth noting. If you are already familiar and following the PhRMA Code on Interactions with HCPs, the language won’t come as a surprise. However, there are two notable differences. First, the PhRMA Code is guidance, whereas New Jersey has taken it a step further and codified it. Second, with the PhRMA Code, the guidance is leveled at manufacturers not to offer gifts; in contrast, the New Jersey law makes it illegal for the prescriber to accept the gift.

The cap on remuneration for bona fide services is certainly unprecedented and is going to take some extraordinary administrative oversight on the part of prescribers. The law puts the obligation on prescribers to maintain accurate accounting for their compensation, which cannot exceed $10,000 in the aggregate from all pharma manufacturers per year for “bona fide services.” The cap includes services for branded promotional activities and participation on advisory boards or in advisory bodies or under consulting arrangements.[3]

Excluded from the cap is fair-market-value compensation or reasonable remuneration for travel, lodging, and personal expenses for speaking at “educational events” that include accredited (continuing medical education, or CME), unaccredited sessions, and reasonable payment or remuneration for travel, lodging, and personal expenses in connection with “research activities” that include both pre- and post-market research. Likewise, payments in connection with pharmaceutical manufacturer recruitment of employees, or royalties and licensing fees for patent holders are excluded.[4]

Since the law places the obligation on prescribers, as opposed to manufacturers, only the prescribers will know if they are nearing or have met the annual cap. Manufacturers will only have visibility into the payments they are making to prescribers. Our clients are still determining how bests to work with prescribers to exchange information with one another to ensure that fee thresholds are not exceeded. At BCD M&E, we will also be monitoring prescriber reaction and willingness to manage this type of restriction and recordkeeping given the cost (both in terms of time and resources) associated with adherence. The question remains whether HCPs will simply back away from relationships with manufacturers, as described above, because the law is too burdensome.

Records must be kept. In addition to tracking remuneration and ensuring it doesn’t exceed the cap, HCPs must document their bona fide services in writing (which is commonplace). However, the agreement must now contain certain elements that were not mandated previously. Specifically, the agreement needs to contain the amount of compensation the prescriber is receiving (based on fair-market value), and specify that the meeting is being held in association with “bona fide services in venues and under circumstances [that are] conducive to the services provided and that the activities related to the services are the primary focus.”[5] In addition, the agreement needs to contain the following:
1. The legitimate need for services in advance
2. The connection between the competence, knowledge, and expertise of the prescriber and the purpose of the arrangement
3. How participation of the prescriber is reasonably related to achieving the identified purpose
4. The manner by which the prescriber will maintain records concerning the arrangement and the services provided by the prescriber
5. An attestation that the prescriber's decision to render the services is not unduly influenced by a pharmaceutical manufacturer's agent.[6]

Disclosures must be made. Prior to speaking at an educational or promotional program, a prescriber-speaker must disclose, either orally or in writing, whether they have accepted payments for bona fide services from that sponsoring pharmaceutical company within the preceding five years.[7] While this practice voluntarily took place at some industry events in the past, the law now mandates it. This may mean that slight updates to talk tracks need to be made to support compliance for the speaker or key opinion leader.

The meal cap is also somewhat novel. While New Jersey is by no means the first state to limit the offering of meals from pharmaceutical companies to prescribers (think Vermont and Minnesota), it does set the threshold very low (defining modest meals at $15.00 or less).[8] Likewise, it explicitly states that the meal cap applies to educational events (accredited and unaccredited) as well as promotional activities[9] (which aligns closely with Vermont’s law) .[10] In a recent article in, author Anjalee Khemlani indicates that the newly elected Governor Murphy’s administration is looking closely at the unintended consequences that the law’s meal cap has had on the restaurant and hospitality industry. Specifically, the New Jersey Restaurant and Hospitality Association is estimating a loss of $4.5 million in revenue in 2018 as a direct result of the law. Whether Governor Murphy’s office modifies the law, and to what extent it is modified, remains to be seen.

The unintended consequences reported on are not a surprise.  As an initial response, many of our clients have avoided placing programs in New Jersey or with New Jersey prescribers until their legal and compliance teams have finalized their internal policies explaining how to follow the new law. Whether these organizations end up mirroring their own protocols in Vermont and Minnesota, or take a more nuanced approach, will become evident as the industry works quickly to adapt to the new law. In the meantime, the law, which has had some disruptive elements, does deserve industry attention; and with collaboration, communication, and attention to detail, compliance is achievable.

Laura Konwinski is director of compliance with BCD Meetings & Events.

NOTE: This article is for educational purposes only as well as to provide general information. The article should not be used as a substitute for competent legal advice from an attorney in your state or jurisdiction. The materials presented in this article may not reflect the most current legal developments. BCD Meetings & Events LLC is not responsible for any errors or omissions in the content or for any damages arising from reliance on information contained in the article.

© 2018 Laura Konwinski, all rights reserved

[1] N.J.A.C. 13:45J
[2] NJAC 13:45J-1.3
[3] NJAC 13:45J-1.2
[4] NJAC 13:45J-1.2
[5] NJAC 13:45J-1.2
[6] NJAC 13:45J-1.2
[7] N.J.A.C. 13:45J-1.7
[8] NJAC 13:45J-1.2
[9] NJAC 13:45J-1.2
[10] 18 V.S.A. 4631a(a)(1)(H)

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