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

This article was updated on June 7, 2019, to reflect new regulatory changes.

The New Jersey pharma “gift ban” is much more than a gift ban. It was enacted in January 2018 and is formally known as “Limitations on and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers”. [1] 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 been educating our life science teams about it. We have also worked with our clients to understand the guardrails that have put in place to support its adherence. Here are a few of the things we’ve been talking about.

First, it is important to note that the law includes 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. [2] One of the ways we have 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.  

The gift ban is worth noting, but if you are already familiar and following the PhRMA Code on Interactions with HCPs, it won’t come as a surprise. To explore it further, you can click here.

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.” [3] The cap includes services for branded promotional activities and participation on advisory bodies or under consulting arrangements. [4]

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 both accredited (CME) and unaccredited sessions (e.g., unbranded presentations or disease state awareness) and reasonable payment or remuneration for travel, lodging, and personal expenses in connection with “research activities” that include both pre- and post-market research. [5] Changes implemented on May 6, 2019, now also exclude the value of meals associated with promotional and non-promotional events from the cumulative total in the bona fide services cap.[1] [6] Likewise, payments in connection with pharmaceutical manufacturer recruitment of employees, or royalties and licensing fees for patent holders are excluded. [7]

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. Our clients are still determining how closely they will work with prescribers to exchange information with one another to ensure that fee thresholds are not exceeded. At BCD, we will also be monitoring prescriber reaction and willingness to manage to this type of restriction and recordkeeping given the cost (both in terms of time and resources) it will take to adhere to the law’s requirements. 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 isn’t exceeding the cap, HCPs must memorialize their bona fide services in writing (which is commonplace). [8] 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), 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.” [9] 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. [10]

Disclosures must be made. Prior to speaking at an educational or promotional program, a prescriber-speaker must disclose, either orally or in writing, whether he or she has accepted payments for bona fide services from that sponsoring pharmaceutical company within the preceding five years. [11] This may mean that slight updates to talk tracks need to be made to support compliance for the speaker or KOL. 

The meal cap is also somewhat novel. While New Jersey is by no means the first state to limit the offering of meals from pharmaceuticals to prescribers (think Vermont and Minnesota), it does set the threshold very low (defining modest meals at $15 or less for breakfast and lunch and $30 or less for dinner). [12] The rule now clarifies that meals (even if they are supported by a manufacturer) that are educational, including those about disease states and treatment approaches, are excluded from the modest meal limitation. [13] The meal cap applies to educational events (accredited and unaccredited) as well as promotional activities. [14]  In a 2018 article in, author Anjalee Khemlani indicated that the newly elected Governor Murphy’s administration is looking closely at the unintended consequences the law’s meal cap has had on the restaurant and hospitality industry. [15] Specifically, the New Jersey Restaurant and Hospitality Association is estimating a loss of $4.5M in revenue in 2018 as a direct result of the law. [16]  We now know that the 2019 changes made by Attorney General Grewal are to promote and make easier educational exchanges and not to limit the impact the rule has had on the restaurant and hospitality industry. [17]

The initial response from many of our clients—to avoid placing programs in New Jersey or with New Jersey prescribers—was short lived. Instead, their approach has been to be more mindful and nuanced. Given these new, slightly more relaxed rules, manufacturers will be able to continue providing compliant educational content to prescribers with a few less restrictions. Nonetheless, while the law does still serve as one of the more restrictive pieces of legislation impacting HCP meetings, compliance is achievable with collaboration, communication, and attention to detail.

Laura Konwinski is senior 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] N.J.A.C. 13:45J-1.1
[3] N.J.A.C. 13:45J-1.2
[4] N.J.A.C. 13:45J-1.2
[5] N.J.A.C. 13:45J-1.4; 1.6
[6] N.J.A.C. 13:45J-1.4
[7] N.J.A.C. 13:45J-1.2
[8] N.J.A.C. 13:45J-1.7
[9] N.J.A.C. 13:45J-1.2
[10] N.J.A.C. 13:45J-1.2
[11] N.J.A.C. 13:45J-1.7
[12] N.J.A.C. 13:45J-1.2
[13] N.J.A.C. 13:45J-1.4
[14] N.J.A.C. 13:45J-1.4
[15] Khemlani, Anjalee: Murphy ponders modifying “gift ban” for docs
[16] Khemlani, Anjalee: Murphy ponders modifying “gift ban” for docs
[17] Sullivan, Thomas: New Jersey Finally Finalizes its “Gift” Ban Amendments—Exempts Educational Events

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