SF 1237

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:19am

A bill for an act
relating to health; preventing conflicts of interest; banning gifts from drug
or medical device manufacturers or distributors to physicians and formulary
committee members; amending Minnesota Statutes 2008, sections 151.461;
151.47, subdivision 1; 256B.0625, subdivision 13c; proposing coding for new
law in Minnesota Statutes, chapter 62J.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

[62J.241] DISCLOSURE OF PAYMENTS TO PRACTITIONERS.

Subdivision 1.

Disclosure required.

(a) Each pharmaceutical manufacturer,
wholesale drug distributor, and medical device manufacturer or their agent shall file with
the commissioner of health an annual report that identifies all payments or other transfers
of value to a practitioner or to an entity or individual at the request of or designated on
behalf of a practitioner. The report shall include the following information:

(1) the name of the practitioner;

(2) the business address of the practitioner and the specialty and Medicare billing
number of the practitioner, if applicable;

(3) the value of the payment or other transfer of value;

(4) the dates on which the payment or other transfer of value was provided to the
practitioner;

(5) a description of the form of the payment or other transfer of value indicated as
cash or cash equivalent; in-kind items or services; or stock, stock option, or any other
ownership interest, dividend, profit, or other return on investments; and

(6) a description of the nature of the payment or other transfer of value indicated
as consulting fees; compensation for services other than consulting; honoraria; gift;
entertainment; food; travel; education; research; charitable contribution; royalty or license;
current or prospective ownership or investment interest; compensation for serving as
faculty or as a speaker for a continuing medical education program; or grant.

(b) The information reported by the manufacturer shall include the aggregate amount
of all payments or other transfers of value provided by the manufacturer to practitioners
and to entities or individuals at the request of or designated on behalf of a practitioner
during the preceding calendar year.

Subd. 2.

Exceptions.

A manufacturer or distributor is not required to report the
following:

(1) product samples that are not intended to be sold and are intended for patient use;

(2) educational materials that directly benefit patients or are intended for patient use;

(3) the loan of a medical device for a short-term trial period not to exceed 90 days, to
permit evaluation of the device by the practitioner;

(4) items or services provided under a contractual warranty, including the
replacement of a device, where the terms of the warranty are set forth in the purchase or
lease agreement for the device;

(5) a transfer of anything of value to a practitioner when the practitioner is a patient
and not acting in the professional capacity of a practitioner;

(6) discounts; or

(7) in-kind items used for the provision of charity care.

Subd. 3.

Report.

(a) The report must be filed on a standardized form prescribed by
the commissioner.

(b) The report must be filed by April 1 of each year, beginning April 1, 2010, and
must include the required information with respect to the preceding calendar year.

(c) The reports filed under this section are public data and must be made available on
the department Web site in an easily accessible and searchable format.

Subd. 4.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given.

(b) "Payment or other transfer of value" means a transfer of anything of value
and includes any compensation, gift, honorarium, speaking fee, consulting fee, travel,
services, dividends, profit distribution, stock or stock option grant; or ownership or
investment interest.

(c) "Practitioner" has the meaning provided under section 151.01, subdivision 23,
but does not include a practitioner who is an employee of a manufacturer or distributor.

Sec. 2.

Minnesota Statutes 2008, section 151.461, is amended to read:

151.461 GIFTS TO PRACTITIONERS PROHIBITED.

Subdivision 1.

Prohibition.

It is unlawful for any pharmaceutical manufacturer or,
wholesale drug distributor, or medical device manufacturer or distributor, or any agent
thereof, to offer or give any gift of value or to request another person to give a gift to a
practitioner. A medical device manufacturer that distributes drugs as an incidental part of
its device business shall not be considered a manufacturer, a wholesale drug distributor,
or agent under this section. A practitioner may not accept a gift from a manufacturer
or distributor or from an agent of either.

Subd. 2.

Definition of gift.

For purposes of this section, "gift" has the meaning
given under section 10A.071.

Subd. 3.

Exceptions.

As used in this section, "gift" does not include The prohibition
in this section does not apply to:

(1) professional samples of a drug provided to a prescriber practitioner for free
distribution to uninsured or low-income patients or for distribution to patients in order to
provide a brief therapeutic trial of the drug;

(2) items with a total combined retail value, in any calendar year, of not more than
$50;

(3) a payment (2) an unrestricted grant to the sponsor of a medical conference,
professional meeting, or other educational program, provided that the grantor has no
influence on the content, presenters, or attendees at the event and provided the payment is
not made directly to a practitioner and is used solely for bona fide educational purposes; is
made to underwrite the conference, meeting, or program; is not meant to subsidize any
particular attendees; and is not tied to the attendance of any particular practitioner;

(4) (3) reasonable honoraria and payment of the reasonable expenses of a practitioner
who serves on the faculty at a professional or educational conference or meeting if
the honoraria for the speech or presentation does not exceed reasonable professional
compensation for the practitioner's specialty;

(5) (4) compensation for the substantial professional or consulting services of
a practitioner in connection with a genuine research project that has the potential
of advancing medical care or establishing an improved understanding of the safety,
performance, or improvement in clinical outcomes of a drug or medical device. The
compensation for these services must not exceed reasonable professional compensation
for the practitioner's specialty;

(6) (5) informational publications and educational materials, provided that the
materials were produced and published by the drug manufacturer or medical device
manufacturer; or

(7) (6) salaries or other benefits paid to employees. If a practitioner is an employee
of a drug manufacturer, wholesale drug distributor, or medical device manufacturer or
distributor, the practitioner must notify a patient of the employment relationship or make
the relationship otherwise available before prescribing or recommending any medication
or medical device from that manufacturer or distributor to the patient;

(7) bona fide training or educational programs conducted or sponsored by a medical
device manufacturer or distributor for the sole purpose of training the practitioner in
the use of a medical device and any reasonable expenses associated with attending the
training or educational program; or

(8) reasonable payment to the practitioner for intellectual property or patent royalties
on a medical device provided that the practitioner is named on the patent.

Subd. 4.

Notice.

(a) When a practitioner receives compensation under subdivision
3, clause (3), (4), or (8), the practitioner must notify a patient of the existence of a
financial relationship or make the information otherwise available before prescribing any
medication or device from that manufacturer or distributor to the patient.

(b) For purposes of this section, "practitioner" includes the employees of the
clinic or facility where the practitioner is practicing and includes family members of
the practitioner.

Sec. 3.

Minnesota Statutes 2008, section 151.47, subdivision 1, is amended to read:

Subdivision 1.

Requirements.

All wholesale drug distributors are subject to the
requirements in paragraphs (a) to (f).

(a) No person or distribution outlet shall act as a wholesale drug distributor without
first obtaining a license from the board and paying the required fee.

(b) No license shall be issued or renewed for a wholesale drug distributor to operate
unless the applicant agrees to operate in a manner prescribed by federal and state law and
according to the rules adopted by the board.

(c) The board may require a separate license for each facility directly or indirectly
owned or operated by the same business entity within the state, or for a parent entity
with divisions, subsidiaries, or affiliate companies within the state, when operations
are conducted at more than one location and joint ownership and control exists among
all the entities.

(d) As a condition for receiving and retaining a wholesale drug distributor license
issued under sections 151.42 to 151.51, an applicant shall satisfy the board that it has
and will continuously maintain:

(1) adequate storage conditions and facilities;

(2) minimum liability and other insurance as may be required under any applicable
federal or state law;

(3) a viable security system that includes an after hours central alarm, or comparable
entry detection capability; restricted access to the premises; comprehensive employment
applicant screening; and safeguards against all forms of employee theft;

(4) a system of records describing all wholesale drug distributor activities set forth
in section 151.44 for at least the most recent two-year period, which shall be reasonably
accessible as defined by board regulations in any inspection authorized by the board;

(5) principals and persons, including officers, directors, primary shareholders,
and key management executives, who must at all times demonstrate and maintain their
capability of conducting business in conformity with sound financial practices as well
as state and federal law;

(6) complete, updated information, to be provided to the board as a condition for
obtaining and retaining a license, about each wholesale drug distributor to be licensed,
including all pertinent corporate licensee information, if applicable, or other ownership,
principal, key personnel, and facilities information found to be necessary by the board;

(7) written policies and procedures that assure reasonable wholesale drug distributor
preparation for, protection against, and handling of any facility security or operation
problems, including, but not limited to, those caused by natural disaster or government
emergency, inventory inaccuracies or product shipping and receiving, outdated product
or other unauthorized product control, appropriate disposition of returned goods, and
product recalls;

(8) sufficient inspection procedures for all incoming and outgoing product
shipments; and

(9) operations in compliance with all federal requirements applicable to wholesale
drug distribution.

(e) An agent or employee of any licensed wholesale drug distributor need not seek
licensure under this section.

(f) A wholesale drug distributor shall file with the board an annual report, in a
form and on the date prescribed by the board, identifying all payments, honoraria,
reimbursement or other compensation authorized under section 151.461, clauses (3) to
(5), paid to practitioners in Minnesota during the preceding calendar year. The report
shall identify the nature and value of any payments totaling $100 or more, to a particular
practitioner during the year, and shall identify the practitioner. Reports filed under this
provision are public data.

Sec. 4.

Minnesota Statutes 2008, section 256B.0625, subdivision 13c, is amended to
read:

Subd. 13c.

Formulary committee.

(a) The commissioner, after receiving
recommendations from professional medical associations and professional pharmacy
associations, and consumer groups shall designate a Formulary Committee to carry
out duties as described in subdivisions 13 to 13g. The Formulary Committee shall be
comprised of four licensed physicians actively engaged in the practice of medicine in
Minnesota one of whom must be actively engaged in the treatment of persons with mental
illness; at least three licensed pharmacists actively engaged in the practice of pharmacy
in Minnesota; and one consumer representative; the remainder to be made up of health
care professionals who are licensed in their field and have recognized knowledge in the
clinically appropriate prescribing, dispensing, and monitoring of covered outpatient drugs.
Members of the Formulary Committee shall not be employed by the Department of Human
Services, but the committee shall be staffed by an employee of the department who shall
serve as an ex officio, nonvoting member of the committee. The department's medical
director shall also serve as an ex officio, nonvoting member for the committee. Committee
members shall serve three-year terms and may be reappointed by the commissioner. The
Formulary Committee shall meet at least quarterly. The commissioner may require more
frequent Formulary Committee meetings as needed. An honorarium of $100 per meeting
and reimbursement for mileage shall be paid to each committee member in attendance.

(b) A member of the formulary committee may not accept a gift or any professional
samples from a drug manufacturer or wholesale drug distributor. A member of the
formulary committee may not be an employee or an agent of a drug manufacturer or
wholesale drug distributor.