Banned in Boston

Pharma is sexy. Big drugs, big money, big news. In the life sciences arena, perhaps only biotech commands a higher political and public profile.

So it isn’t surprising that the medical device industry’s groundbreaking inclusion in Massachusetts’ new code of conduct garnered relatively little attention.

But the new rules governing industry payments to physicians — the so-called “gift ban” — include provisions aimed at curbing what some call undue and improper influence by medical device manufacturers.

Finalized March 11 by the state Department of Public Health’s Public Health Council, the toughest-in-the-nation policy aims to lower healthcare costs by forcing companies to reduce the amount spent on marketing.

That means no more meals outside of a presentation or hospital setting — and spouses should plan on brown-bagging it, as paying for their meals is over too. It means no gifts or payments of any kind — say good bye to the promotional pen — and no covering doctors’ continuing medical education expenses.

The policy also aims to make the life sciences industry more transparent, by mandating that companies divulge to the public how much they spend and what — or who — they spend it on. Companies must report the “value, nature, purpose and particular recipient of any fee, payment, subsidy or other economic benefit with a value of over $50.”

Although the regulations cover much of the same ground as similar laws in a handful of other states, they also make Massachusetts the first to include medical device manufacturers in the ban on certain payments to healthcare practitioners, the first to mandate financial disclosure from medical device companies and the only state to require disclosing handouts of demonstration and evaluation units.

And, predictably, more ink was spilled over the extinction of promotional doodads and a-la-carte steakhouse dinners.

Less expected is what the new rules and the eight-month battle over them seem to say about the relationship between the industry and a state in which it’s long been an economic linchpin.

Namely, that they have a lot to learn about each other.

Under the radar

Medical device leaders complain that the Public Health Council didn’t fully grasp medical device sales and marketing practices. They remain unsure of the exact impact of the new rules will be. And the healthcare consumer advocates who pushed for the rules admit that, compared to the drug industry, they don’t know the medical device world particularly well.

Both sides expect that in the year before the state comes back to the table to review the rules — a year earlier than originally planned — everyone will get an education.

“There’s a lot we don’t know about [the medical device industry],” says Georgia Maheras, coordinator for Healthcare for All’s Massachusetts Prescription Reform Coalition and one of the drivers behind the tougher regulations. When the mandatory annual disclosure reports go up on the Department of Public Health’s website – searchable by company and health care provider — Maheras’s will be among the first mouse clicks you hear.

“We’re really interested to see some of the data that comes out in the next few years,” she says, “to see how it affects [the medical device industry].”

{IMAGELEFT:}That lack of familiarity is distressingly apparent in the regulations, according to Tom Sommer, president of the Massachusetts Medical Device Industry Council (MassMEDIC).

“This whole process has been very disappointing, despite putting in the time explaining [to the Public Health Council] what makes us different,” Sommer says. “I think it’s easier for people to lump medical device in with pharma, rather than differentiate.”

Ask him about the new rules and the first sentence out if his mouth begins with, “We’re concerned about…” The next 10 or so start with, “We’re also concerned about…”

Sommer argues that developing medical device technology requires far greater interaction with healthcare practitioners than most people realize. The industry is worried how that “free flow of information” will be hampered by fears of, say, an illegal meal with a medical device rep and a doctor.

And while he agrees there’s a need for transparency and says there are concessions that improve the final draft, “our concern is that a lot of pre-sales kicking of the tires that goes on won’t be allowed under these regulations,” he says.

{IMAGELEFT:}For instance, the new rules bar any reimbursement for technical training prior to executing a sales contract. Much of the collaboration that isn’t restricted or banned outright will be made public, creating a distinct competitive disadvantage against companies in other states, says Robert Coughlin, president and CEO of the Massachusetts Biotechnology Council. That’s especially worrisome, he adds, as the medical device industry moves toward “combination products” featuring a biological or pharmaceutical product delivered in a device.

“In order to develop these devices, there is a terrific amount of collaboration between physicians and companies that will now need to be disclosed,” Coughlin explains.

Those deeper, more elaborate ties are a good example of the need for more regulation, not less, Maheras argues. Whereas the pharma dealers tend to be the “pretty cheerleader” handing out drug samples and trinkets, she explains, medical device marketing can involve large, expensive demo units and rebates that “read like kickbacks.”

“They’re doing some things in which the potential conflict of interest is a little worse,” Maheras says, adding that tighter relationships between industry and physicians offer more chances to cross ethical lines.

An upside?

Some believe a nationwide trend toward tighter regulation — along with a growing list of states with laws, the federal Physician Payments Sunshine Act of 2007 is creeping along in Washington — should be seen as an opening for the medical device industry.

“This is a great opportunity for a company to say, ‘Look at us. Look at our charitable giving, look at all the good work we’re doing,'” says Maheras.

For an example of getting ahead of the curve and looking good doing it, see Medtronic, a Minneapolis-based medical device colossus with a facility in Danvers. In February, the devices giant proudly announced its plan to start voluntarily disclosing payments to U.S. physicians, complete with a public, third-party audit.

But Medtronics’ move wasn’t made without its critics, who complained that the company’s registry isn’t transparent enough. That’s because it doesn’t provide enough detail about the role of its vendors in deciding how and where Medtronic spends its cash, they say.

Maheras believes the leveling of the playing field for smaller companies with equally-sized marketing budgets is another opportunity. With less focus on salesmanship, her theory goes, the greater the ability to focus on product quality.

“That perspective was not raised to us in our outreach and advocacy,” says Tim Sweeney, director of public policy at the Greater Boston Chamber of Commerce, which helped lobby against state-level regulations. “Uniformly, what we heard from these companies was concern that this was not drafted correctly.”

Being small is, in fact, a distinct disadvantage when it comes to the new rules, according to MassMEDIC’s Sommer, since the first disclosure report is due July 1, 2010. Larger companies have the resources to rapidly bring compliance policies and systems online.

“It is a challenge and probably will be more of a problem for small- and medium-sized companies, which make up the bulk of the medical device industry,” he says.

The biggest unanswered question, one raised but not addressed by the regulations, is their long-term impact on the medical device industry when it takes a front-row seat next to pharma. The new Massachusetts rules leave little distinction between the industries. And with higher scrutiny and low public opinion bedeviling pharma, there seems to be little upside in sharing the spotlight.

{IMAGELEFT:}”I can understand their concern, not wanting to be lumped together with the drug industry, but from a public health and consumer perspective there’s no reason to wait for the medical device industry to get as bad as the drug companies are,” says Deirdre Cummings, legislative director for MASSPIRG, which joined Healthcare for All in lobbying for the law.

“The Department of Public Health did say there is some uniqueness between these two industries, but overall the idea is still the same,” Cummings adds. “If there’s going to be a lot of spending in this particular private sector, we ought to get a handle on it fairly quickly.”

Maheras agrees that “pharma has a big target on themselves, fairly or unfairly, and medical device companies tend to be quieter,” but those days are likely over. More and more people are using more and more medical devices, thanks to the graying of the Baby Boom generation.

Sommer considers the grouping with pharma unfair and inaccurate, noting that “we have different manufacturing processes, different workers, different investors, the timelines are different, we don’t enjoy the same patent protections,” sounding distinctly like someone who’s already had this argument – and grown tired of losing it.

“We’re a different industry,” he says, “and I’ll leave it at that.”

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