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SB-790 Health care providers: gifts and benefits.(2017-2018)

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Date Published: 07/06/2017 09:00 PM
SB790:v93#DOCUMENT

Amended  IN  Assembly  July 06, 2017
Amended  IN  Assembly  June 22, 2017
Amended  IN  Assembly  June 13, 2017
Amended  IN  Senate  May 02, 2017
Amended  IN  Senate  April 17, 2017
Amended  IN  Senate  March 29, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 790


Introduced by Senator McGuire
(Coauthor: Senator Monning)

February 17, 2017


An act to add Division 117 (commencing with Section 150300) to the Health and Safety Code, relating to health care providers.


LEGISLATIVE COUNSEL'S DIGEST


SB 790, as amended, McGuire. Health care providers: gifts and benefits.
The Sherman Food, Drug, and Cosmetic Law, administered by the State Department of Public Health, regulates the packaging, labeling, and advertising of drugs and devices, and requires a manufacturer of any drug or device in the state to be licensed by the department. Existing law imposes various requirements on persons engaged in the provision of health care services in the state.
This bill would, on and after January 1, 2019, prohibit a manufacturer of a prescribed product from offering or giving a gift to a health care provider. The bill would further prohibit a manufacturer of a prescribed product or an entity on behalf of a manufacturer of a prescribed product from providing a fee, payment, subsidy, or other economic benefit to a health care provider in connection with the provider’s participation in research, except as specified. The bill would define terms of its purposes, including, among others, the term “gift.” The bill would specify circumstances to which these prohibitions do not apply.
Existing federal law, the Physician Payments Sunshine Act (Sunshine Act), requires manufacturers of specified drugs, devices, biologicals, or medical supplies to disclose to the federal Centers for Medicare and Medicaid Services payments or other transfers of value made to physicians or teaching hospitals.
This bill would state the intent of the Legislature that the prohibitions and requirements described above complement and operate in conjunction with the Sunshine Act. The bill would state the intent of the Legislature to enact legislation similar to the Sunshine Act if the Sunshine Act is repealed or becomes inoperative.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Division 117 (commencing with Section 150300) is added to the Health and Safety Code, to read:

DIVISION 117. Expenditures by Manufacturers of Prescribed Products

150300.
 For the purposes of this division, the following definitions shall apply:
(a) “Allowable expenditure” means any of the following:
(1) Payment by a manufacturer of a prescribed product to the sponsor of a significant educational, medical, scientific, or policymaking conference or seminar, provided that all of the following conditions are satisfied:
(A) The payment is not made directly to a health care professional or pharmacist.
(B) Funding is used solely for bona fide educational purposes, except that the sponsor may, in the sponsor’s discretion, apply some or all of the funding to provide meals and other food for all conference participants.
(C) All program content is objective, free from industry control, and does not promote specific products.
(2) Honoraria and payment of the expenses of a health care professional who serves on the faculty at a bona fide educational, medical, scientific, or policymaking conference or seminar, only if all of the following conditions are satisfied:
(A) The honoraria or payment is governed by an explicit contract with specific deliverables that are restricted to medical issues, not marketing activities.
(B) Consistent with federal law, the content of the presentation, including slides and written materials, is determined or at a minimum is reviewed and approved by the health care professional.
(3) For a bona fide clinical trial or a research project that constitutes a systematic investigation, is designed to develop or contribute to general knowledge, and reasonably can be considered to be of significant interest or value to scientists or health care professionals working in the particular field of inquiry, all of the following:
(A) Compensation for services provided by investigators, health care professionals, or health care providers in connection with the bona fide clinical trial or research project.
(B) Expenses paid on behalf of investigators, health care professionals, or health care providers in connection with the bona fide clinical trial or research project.
(C) Expenses paid by the investigators, health care professionals, or health care providers in connection with the bona fide clinical trial or research project.
(D) Materials and supplies used in connection with the bona fide clinical trial or research project.
(4) Payment or reimbursement for reasonable expenses, including travel and lodging-related expenses, necessary for technical training of individual health care professionals on the administration of a prescribed product, if the commitment to provide those expenses and the amounts or categories of reasonable expenses to be paid are described in a written agreement between the health care provider and the manufacturer.
(5) Public health initiatives to develop replicable and sustainable model programs that embody best practices in disease screening and linkages to care.
(6) Royalties and licensing fees paid to health care providers in return for contractual rights to use or purchase a patented or otherwise legally recognized discovery for which the health care provider holds an ownership right. This also includes royalties, licensing fees, and financial transactions related to joint ventures and partnerships with health care providers.
(7) A payment to a health care provider for participation in bona fide marketing research conducted by a third party, only if the payments are made by that third party and the sponsoring manufacturer is not informed of the identity of the participating health care provider.
(8) Other reasonable fees, payments, subsidies, or other economic benefits provided by a manufacturer of a prescribed product at fair market value.
(9) The payment of reasonable expenses of an individual related to the interview of the individual by a manufacturer of prescribed products in connection with a bona fide employment opportunity or for health care services on behalf of an employee of the manufacturer.
(10) Provision of meals for a health care provider that do not exceed two hundred fifty dollars ($250) per person, per year in value in addition to payments otherwise permitted under this subdivision.
(b) “Bona fide clinical trial” means an FDA-reviewed clinical trial that constitutes research as defined in Section 46.102 of Title 45 of the Code of Federal Regulations that can be reasonably considered to be of interest to scientists or health care professionals working in the particular field of inquiry.
(c) “Bona fide marketing research” means the collection and analysis of data regarding opinions, needs, awareness, knowledge, views, experiences, and behaviors of a population, through the development and administration of surveys, interviews, focus groups, polls, observation, or other research methodologies, in which no sales, promotional, or marketing efforts are involved and through which there is no attempt to influence a participant’s attitudes or behavior.
(d) “Clinical trial” means a study that does either of the following:
(1) Assesses the safety, efficacy, or effectiveness of prescribed products administered alone or in combination with other prescribed products or other therapies.
(2) Assesses the relative safety or efficacy of prescribed products in comparison with other prescribed products or therapies.
(e) “Free clinic” means a health care facility operated by a nonprofit private entity that satisfies all of the following conditions:
(1) In providing health care, the health care facility does not accept reimbursement from any third-party payer, including reimbursement from any insurance policy, health plan, or federal or state health benefits program that is individually determined.
(2) In providing health care, the health care facility either does not impose charges on patients to whom service is provided, or imposes charges on patients according to their ability to pay.
(3) The health care facility may accept voluntary donations from patients for the provision of health care services.
(4) The health care facility is licensed or certified to provide health services under applicable law.
(f) “Gift” means a payment, food, entertainment, travel, subscription, advance, service, or anything else of value provided at no cost or less than full market value to a health care provider. Notwithstanding the foregoing, “gift” does not include any allowable expenditure as defined in subdivision (a), any payment, food, entertainment, travel, subscription, advance, service, or anything else of value for which the health care provider reimburses the cost at fair market value, or any payment made in compliance with the Political Reform Act of 1974 (Title 9 (commencing with Section 81000) of the Government Code) except a gift made under that act.
(g) “Health benefit plan administrator” means the person or entity who sets formularies on behalf of an employer or health insurer.
(h) (1) “Health care professional” means any of the following:
(A) A person who is authorized by law to prescribe or to recommend prescribed products, who regularly practices in the state, and who is either licensed by the state to provide or is otherwise lawfully providing health care in the state.
(B) A partnership or corporation made up of the persons described in subparagraph (A).
(C) An officer, employee, agent, or contractor of a person described in subparagraph (A). who is acting in the course and scope of employment, of an agency, or of a contract related to or supportive of the provision of health care to individuals.
(2) A “health care professional” shall not be construed to include individuals employed by a manufacturer, working as a full-time contractor for a manufacturer or working as a full-time employee or contractor of a clinical research organization or business services firm, regardless of licensure, provided that the individual does not treat or otherwise render health care services to patients or hold a position to recommend prescribed products for a formulary, organization, or individuals.
(i) “Health care provider” means a health care professional, hospital, nursing home, pharmacist, health benefit plan administrator, hospital foundation that is organized as a nonprofit entity separate from a hospital, or any other person authorized to dispense or purchase for distribution prescribed products in the state. A health care provider is not a veterinarian.
(j) “Investigator” means any individual who is involved in conducting a bona fide clinical trial or research project.
(k) “Manufacturer” means a pharmaceutical manufacturer, biological product manufacturer, or any other person who is engaged in the production, preparation, propagation, compounding, processing, marketing, packaging, repacking, distributing, or labeling of prescribed products. “Manufacturer” does not include a wholesaler, as defined in Section 4043 of the Business and Professions Code, a pharmacist, as defined in Section 4036 of the Business and Professions Code, or a pharmacy, as defined in Section 4037 of the Business and Professions Code.
(l) “Marketing” means promoting, detailing, or any activity that is intended to be used or is used to influence sales or market share or to evaluate the effectiveness of a professional sales force.
(m) “Pharmaceutical manufacturer” means either of the following:
(1) An entity that is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drugs, whether directly or indirectly by extraction from substances of natural origin, independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis.
(2) An entity engaged in the packaging, repackaging, labeling, relabeling, or distribution of prescription drugs.
(n) “Prescribed product” means a drug as defined in Section 321 of Title 21 of the United States Code, a compounded drug or drugs, a biological product as defined in Section 262 of Title 42 of the United States Code for human use, or a combination product as defined in subdivision (e) of Section 3.2 of Title 21 of the Code of Federal Regulations.
(o) “Sample” means a unit of a prescription drug or biological product that is not intended to be sold and is intended to promote the sale of the drug or product and includes starter packs and coupons or other vouchers that enable an individual to receive a prescribed product free of charge or at a discounted price. “Sample” does not include prescribed products distributed free of charge or at a discounted price pursuant to a manufacturer-sponsored or manufacturer-funded patient assistance program.
(p) “Research” or “research project” means a systematic investigation, including research development, testing, and evaluation, designed to develop or contribute to generalized knowledge, whether or not it is conducted or supported under a program that is considered research for other purposes.
(q) “Significant educational, scientific, or policymaking conference or seminar” means a nonmarketing educational, scientific, or policymaking conference or seminar that is national, regional, or within the State of California and that satisfies either of the following:
(1) The conference or seminar is accredited by the Accreditation Council for Continuing Medical Education or a comparable organization or is presented by an approved sponsor of continuing education, only if the sole sponsor is not a manufacturer of prescribed products.
(2) The conference or seminar offers continuing education credit, features multiple presenters on scientific research, or is authorized by the sponsor to recommend or make policy.

150302.
 A manufacturer of a prescribed product or an agent thereof shall not offer or give a gift to a health care provider.

150304.
 Except as described in paragraph (3) of subdivision (a) of Section 150300, a manufacturer or an entity on behalf of a manufacturer shall not provide a fee, payment, subsidy, or other economic benefit to a health care provider in connection with the provider’s participation in research.

150306.
 Sections 150302 and 150304 shall not apply to the following:
(a) Samples of a prescribed product or reasonable quantities of an over-the-counter drug, an item of medical food as defined in Section 360ee of Title 21 of the United States Code, or infant formula as defined in Section 321 of Title 21 of the United States Code, that are provided to a health care provider for free distribution to patients.
(b) The provision, distribution, dissemination, or receipt of peer-reviewed academic, scientific, or clinical articles or journals and other items that serve a genuine educational function provided to a health care provider for the benefit of patients.
(c) Scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policymaking conference or seminar of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association.
(d) Rebates and discounts for prescribed products provided in the normal course of business.
(e) The provision to a free clinic of financial donations or of free prescription drugs, over-the-counter drugs, biological products, combination products, medical food, or infant formula.
(f) Prescribed products distributed free of charge or at a discounted price pursuant to a manufacturer-sponsored or manufactured-funded patient assistance program.
(g) Fellowship salary support provided to fellows through grants for from manufacturers of prescribed products, provided that all of the following conditions are satisfied:
(1) The grants are applied for by an academic institution or hospital or clinical research site.
(2) The institution, hospital, or clinical research site selects the recipient fellows.
(3) The manufacturer imposes no further demands or limits on the institution’s, hospital’s, clinical research site’s, or fellow’s use of the funds.
(4) Fellowships are not named for a manufacturer and no individual recipient’s fellowship is attributed to a particular manufacturer of prescribed products.
(h) The provision of coffee or other snacks or refreshments at a booth at a conference or seminar.

150308.
 It is the intent of the Legislature that the requirements and prohibitions of this division complement and operate in conjunction with the federal Physician Payments Sunshine Act (42 U.S.C. Sec. 1320a-7h). If the Physician Payments Sunshine Act is repealed or becomes inoperative, it is the intent of the Legislature to enact similar legislation requiring manufacturers to disclose payments or other transfers of value made to health care providers in the state.

150310.
 This division shall become operative on January 1, 2019.