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

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Date Published: 04/18/2017 04:00 AM
SB790:v97#DOCUMENT

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

February 17, 2017


An act to add Article 16 (commencing with Section 870) to Chapter 1 of Division 2 of the Business and Professions Code, and 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 prohibit a manufacturer of a prescribed product or a wholesale distributor of medical devices, as defined, from offering or giving a gift to a health care provider. The bill would define a gift as anything of value provided for free to a health care provider, or a payment, food, entertainment, travel, subscription, advance, service, or anything else of value provided to a health care provider, unless it is a specified allowable expenditure or the health care provider reimburses the cost at fair market value. The bill would 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. The bill would specify circumstances to which these prohibitions do not apply. The bill would authorize the Attorney General to bring an action to enforce a violation of these prohibitions and to seek injunctive relief and imposition of a civil penalty for each violation, as specified. The bill would require a health care professional, as defined, who is a member of a committee that sets formularies or develops clinical guidelines and who also serves as a speaker or commercial consultant for a manufacturer of prescribed products to disclose to the committee his or her relationship with the manufacturer, as specified.
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: YES   Local Program: NO  

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


SECTION 1.Article 16 (commencing with Section 870) is added to Chapter 1 of Division 2 of the Business and Professions Code, to read:
16.Disclosure of Relationship with Manufacturer of Prescribed Products
870.

(a)A health care professional, as defined in subdivision (g) of Section 150300 of the Health and Safety Code, who is a member of a committee that sets formularies or develops clinical guidelines and who also serves as a speaker or commercial consultant for a manufacturer, as defined in subdivision (i) of Section 150300, shall disclose to the committee his or her relationship with the manufacturer.

(b)A health care professional shall make the disclosure required by subdivision (a) during and for a period of two years after the termination of his or her relationship with a manufacturer.

SEC. 2.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 or a wholesale distributor of medical devices 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, provided that all of the following conditions are satisfied:
(A) The honoraria or payment is governed by an explicit contract with specific deliverables which 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 by the health care professional.
(3) For a bona fide clinical trial, the annual direct salary support for principal investigators and other health care professionals.
(4) For 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) Gross compensation.
(B) Direct salary support per health care professional.
(C) Expenses paid on behalf of each health care professional.
(5) Payment or reimbursement for reasonable expenses, including travel and lodging-related expenses, necessary for technical training of individual health care professionals on the use of a medical device, 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.
(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.
(7) 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.
(8) Provision of meals for a health care provider that do not exceed two hundred fifty dollars ($250) per person, per year in value.
(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) “Clinical trial” means a study that does either of the following:
(1) Assesses the safety or efficacy 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.
(d) “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.
(e) “Gift” means either of the following:
(1) Anything of value provided for free to a health care provider.
(2) A payment, food, entertainment, travel, subscription, advance, service, or anything else of value provided to a health care provider, unless it is an allowable expenditure as defined in subdivision (a) or the health care provider reimburses the cost at fair market value.
(f) “Health benefit plan administrator” means the person or entity who sets formularies on behalf of an employer or health insurer.
(g) “Health care professional” means any of the following:
(1) 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.
(2) A partnership or corporation made up of the persons described in paragraph (1).
(3) An officer, employee, agent, or contractor of a person described in paragraph (1) 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.
(h) “Health care provider” means a health care professional, hospital, nursing home, pharmacist, health benefit plan administrator, or any other person authorized to dispense or purchase for distribution prescribed products in the state. “Health care provider” does not include a hospital foundation that is organized as a nonprofit entity separate from a hospital.
(i) “Manufacturer” means a pharmaceutical manufacturer, biological product manufacturer, or medical device 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 wholesale distributor of biological products, a retailer, or a pharmacist.
(j) “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.
(k) “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.
(l) “Prescribed product” means a drug or device 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, but shall not include prescription eyeglasses, prescription sunglasses, or other prescription eyewear.
(m) “Sample” means a unit of a prescription drug, biological product, or medical device that is not intended to be sold and is intended to promote the sale of the drug, product, or device, 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.
(n) “Significant educational, scientific, or policymaking conference or seminar” means an educational, scientific, or policymaking conference or seminar that satisfies both 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, provided that the 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 a wholesale distributor of medical devices, 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, a nonprescription medical device, an item of nonprescription durable medical equipment, 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 loan of a medical device for a short-term trial period, not to exceed 120 days, to permit evaluation of the device by a health care provider or patient.
(c) The provision of reasonable quantities of medical device demonstration or evaluation units to a health care provider to assess the appropriate use and function of the product and determine whether and when to use or recommend the product in the future.
(d) 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.
(e) 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.
(f) Rebates and discounts for prescribed products provided in the normal course of business.
(g) Labels approved by the federal Food and Drug Administration for prescribed products.
(h) The provision to a free clinic of financial donations or of free prescription drugs, over-the-counter drugs, medical devices, biological products, combination products, medical food, infant formula, medical equipment, or medical supplies.
(i) Prescribed products distributed free of charge or at a discounted price pursuant to a manufacturer-sponsored or manufactured-funded patient assistance program.
(j) Fellowship salary support provided to fellows through grants for 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.
(2) The institution or hospital selects the recipient fellows.
(3) The manufacturer imposes no further demands or limits on the institution’s, hospital’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.

150308.
 (a) The Attorney General may bring an action seeking injunctive relief, costs, attorney’s fees, and imposition of a civil penalty of up to ten thousand dollars ($10,000) for each violation of Section 150302 or 150304.
(b) For purposes of this section, each unlawful gift offered or given in violation of Section 150302, or each fee, subsidy, payment or other economic benefit given in violation of Section 150304 shall constitute a separate violation.
(c) In connection with an action brought pursuant to this section, the Attorney General shall, in addition to the powers granted to him or her by law, have the same powers to investigate and obtain remedies as are granted to the Director of Consumer Affairs pursuant to Chapter 4 (commencing with Section 300) of Division 1 of the Business and Professions Code.

150310.
 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.