The new PhRMA code bans giveaways. Here's how to protect your sponsorships, exhibits, and events.
An Already Tough regulatory environment just got tougher with the Pharmaceutical Research and Manufacturers of America's updated Code on Interactions with Healthcare Professionals, which takes effect in January 2009. The new, voluntary code places a strict focus on science and education. When it comes to, resorts and non-educational gifts are out, and the watchword for everything from venues to menus is “appropriate.”
The new code is the pharmaceutical industry's reaction to a cascade of lawsuits and mounting government scrutiny, say legal experts. Companies have paid billions in settlements related to illegal marketing practices that include violations involving meetings and education. Several U.S. Senate committees, including the Senate Committee on Finance and the Senate Committee on Aging, are investigating CME and industry marketing efforts. Proposed federal legislation, the Physician Payments Sunshine Act, would require companies to disclose payments and gifts to healthcare professionals. Similar legislation has already been adopted in states from coast to coast — California, Massachusetts, Vermont, and Minnesota among them — and is pending in others. And similar trends are being seen internationally.
Since the code was published in July, companies have been busy designing their compliance plans. But it's clear that there are challenges ahead for medical meetings across the board, from association trade shows to pharma-sponsored consultant meetings.
“The PhRMA code is fundamentally changing the way we have to look at our events and the interactions we're having with our pharmaceutical partners in producing events,” says Gregg Talley, CAE, president, Talley Management Group Inc., an association management company in Mount Royal, N.J. “There's an extra step now, an extra degree of communication that we need to have with industry partners to understand their interpretations of the code and how their interpretations may affect what we have traditionally done at our meetings.”
In light of the restrictions on meals, gifts, and other corporate support, associations are concerned that revenues from exhibitors and sponsors will take a nosedive.
Under the code, companies are not permitted to directly pay for meals at CME events, although they can give funding to a CME provider, which that provider can use for meals for all participants. And companies can sponsor meals at conferences where CME activities are only a part of the event, such as an association annual meeting, as long as they follow the organizer's guidelines, and the meal or reception is separate from CME.
Companies are allowed to give away only items that are primarily for the education of patients or healthcare professionals, provided they are valued at $100 or less — for example, a medical textbook, a relevant medical journal, anatomical models for exam rooms, informational sheets and brochures, and patient self-assessment and tracking tools. Even these gifts should be offered only occasionally. Off-limits are practice-related items such as pens or notepads with a company or product logo because they “may foster misperceptions that company interactions with healthcare professionals are not based on informing them about medical and scientific issues.” Even stethoscopes or general fitness items for patients, such as pedometers, are ruled out.
What happens to sponsorship relationships if corporations can no longer underwrite giveaways with their logos on them? “We will have to become more creative in terms of what other types of marketing and promotion opportunities we can offer for exhibitors,” says Timothy A. Moses, director, meetings and conventions, American Academy of Dermatology, Schaumburg, Ill.
But regardless of how they retool marketing opportunities, planners need to identify additional revenue sources. “Associations will have to seriously begin looking at their overall budgets and seek alternative means of funding some items. This would entail utilizing monetary resources out of existing budgets, or possibly increasing registration or other conference fees to compensate for these additional expenses. Ultimately, it could also mean that association giveaways such as conference bags would no longer be provided,” says Moses.
And planners need to prepare for a decrease in revenue, he says. “The potential definitely exists for a drop in both exhibitor participation and sponsorship participation. During our annual budgeting process, we at the Academy have begun to develop long-term budgets for three to five years in advance in anticipation of such decreases in meeting sponsorship revenues,” he says. “This has helped both staff and our leadership to begin seeing how the potential decreases in corporate support will impact the Academy's budget in the future — and to begin thinking of means and ways to address these deficiencies.”
It is more critical than ever for planners to communicate with corporate sponsors and exhibitors about their needs. “Ask them what kinds of problems they're having,” says Eric Allen, executive vice president, Healthcare Convention & Exhibitors Association. “A convention has always been a value proposition question for the exhibitors. Ask what you can do to make this a better experience for them even in the post-PhRMA-code era. You may not be able to do everything they would like, but getting that kind of honest feedback will help.”
The Endocrine Society is doing just that. “We have a corporate liaison board. I've asked them to include an agenda item to discuss how companies are interpreting the changes to the PhRMA code and how they are going to respond to it,” says Wanda Johnson, CMP, senior director, meetings and education, The Endocrine Society, Chevy Chase, Md.
While some are pleased that the code will encourage all companies to play by the same rules, there could be inconsistencies if not all exhibitors comply, notes Johnson. “It's something we're going to discuss. Is there a competitive advantage for companies that don't comply? I believe most, if not all, of our exhibitors are PhRMA members, so this may be a nonissue, but it's something that we're looking at in order to consider whether the Society wants to establish some rules to level the playing field if we feel the field is not level,” she says.
In addition to strengthening communications, planners need to help exhibitors find new ways to draw physicians to their booths.
“Not giving premiums at exhibit booths atis a significant change that has the potential to affect traffic in an exhibition hall. The industry will need to look at new, creative ways to draw in and engage physicians at the booth,” says Joann Kerns, associate director of global meeting management, Bristol-Myers Squibb, Plainsboro, N.J.
Planners need to focus on the underlying purpose of the exhibit hall, says Allen. “The bottom line for exhibitors is to be able to meet with their target audience. The key is for associations to start looking at things they can do to help make that happen. We have to remember that healthcare professionals are always going to have questions of industry — they should, that's appropriate because they're using the products. The challenge in this new era will be getting everybody to communicate in advance the message that the exhibit hall is a place to learn and to get those questions answered.”
Technology can help, says Kerns. “The trend is toward more educational experiences at booths. We need visually appealing, engaging technology, and we can use interactive capabilities to focus on the data with activities such as quizzes.”
Exhibitors can also offer more peer-to-peer interaction. “Exhibitors could create areas for conversation within their booths, which is a little easier to do if you have a big footprint. I have seen companies set up small theaters or teaching areas where they can assemble up to 15 people,” says Elizabeth Keyes, senior vice president of professional resources and business development, American Pharmacists Association, Washington, D.C. “I think those sorts of things are going to be really attractive to someone who is walking by — everybody wants to see what's being talked about or get the latest information.”
Novo Nordisk has used give-back programs to attract attendees on the exhibit floor. “Instead of giving the attendee a gift, we make a donation to the association in the attendee's name,” says Tom Tolve, senior manager, meeting operations, Novo Nordisk, Princeton, N.J. “We now have to determine whether [that practice] is acceptable in terms of the code. If giving to the association ultimately helps further that association's medical cause, then are we ultimately giving back to the patient, and is that permitted? It's a very gray area.”
Another gray area is the updated code's prohibition against providing entertainment or recreational activities for healthcare professionals. The previous version did allow for some social or entertainment events in certain circumstances. “For me, the biggest change is about entertainment because at our medical meetings we have typically had some form of entertainment with our welcome dinners,” says Tolve. “At Novo Nordisk we're working on defining what we consider entertainment in terms of complying with the code. If a live three-piece ensemble plays in the corner as background music, is that entertainment? My preliminary thinking is that entertainment is defined as a reason to be there. Someone's not going to come to a meeting because there's soft music in the background from a three-piece ensemble. But someone might come because we have Billy Joel or a comedian or a magician.”
While sales reps are no longer allowed to take healthcare professionals out for meals, the code says that a company can arrange for an expert physician to make a presentation to a group of healthcare providers at a restaurant and sales reps can attend. The meeting must “occur in a venue and manner conducive to informational communication,” such as a private room in a local restaurant.
As with the previous code, one challenge for meeting planners is that meals must be “modest by local standards,” and those standards can vary considerably from city to city. It's another area open to interpretation, says James Montague, president and CEO, Professional Meeting Planners Network, Durham, N.C., which specializes in dinner meetings.
“Dinner programs provide doctors with an opportunity to get together with their peers, listen to a credible speaker, and then have some Q&A,” says Montague. “The methodology about how or where they can meet is being fine-tuned, but physicians' desire to get together and discuss things with their peers is really not going to change.”
But one thing that may change is companies' use of e-meetings. VMS Inc., a third-party meeting-management company, reports that its webcast and teleconference programs have increased as clients have anticipated the changes in the new PhRMA code.
“They've been a very minor piece of our business in the past, but we think they'll be a significant piece of our business in the future. Clients are still faced with a need to reach healthcare professionals; they're probably looking at doing it in different, nontraditional ways. So we've seen them reaching toward enhanced technology to deliver the same key messages,” says Abby Mallon, CMP, vice president, VMS Medical, Chicago. “I think the online programs will be in addition to live meetings. The majority of the webcast programs so far have been for advisory board meetings. The typical model we're seeing is that instead of doing a live meeting four times a year with their advisers, they will do one live meeting and then follow that up with three webcasts throughout the year.”
No More Resorts
For face-to-face meetings produced by pharma companies, another aspect affected by the code is site selection. The previous code said that venues had to be conducive to the meeting but did not specifically prohibit resorts, although it suggested other venues might be more appropriate. Under the new code, resorts are verboten for events such as speaker-training and consultant meetings. Since most pharma companies have been avoiding lavish venues since the first code came out, that's not a cataclysmic change.
“We already have a plan that clearly outlines appropriate properties,” says Kerns of Bristol-Myers Squibb. “We don't go to resorts. We don't go to five-star or five-diamond hotels. Also, we benchmark with many of our pharmaceutical meeting management colleagues and most have established the same policy regarding five-star hotels. We don't see a dramatic difference with regard to site selection.”
But although the trend has been away from resorts, the outright prohibition will make a difference in marketing. “I don't think most physicians go to these meetings just so they can hang out at a cool resort. But a five-star resort on the invitation is attention-getting and we no longer have that option. We're going to have to communicate more creatively about why they ought to come — because the possibilities for this drug are so compelling, or the scientific discussion is going to be something they're going to want to be involved in,” says Terri Breining, CMP, CMM, founder and president, Concepts Worldwide, a corporate meeting planning firm in Carlsbad, Calif. “Physicians have a lot of choices about where to spend their time,” she says. “The challenge is to create a meeting that is attractive and compelling without violating the code, without having either the reality or the perception of extravagance.”
Room for Interpretation
Medical Meetings asked attorney Michael Manthei, a partner with Holland & Knight LLP, Boston, to comment on some PhRMA code compliance questions that came up in our interviews with meeting planners.
MM: What if a five-star hotel calls a meeting planner because it has open dates and offers a special rate for those dates? If it's in the right location and the overall cost would be less than for a three- or four-star property, would the five-star hotel be an appropriate venue for a pharma meeting?
Manthei: This is a question that comes up often. The key is documentation. I would say that if you can document that the rate brings the cost below that of some three- or four-star properties, and the five-star hotel is equally convenient and equally conducive to the purposes of the meeting, then I don't see a problem with it. Of course, it all depends on the pharma company's own compliance program.
MM: The code prohibits carry-out meals. But if a meeting ends near lunchtime, can the planner provide doctors with a box lunch to eat on the way to the airport? If a box lunch isn't provided, then the doctors will eat at the airport and include it on the expense reimbursement form.
Manthei: I think you have to look at it in context. If you're in a situation in which the rules would otherwise allow you to provide a modest meal in conjunction with the event, or otherwise would permit you to reimburse the physicians' expenses, you can give a boxed lunch. You're just substituting one for the other.
MM: Is serving wine or liquor at meals allowed?
Manthei: Historically, it has been customary to have wine or maybe one cocktail. There's no specific reference in any of the guidances of which I'm aware about serving or paying for alcohol. I think it goes back to the core principle that it should be modest by local standards and conducive to the underlying purpose of the gathering. So if it's an informational meeting over dinner, the meal has to be modest and that would include the cost and consumption of alcohol. The most conservative approach, of course, would be to say no alcohol.
MM: If a meeting planner hires a string quartet to play in the background as guests arrive for a dinner meeting, does that violate the ban on entertainment?
Manthei: Is it entertainment? Arguably it's not. It creates ambience, not unlike paying to have the hotel music system played. It's a tough call. I don't think it's necessarily going to raise any eyebrows, but it points up the difficulty of defining some of these terms.
MM: Meals are no longer allowed, but can exhibitors still give away refreshments at their booths? While a bowl of mints would seem to be OK, what about a cappuccino machine?
Manthei: It's one of those things that's not directly addressed in the code. I would say that so long as what you're giving is truly modest and available to everybody who might walk by, then it's probably OK.
Drowning in Data
More paperwork for meeting planners. That's going to be one of the effects of the Pharmaceutical Research and Manufacturers of America's updated Code on Interactions with Healthcare Professionals. “Companies are going to have to create or purchase mechanisms to capture data that they may not have been capturing before, like the amounts paid to individual physicians as speakers, or things of that nature,” says attorney Michael Manthei, a partner with Holland & Knight LLP, Boston.
This ripple effect throughout the industry will be driven not just by the code but by state legislation. In Massachusetts, for example, the most recent state to institute pharma marketing restrictions, the new law requires companies to capture all remuneration. “Theoretically, although it's not entirely clear, [that could include] even the value of meals that are served at a company-sponsored informational event,” says Manthei.
“What that means for everybody in the industry, including meeting planners, is they're going to be called upon more and more to keep better records and be able to parse where all the money is going,” he says. “The PhRMA code doesn't really get much into setting limits. They use terms like modest. But I think the best practice that many manufacturers are adopting is to set specific limits, and specific limits have to be tracked.”