You may leave your heart in San Francisco — but if you give a pen to a doctor there, you'd better keep track of how much it cost — or so says the new California Marketing Compliance Law (CMCL). What is this new law? Whom does it affect? Why should meeting planners pay careful attention? The law has caused much confusion, consternation, and controversy in the drug industry, and was the focus of several lively sessions at the 2006 Healthcare Convention Marketing Summit, held January 26 in Boston. Sponsored by the Healthcare Convention & Exhibitors Association, the meeting attracted 130 attendees.
The law, California Health and Safety Code Section 119400-119402, aims to rein in drug companies' promotional spending on California medical professionals and thus lower healthcare costs. It affects any pharmaceutical or medical device company that markets or sells its products in California. That doesn't mean just companies with headquarters in California — it includes anyone who does business in the state.
Basically, the law mandates that drug and device companies that do business in California develop compliance programs in accordance with the Office of Inspector General's pharmaceutical marketing guidance, and implement policies that comply with the Pharmaceutical Research & Manufacturers of America's Code on Interactions with Healthcare Professionals. In addition, as part of their compliance programs, companies must determine an annual spending limit for gifts, items, and promotional materials, as well as marketing activities, provided to California healthcare professionals. While this amount can be declared as an annual per-physician spend or an overall aggregate amount, all promotional spending must be accounted for within this budget — including activities at medical conferences that will target California doctors.
Transparency is written into the law. Companies are required to make their compliance programs — including promotional spending budgets — public by communicating them both internally and publishing them on their Web sites. They must also make a toll-free telephone number available for those who may not have access to the Internet.
While technically there is no official body or organization responsible for enforcing the new law or specific penalties for noncompliance, companies would be wise to track spending to ensure compliance as consumer and patient advocacy groups will certainly be monitoring activity, speakers said. The Attorney General's Office may also have the authority to enforce CMCL.
CMCL was officially passed in 2004 to take effect on July 1, 2005. As with many other parts of the law, the effective date has been debated and interpreted in a number of different ways, with some camps believing they must have been in full compliance as of July 1, 2005, while others maintain that they have a full year from the time the law became effective to become fully compliant — i.e., July 1, 2006.
Pharma companies are not only unsure about when to implement the law, but how to comply with it. “People are really confused about how to apply the law,” said speaker Marc Goldberg, CME, partner and founder, Marketech Inc., an exhibitor consulting firm in Westborough, Mass. “There is no context around the law and no compliance regulation. Most confusion centers on if the law applies only to interactions within the state of California, or anytime there is interaction with a California doctor. I've personally looked into several opinions from a variety of sources and they all conflict.”
There are also differing opinions about the impact of the law on the medical meetings industry. General support for conferences (such as through an educational grant), seems to remain outside the scope of the CMCL, said speakers. (The law excludes financial support of CME, in addition to drug samples, certain educational scholarships, and payments for legitimate professional services.) Many of the popular sponsorship options are still acceptable, such as conference bags and Internet cafes, though these arrangements need to clearly state that all physicians at the convention will have equal access to the item. In other words, companies cannot earmark them for specific doctors — such as California physicians.
Where companies need to be careful is in the context of direct, one-to-one, company-to-physician interactions. This is why most concern — and confusion — seems to center around booth activities where individual sales representatives have direct contact with physicians who may or may not hail from California.
While the law applies to California conferences for California health professionals, it is still unclear how it applies to other meetings. Do exhibitors need to track their marketing outreach to the subset of California doctors who attend national conferences? Jeffrey Mittleman, associate with Boston law firm Holland & Knight, offered his opinion in a presentation during the conference and in an interview afterward. “I believe it would be hard for California to say its rules apply to the dollars that manufacturers or device makers spend at a national conference with some California attendees. It's a little bit of a stretch. But if you had a conference for California doctors in Atlanta, then, in our opinion, it would apply. You can't circumvent the law by going outside of California if your meeting targets California physicians.” However, if your meeting in Atlanta attracts only one physician from California, the law doesn't apply, he said.
Since the law is unclear, Goldberg suggested that a safe bet for an exhibiting company might be to allocate a certain percentage of its budget for give-aways to the total number of California doctors at the conference. For example, let's say an exhibitor has purchased pens at $5 per pen. At a national conference of 20,000 participants, there might be 800 California doctors present. The exhibiting company doesn't need to scan and track every pen it gives away to a California attendee. Rather, exhibitors can take the cost of a pen ($5) and multiply that by the number of California doctors in attendance (800) to come up with a total marketing allocation of $4,000 for marketing activities directed to California physicians. They can then spread that $4,000 across all doctors the company calls on in California to count towards their annual per-physician marketing budget.
While everyone sorts out interpretations of the law, most companies have posted their compliance policies on the Web and are waiting to see what comes next. However, Goldberg has observed an effect on exhibitor spending. “We've already seen a deep decline in spending on giveaway items for conferences,” he said. “Companies are erring on the conservative side. There are no more golf clubs or expensive promotional products. Exhibitors are moving toward inexpensive and patient-oriented items.”
Speakers also expect the law to have national reverberations. Several other states are in the process of adopting similar legislation, including Maine, Michigan, and West Virginia. Maine's proposed laws take state-level scrutiny to a new level by adding limits on the number of sales representatives in the state and closely monitoring direct-to-consumer promotional activities. With elections around the corner, this is sure to be a hot topic for public debate. Buckle up, it's going to be a bumpy ride!
For tips on how to help your exhibitors comply with the California law, see page 44.
With no official department appointed to monitor or enforce the new California Marketing Compliance Law, Marc Goldberg, CME, partner and founder, Marketech Inc., an exhibitor consulting company in Westborough, Mass.; and Jane Lorimer, Marketech's measurement and research director, were curious to find out the drug industry's reaction.
They surveyed Web site compliance declarations from 84 pharmaceutical companies to ascertain the spending caps companies had adopted for gifts to healthcare professionals. The average posted annual spending limit per physician was $1,561, with a median posted annual spending limit of $1,500 per physician.
The overall range was quite wide — from a top limit of $3,500 per physician per year, to a low of just $300 per physician per year.
Most policies put strict limits on meals at meetings as well. In general, company policies stated that modest meals could be provided on an occasional basis, but only if accompanied by a presentation directly related to a product or a disease state. Meals featuring entertainment or recreation are not permitted, and companies will no longer pay for meals for spouses.
| Average | Median | |
|---|---|---|
| Annual spending limit per healthcare professional (HCP) | $1,561 | $1,500 |
| General educational gifts per HCP (items that primarily benefit the patient) | $112 | $100 |
| Higher-end gifts per HCP (textbooks, anatomical models, etc.) | $230 | $263 |
| “Reminder” (branded) items per HCP (coffee mugs, notepads, pens, etc.) | $19 | $25 |
| Breakfast per HCP | $38 | $25 |
| Lunch per HCP | $53 | $50 |
| Dinner per HCP | $114 | $125 |