Massachusetts Loosens Restrictions on Co-Pay Coupons; Modifies Gift Ban
On July 8, 2012, Governor Deval Patrick of Massachusetts signed into law the fiscal year 2013 state budget. Included in the budget is an amendment to the Massachusetts all payor anti-kickback act that temporarily loosens restrictions on the use of coupons for certain prescription drug purchases. Furthermore, the budget includes a statutory amendment to the state’s so-called “gift ban” to provide greater flexibility to pharmaceutical and medical device companies to offer modest meals and refreshments to health care providers outside of the office or hospital setting. These changes will have a significant effect on interactions between representatives of pharmaceutical and medical device manufacturers and health care providers in Massachusetts.
Previously, Massachusetts prohibited companies from issuing any rebates to consumers for health care purchasing under its all payor anti-kickback act set forth in Chapter 175H, § 3, of the Massachusetts General Laws. Under the old law, a pharmacy or manufacturer that offered coupons to consumers, whether redeemable at the point of sale or afterwards, to reduce their prescription drug co-payments, co-insurance, or other cost-sharing obligations could face potential criminal fines and/or imprisonment as well as restitution. Massachusetts was the only state in the country with such a broad prohibition on consumer rebates.
Under the amended law, pharmacies and pharmaceutical manufacturers are permitted to issue coupons to consumers to cover cost-sharing obligations on certain prescription drugs. Importantly, coupons may not be offered to consumers for brand prescription drugs when there is a competing AB rated generic equivalent, as defined by the United States Food and Drug Administration. Pharmaceutical manufacturers are also prohibited from favoring or excluding certain pharmacies from their coupon programs.
These changes will sunset on July 1, 2015, at which point the original universal ban on all rebates, including coupons for individual cost-sharing obligations, will go back into effect.
Gift Ban Modifications
Section 111 of the 2013 budget narrows the broad ban on meals for health care providers found in Chapter 111N, § 2, of the Massachusetts General Laws. Previously, the law prohibited pharmaceutical and medical device companies from providing a meal to a health care provider unless the meal took place at the health care provider’s office or in a hospital setting.
Under the amended law, the prohibition on restaurant meals is eliminated. Representatives of pharmaceutical and medical device manufacturers may provide modest meals and refreshments to health care providers in connection with certain educational or informational presentations. Section 111 of the budget instructs the state Department of Health and Human Services to define “modest meals and refreshments” through regulation.
Pharmaceutical and medical device companies are required to report these meals along with other gifts, meals, and transfers of value to health care providers on a quarterly basis under the existing Massachusetts reporting provisions, much of which will be preempted by the reporting requirements under the federal Physician Sunshine Act, set forth in Section 6002 of the Affordable Care Act, that is scheduled to take effect in January 2013.
Another new statutory change that will impact the medical device community is that training related to medical devices can now be provided without having a signed sale agreement.
These changes became effective as of July 1, 2012.