Download this document in MS Word 97 format

S.170

Introduced by Senator Shumlin of Windham County and Senator Sears of Bennington County

Referred to Committee on

Date:

Subject: Health; prescription drug promotional activities

Statement of purpose: This bill proposes to collect information relating to the promotional activities of pharmaceutical companies for health care cost containment purposes.

AN ACT RELATING TO PRESCRIPTION DRUG COST CONTAINMENT INFORMATION

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. FINDINGS

The General Assembly finds that:

(1) More than almost all other consumer purchases, the ability to purchase medications has a direct, discernible impact on the health and life of this state’s citizens.

(2) A substantial and significant portion of the prescription drug price and cost to the consumer and the state is represented by advertising, particularly direct-to-consumer advertising through mass media, and advertising through the education of the personnel of managed care plans, pharmaceutical benefits management companies, hospitals and clinics and health care professionals by means of salespersons’ detailing, seminars and conferences, and indirect advertising and promotion to health care professionals and their staffs and the personnel of managed care plans, and pharmaceutical benefits management companies, hospitals and clinics through entertainment, meals, travel, trips, promotional items, free samples and free supplies, all of which also include the salaries of drug representatives and salespersons.

(3) There is a marked increase in spending by pharmaceutical companies for direct-to-consumer advertising since the relaxation of federal regulations in 1997.

(4) Researchers have indicated that assumptions of the amount of advertising are based on extrapolation from data in the public domain since they were unable to obtain data directly from the pharmaceutical companies.

(5) Pharmaceutical companies claim that advertising dollars are well spent in that they facilitate dialogue between patients and doctors about diseases and conditions that are widely undertreated, thereby leading to diagnoses and prescriptions that save lives or even greater costs resulting from delays in treatment, while consumer groups claim that advertising may result in consumers making inappropriate demands for newer, costlier medicines, when less expensive drugs may be as or more appropriate.

(6) Health insurance companies claim that direct-to-consumer advertising motivates consumers to go to the doctor to ask for more expensive drugs than necessary or for unnecessary drugs which, in turn, is responsible in part for large increases in health insurance premiums.

(7) There are no accurate reported figures on what pharmaceutical companies spend on advertising, educational and promotional activities engaged in with managed care plans and pharmaceutical benefits management companies to influence market share.

(8) The state is a major purchaser of prescription medications amounting to over one billion dollars per year, attributable to increases in prices and costs with a projected annual increase of 18 percent.

(9) Pharmaceutical companies claim that any action by the government to deal with those increasing prices and costs will have a negative impact on their capacity to engage in vital research and development.

(10) The General Assembly needs data that is reliable and valid, and pharmaceutical companies have not been responsive to the General Assembly’s requests for such data.

(11) The General Assembly has determined that it must require pharmaceutical companies to provide data through the disclosure of their expenditures for mass media direct-to-consumer advertising, correspondence to consumers, and direct and indirect advertising through education, entertainment and promotional giveaways for health care professionals and their staffs, and for the personnel of managed care plans and pharmaceutical benefits management companies and hospitals and clinics.

Sec. 2. 33 V.S.A. § 2001 is added to read:

§ 2001. PHARMACEUTICAL ADVERTISING AND PROMOTIONAL EXPENSE DISCLOSURE AND COST CONTAINMENT

(a) Cost/benefit analysis.

(1) The commissioner of prevention, assistance, transition, and health access shall conduct a cost/benefit analysis of advertising and promotional activities associated with the provision of prescription drugs to this state’s citizens by pharmaceutical companies.

(2) The commissioner of prevention, assistance, transition, and health access shall utilize a methodology to determine the impact upon the necessity for inpatient hospital care, major ambulatory services, invasive procedures, numbers of visits to health care professionals and health insurance premium rates relative to the costs associated with advertising and promotional activities directed toward this state’s citizens by pharmaceutical companies.

(3) At reasonable intervals, as determined by the commissioner of prevention, assistance, transition, and health access, pharmaceutical companies which provide prescription drugs in this state shall provide the commissioner with information necessary to carry out its duties under this section.

(4) Pharmaceutical companies or their representatives who provide prescription drugs in this state shall disclose in the aggregate all advertising and promotional costs to the commissioner of prevention, assistance, transition, and health access as follows: for every health care professional who prescribes prescription drugs and for every managed care plan, pharmaceutical benefits management company, hospital and clinic which provides prescription drugs, the dollar amounts spent on the professional, that professional’s staff and the personnel of the managed care plan and the pharmaceutical benefits management company, hospital and clinic, and the dollar amount of the portion of the pharmaceutical companies’ detail persons’ salaries attributable to the following activities:

(A) Education and educational materials, regardless of whether provided in the place of business of the health care professional, the managed care plan, the pharmaceutical benefits management company, the hospital or clinic, or in another setting, and regardless of whether the pharmaceutical company directly or indirectly provides the education and educational materials.

(B) Food and entertainment.

(C) Gifts, or anything which is received without consideration of equal or greater value.

(D) Trips.

(E) Travel.

(F) Free samples.

(G) Seminars.

(H) Reduced prices on prescription drugs.

(I) Income.

(5) Pharmaceutical companies which advertise in media to reach a Vermont audience and pharmaceutical companies which correspond directly with consumers shall disclose the aggregate cost of the advertising of prescription drugs in the media and in correspondence to the consumer. For purposes of this subdivision, media shall include, but not be limited to, radio, television, the internet and daily and weekly magazines and newspapers, billboards and signs. For purposes of this subdivision, correspondence shall mean direct mail, telephone communications and electronic mail directed to specific individuals or households.

(6) Pharmaceutical companies referred to in subdivisions (4) and (5) of this subsection shall disclose the aggregate of the portion of salaries of their drug representatives and salespersons who have all or part of their employment in activities enumerated in subdivision (4) or (5) of this subsection, or both.

(b) Collection, compilation analysis and comparison. The commissioner of prevention, assistance, transition, and health access shall collect and compile data from pharmaceutical companies required to provide information under this section. The commissioner shall use appropriate measures to analyze and compare data with data on inpatient hospital stays, ambulatory services, invasive procedures and visits to health care professionals to conduct the cost/benefit analysis required under subdivision (a)(1) of this section.

(c) Dissemination of data and recommendations.

(1) The commissioner of prevention, assistance, transition, and health access shall disseminate data in accordance with this section and shall, no later than one year from the effective date of this section, make recommendations to the general assembly on the costs associated with advertising and promotional activities by pharmaceutical companies. Such recommendations may include, but are not limited to, the necessity of imposing price controls, the efficacy of bulk purchasing and the institution of educational programs to maintain good health with or without prescription drugs.

(2) The commissioner of prevention, assistance, transition, and health access shall, within two years of the effective date of this section, publish a report on the impact of advertising and promotional activities upon the necessity of inpatient hospital stays, ambulatory care, invasive procedures, visits to health care professionals and health insurance premium rates.