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Pharma Payments to NJ Prescribers Capped at $10,000 Per Year Under New Rule

Posted in Legislation and Public Policy, Life Sciences, Pharmaceuticals, State Matters

Beginning January 16, the amount of compensation that a New Jersey healthcare provider can accept from pharmaceutical manufacturers for “bona fide services,” including speaking at promotional events, participating on advisory boards, and providing consulting services, is capped at $10,000 in the aggregate for any calendar year. The new rule, which was finalized on December 22, 2017, was prompted by concerns that payments from drugmakers to opioid prescribers had contributed to the state’s opioid epidemic. Despite concerns from commenters that the rule would add an unnecessary layer of complexity to the existing framework of state and federal laws that regulate manufacturer and prescriber interactions, and requests to narrow its applicability, the final rule imposes a new standard for compliance affecting all New Jersey healthcare providers. Consistent with the existing regulatory framework, under the new rule, agreements between manufacturers and prescribers must set compensation based on the fair market value of legitimate services provided. However, the rule enumerates specific details of the arrangement that must be explicit in the agreement, such as the connection between the competence and expertise of the prescriber and the purpose of the arrangement and the manner by which the prescriber will maintain records concerning the arrangement.

In addition to restricting the types of gifts and payments that a prescriber may receive from a manufacturer, the rule explicitly prohibits prescribers from accepting items that do not advance disease or treatment including pens, mugs and other items with a company or product logo, and other personal items such as floral arrangements. The rule limits prescribers to accepting only “modest meals,” defined as meals that do not cost more than $15.00.

The final rule is not intended to restrict compensation for research and development activities or payments in the context of employment. The following are examples of payments that are not subject to the bona fide services cap:

  • payments for royalties and licensing fees;
  • compensation to prescribers who are employees of pharmaceutical manufacturers and also provide patient care;
  • compensation for pre- and post-market research activities;
  • payments to job candidates for travel, lodging, and other personal expenses;
  • remuneration for travel, lodging, and personal expenses associated with participation on advisory bodies or under consulting arrangements; and
  • payments to speakers at accredited and non-accredited education programs.

The rule applies to all New Jersey-licensed prescribers regardless of whether the services are provided in New Jersey or out of state.

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