Governor David A. Paterson today announced that he has proposed legislation to limit the influence of pharmaceutical manufacturers over prescription decisions. The Governor’s bill would ban gifts and payments from drug companies to physicians and other prescribers in excess of $50 per year. The bill would also require practitioners who make presentations at Continuing Medical Education (CME) events to disclose any financial relationship they have with drug companies. In addition, the bill would increase transparency and promote competition among pharmacy benefit managers (PBMs) by requiring them to disclose information to health plans, doctors and patients.

“I believe that the vast majority of doctors and other prescribers work very hard to make appropriate decisions in the interest of serving their patients, but studies show that gifts can have an influence – perhaps even unconsciously – on prescribing decisions,” said Governor Paterson. “This legislation will allow practitioners to exercise their clinical judgment and make prescribing decisions free of this influence. This is an important step in furthering the State’s commitment to quality health care.”

Pharmaceutical manufacturers spend billions of dollars each year on gifts and payments to doctors, and spend a billion dollars annually to support or sponsor at least half of the CME events attended by physicians. The Governor’s bill would prohibit a drug manufacturer from giving to a prescriber, and also prohibit a prescriber from accepting payments or gifts that exceed a total of $50 in value in each calendar year. These restrictions would also apply to the prescriber’s employees.

The bill contains exemptions from the gift ban for drug samples and discounts and for reasonable payments to physicians and other prescribers that are made in connection with bona fide research or educational activities. Such payments must be disclosed by the manufacturer and the prescriber to the Department of Health.

A prohibited gift or payment in violation of the $50 threshold would result in fines and if committed by a prescriber would constitute professional misconduct. The bill would also require presenters at CME programs to disclose any financial relationships they have with drug manufacturers, and failure to do so would constitute professional misconduct, and could result in fines. The bill also imposes disclosure requirements upon PBMs, which are private entities that administer almost all prescription drug insurance plans offered by health benefits providers.

New York State Health Commissioner Richard Daines, M.D., said: “PBMs perform a valuable service, but there is little oversight of their practices, and little competition. The three largest PBMs – Medco, Caremark, and Express Scripts – manage pharmacy benefits for 200 million Americans – 95 percent of those who have prescription drug coverage. Governor Paterson’s legislation would impose significant reforms for pharmacy benefit managers, requiring that they provide specific information to their clients periodically, and give notice to prescribers and patients when switching drugs.”

The information that would have to be disclosed by a PBM to their client health plans includes: (1) the actual utilization of drugs by the health plan’s participants; (2) every policy or practice of the PBM that presents an actual or potential conflict of interest with the health plan; (3) any increase in the net price to the health plan for a covered drug and the reason for the increase; (4) all contracts and agreements entered into by the PBM with a network pharmacy and with any pharmaceutical manufacturer. To prevent PBMs from switching patients to more expensive drugs without the patient’s knowledge and without providing adequate information to the practitioner, the bill requires notification to patients and the provision of relevant clinical and financial information to prescribers before drug switches can be made.