A.11187 ( Gottfried) / S.8556 Rules
Marketing Prohibitions on Pharmaceutical, Medical Device Manufacturers
June 20, 2008
The Business Council opposes this legislation, which adds a new section to the Public Health Law to ban payments from pharmaceutical and medical device manufacturers to physicians and other prescribers in excess of $50 per year. This bill would have a significant, adverse impact on the ability of these manufacturers to market their goods and services, as well as on clinical research in New York.
The state's pharmaceutical and biotechnology industry is a vital part of our manufacturing sector and the state's overall economy. The proposed legislation will negatively impact New York's economy by impeding the growth of the pharma/biotech industry. It will undermine the state's ability to attract and retain pharma/biotech industry, and drive investment in this extraordinarily competitive industry to other states and nations.
This bill imposes requirements on these companies to which no other industry in New York is subject. It segregates one sector of the economy, and subjects it to a litany of rules, disclosure requirements and penalties for practices common among nearly all sectors of business - the legitimate marketing of goods and services. The ban would hinder engagement between pharmaceutical representatives and physicians and other medical professionals and a process by which prescribers are educated about these products.
Clinical trials – a critical step in pharmaceutical research and development – would also be adversely affected because the prohibition would essentially limit reimbursement between the researcher and the manufacturer. Interim payments for meeting milestones – an element typically found in research agreements – would be prohibited. In addition, the bill apparently prohibits the payment for the research unless the study is completed as originally planned.
The bill constitutes marketing interference in a free-market system through the imposition of government regulation of the right of a business or manufacturer to develop a product, bring it to market, promote it, and educate and inform a consumer about it, including all known benefits and risks. In this instance, better healthcare - through a more informed prescriber – is provided by doctors having access to this valuable information.
The industry's trade association has adopted voluntary guidelines, which some manufacturers supplement with their own, even more stringent guidelines that are supposed to limit payments and gifts to modest proportions. In addition, the U.S. Health and Human Services' Office of the Inspector General has issued marketing guidelines to ensure that reciprocal arrangements are prohibited between manufacturers and health professionals. Furthermore, the U.S. Food and Drug Administration regulates all information and promotional materials distributed about a prescription drug.
New York's Innovation Economy: Promote, Don't Punish
New York's pharma/biotech industry and their products are an asset, and not a liability, for our health-care system and our economy. It is a major statewide industry that spends billions on research and development, employs thousands in high-paying jobs and generates hundreds of millions of dollars in tax revenue and in rebates to offset the cost of Medicaid and other state programs. For example, the pharma/biotech industry:
- Provides high quality jobs to 131,100 New Yorkers, including 37,400 direct employees and 93,700 indirect jobs, according to 2005 federal data, including a number of upstate counties where the industry is among the largest employers. The average compensation is $65,000 – 22 percent higher than the state average;
- Provides New York with $846 million in income, sales and property taxes from direct and indirect employees;
- Invested more than $530 million in plant expansions in 2005 – the second largest capital expenditure industry in the state; and
- Contributes more than $8.4 billion a year to New York's economic output, nearly as much as Massachusetts and Michigan combined – two other bioscience industry leaders, according to the New York Biotechnology Association.
Reducing Healthcare Costs, Impacting Prescribing Habits?
Not By Marketing Interference
The Business Council's members have identified employee healthcare – the cost of healthcare and how to pay for it - as their No. 1 cost-of-doing-business concern. Yet, interfering with the legitimate marketing of goods and services by essentially banning the marketing of pharmaceuticals is not the solutions for reducing the cost of healthcare in general, or prescription drug spending, in particular.
Rather, effective and innovative initiatives such as chronic care management programs, a point-of-care prescription information program, appropriate use of generics and electronic prescribing for Medicaid providers should be pursued.
In summary, New York should work to promote a legislative and regulatory environment that fosters innovation and encourages companies that develop state of the art medicines to do business in this state. New York should reject this and other proposals that would diminish the future of the biopharmaceutical industry in New York State and negatively impact the state's economy by impeding job growth, stifling innovation, and discouraging investment in the state's pharm/biotech sector. For these reasons, we respectfully urge the rejection of A.11187.