By: Lucio, et al. S.B. No. 553
(In the Senate - Filed January 27, 2009; February 23, 2009,
read first time and referred to Committee on Health and Human
Services; May 13, 2009, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 6, Nays 3;
May 13, 2009, sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 553 By: Deuell
A BILL TO BE ENTITLED
AN ACT
relating to the disclosure of certain economic benefits provided to
health professionals in the marketing of prescription drugs,
medical devices, and medical supplies; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 431, Health and Safety Code, is amended
by adding Subchapter O to read as follows:
SUBCHAPTER O. REPORTING REQUIREMENTS RELATED TO MARKETING OF
PRESCRIPTION DRUGS, MEDICAL DEVICES, AND MEDICAL SUPPLIES
Sec. 431.451. DEFINITIONS. In this subchapter:
(1) "Bona fide clinical trial" means any study
assessing the safety or efficacy of:
(A) drugs administered alone or in combination
with other drugs or other therapies or assessing the relative
safety or efficacy of drugs in comparison with other drugs or other
therapies; or
(B) a medical device.
(2) "Distributor" means a person who furthers the
marketing of a prescription drug, medical device, or medical supply
from the original place of manufacture to the person who makes final
delivery or sale to the ultimate consumer or user.
(3) "Gift" means a payment, food, entertainment,
travel, honorarium, subscription, advance, service, product
sample, or anything of value, unless consideration of equal or
greater value is received, and includes anything of value provided
for less than market value.
(4) "Health professional" means:
(A) a physician;
(B) a physician medical practice; and
(C) a physician group practice.
(5) "Manufacturer" means a person who manufactures,
fabricates, distributes, or repackages a prescription drug,
medical device, or medical supply.
(6) "Marketer" means a person who, while employed by
or under contract to represent a manufacturer, repackager, or
retailer, engages in detailing, promotional activity, or other
marketing of a prescription drug, medical device, or medical supply
in this state to a physician, hospital, nursing home, pharmacist,
health benefit plan administrator, or other health professional.
(7) "Medical device" or "device" means an instrument,
apparatus, implement, machine, contrivance, implant, in vitro
reagent, or other similar or related article, including any
component, part, or accessory, which is:
(A) recognized in the official National
Formulary or the United States Pharmacopia, or any supplement
thereto;
(B) intended for use in the diagnosis of disease
or other conditions, or in the cure, mitigation, treatment, or
prevention of disease in humans; or
(C) intended to affect the structure or any
function of the human body, and which does not achieve its primary
intended purposes through chemical action within or on the human
body and which is not dependent upon being metabolized for the
achievement of its primary intended purposes.
(8) "Prescription drug" has the meaning assigned by 21
C.F.R. Section 203.3.
(9) "Repackage" means repackaging or otherwise
changing the container, wrapper, or labeling of a prescription
drug, medical device, or medical supply to further the distribution
of the drug, device, or supply. The term does not include
repackaging by a pharmacist to dispense a drug, device, or supply to
a patient.
(10) "Repackager" means a person who engages in
repackaging.
(11) "Retailer" means a person who is engaged in the
business of buying for resale, selling, or exchanging a medical
device or medical supply or offering a device or supply for sale,
exchange, or lease-purchase to a consumer or user.
Sec. 431.452. APPLICABILITY OF SUBCHAPTER. This subchapter
applies only to a manufacturer, repackager, or retailer that
exceeds $30 million in annual gross revenue and that manufactures,
markets, sells, distributes, produces, prepares, compounds,
converts, or processes a medical device, medical supply, or
prescription drug for which payment is available through the
medical assistance program under Chapter 32, Human Resources Code,
or under Title XVIII, XIX, or XXI of the Social Security Act (42
U.S.C. Sections 1395 et seq. and 1397aa et seq.).
Sec. 431.453. ANNUAL DISCLOSURE OF CERTAIN ECONOMIC
BENEFITS. (a) Not later than March 31 of each year, a manufacturer
or repackager that sells, repackages, or distributes prescription
drugs, medical devices, or medical supplies in this state, and a
retailer that sells medical devices or medical supplies in this
state, shall submit to the department a report that discloses any
gift, fee, payment, subsidy, or other economic benefit given, paid,
or provided by the manufacturer, repackager, or retailer to a
physician, physician's office, hospital, nursing home, pharmacist,
health benefit plan administrator, or other health professional in
connection with detailing, promotional, or marketing activities of
the manufacturer, repackager, or retailer, directly or through a
marketer.
(b) A report required under Subsection (a) must cover the
preceding calendar year and must be submitted on a form, including
any electronic form, prescribed by the department. In connection
with each gift, fee, payment, subsidy, or other economic benefit
required to be disclosed under this subchapter, the report must
include:
(1) the name and business address of each recipient of
the benefit;
(2) the value of each benefit;
(3) the date of payment or transfer of each benefit;
(4) a categorized description of the form of each
benefit, including:
(A) cash or cash equivalent;
(B) an in-kind item or service;
(C) an ownership interest or other return on
investment, including securities, stock options, dividends, or
profit-sharing arrangement; and
(D) any other category the commissioner deems
appropriate;
(5) a categorized description of the nature of each
benefit, including:
(A) a consulting fee;
(B) compensation for a service other than
consulting;
(C) honoraria;
(D) a gift;
(E) entertainment;
(F) food;
(G) travel;
(H) education;
(I) research;
(J) a charitable contribution;
(K) a royalty or license;
(L) current or prospective ownership of an
investment interest;
(M) compensation for serving as faculty or as a
speaker for a continuing medical education program;
(N) a grant; and
(O) any other category the commissioner
determines appropriate;
(6) if the payment or transfer of the benefit is
related to marketing, education, or research specific to a
particular prescription drug, medical device, or medical supply the
name of the drug, device, or supply; and
(7) any other category of information regarding the
payment or transfer of a benefit the commissioner determines
appropriate.
(c) Not later than May 1 of each year, the department shall
make all reports submitted under this section on or before March 31
available on the department's Internet website. The department
shall make reports submitted under this section after March 31
available on the department's Internet website as soon as
practicable.
(d) The reporting requirements described by Subsections (a)
and (b) do not apply in an area of the state designated in an
executive order or a proclamation by the governor under Chapter
418, Government Code, during the 30-day period after the executive
order or proclamation is issued.
Sec. 431.454. EXEMPTIONS. (a) The following economic
benefits are exempt from disclosure under Section 431.453:
(1) a gift, fee, payment, subsidy, or other economic
benefit with a fair market value that is less than $50;
(2) free samples of prescription drugs intended for
distribution to patients;
(3) any prescription drug rebate or discount;
(4) payment of reasonable compensation and
reimbursement of expenses in connection with a bona fide clinical
trial;
(5) a scholarship or other support for a medical
student, resident, or fellow to attend a bona fide educational,
scientific, or policy-making conference of an established
professional association if the recipient of the scholarship or
other support is selected by the association;
(6) a grant or other support for the development,
production, or presentation of a bona fide educational, scientific,
or policy-making program or conference of an established
professional association if the professional association
independently selects, develops, produces, or presents the
educational, scientific, or policy-making program or conference;
(7) educational materials that directly benefit
patients or are intended for patient use;
(8) in-kind items used for the provision of charity
care;
(9) any transfer or payment of a benefit to treat a
health condition of an individual described by Section 431.453(a),
where the individual is a patient and is not acting in a
professional capacity;
(10) a dividend or other profit distribution from, or
an ownership or investment interest in, a mutual fund or
publically-traded security;
(11) the loan of a device for a short-term trial
period, not to exceed 90 days, to permit evaluation of the device by
the recipient; and
(12) items or services provided under a contractual
warranty, including the replacement of a device, where the terms
for the warranty are set forth in the purchase or lease agreement
for the covered device.
(b) Notwithstanding Subsection (a)(1), any aggregate
payment or transfer of a benefit to a single recipient during an
annual reporting period that does not exceed $100 is exempt under
this section. Any value associated with free samples or with a
dividend or other profit distribution may be excluded from the
calculation of aggregate value.
Sec. 431.455. PENALTIES; INJUNCTION. (a) The
commissioner may, in accordance with the procedures applicable to
administrative penalties assessed under Subchapter C, assess an
administrative penalty against a person who fails to file a report
required under this subchapter.
(b) The attorney general may bring an action:
(1) for injunctive relief to compel a person to file a
report required under this subchapter; and
(2) to impose a civil penalty of not more than $10,000
for a failure to file a report required under this subchapter.
(c) Each failure to file a report required under this
subchapter constitutes a separate violation.
(d) The court may award to the attorney general reasonable
court costs and attorney's fees in connection with an action
brought under Subsection (b).
Sec. 431.456. PUBLIC RECORDS. The information required to
be submitted to the department under this subchapter and the data
and reports compiled by the department based on that information
are public records under Chapter 552, Government Code.
Notwithstanding any other provision of law, the identity of any
recipient of a gift, fee, payment, subsidy, or other economic
benefit required to be reported under this subchapter does not
constitute confidential information or a trade secret.
Sec. 431.457. SUSPENSION OF STATE REPORTING REQUIREMENTS.
If a federal law provides for the disclosure of gifts to health
professionals by manufacturers, repackagers, or retailers to whom
this subchapter applies and the commissioner determines that the
federal law substantially meets the purposes of provisions of this
subchapter, the department shall suspend the application of the
state reporting requirements imposed under those provisions.
SECTION 2. (a) Not later than March 31, 2011, the
executive commissioner of the Health and Human Services Commission
shall adopt the rules and procedures necessary to implement
Subchapter O, Chapter 431, Health and Safety Code, as added by this
Act, including rules defining bona fide programs and conferences
under Subdivisions (5) and (6), Section 431.454, Health and Safety
Code, as added by this Act.
(b) Not later than March 31, 2011, the Department of State
Health Services shall develop the form required by Section 431.453,
Health and Safety Code, as added by this Act.
(c) Notwithstanding Section 431.453, Health and Safety
Code, as added by this Act, a manufacturer, repackager, or retailer
of prescription drugs, medical devices, or medical supplies is not
required to submit the report required by that section before
March 31, 2012.
SECTION 3. This Act takes effect January 1, 2011.
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