NJ Senator seeks drug marketing, rebate disclosures

Last Updated: 2002-07-22 17:00:28 -0400 (Reuters Health)

By Karen Pallarito

NEW YORK (Reuters Health) - New Jersey's senior senator this week plans to offer a measure requiring pharmaceutical companies to report gifts to doctors and disclose cash rebates to pharmacy benefit managers (PBMs).

New Jersey Sen. Robert Torricelli (D-NJ) will offer the disclosure requirements as an amendment to prescription drug legislation being debated in the Senate this week. Vermont Sens. Patrick Leahy, a Democrat, and Jim Jeffords, an Independent, are co-sponsors of the measure.

Vermont enacted similar legislation this spring, making it the first state in the nation to require drug marketers to disclose to state officials any cash payments or gifts to healthcare providers of more than $25.

Torricelli's bill requires drug companies to annually report to the US Food and Drug Administration any gifts worth $50 or more made to doctors as part of the companies' promotional or marketing activities. The bill would also regulate rebates that drug companies make to PBMs, companies that contract with insurers to structure and deliver prescription drugs in a cost-controlled way.

Rep. Peter DeFazio (D-OR) introduced a similar measure in the US House of Representatives last month.

According to press reports, Torricelli on Monday was to testify before a Senate ethics panel as part of a probe of allegations that he accepted gifts from a New Jersey businessman in exchange for political favors, a contention he denies. Torricelli spokeswoman Leslie Danz said the matter is "totally unrelated" and would have no bearing on the senator's ability to offer the pharmaceutical disclosure bill as an amendment this week.

"Patients have a right to know the relationship that exists between their doctor and the company that makes the pills they are prescribing," Torricelli, who is up for re-election this November, said in announcing the legislation last Thursday. He said that prescribing decisions should be "based on science not the size of a cash rebate that may or may not even be passed to consumers through a PBM."

Danz said the legislation is intended "to make sure that doctors are prescribing the appropriate and most affordable medications for patients that still accomplishes the goal of curing their illness or making their quality of life better."

Ronald Pollack, executive director of Families USA, said both disclosure requirements are important for the well being of consumers.

"What a lot of PBMs do--they get rebates from drug costs and then the PBM retains that rebate, and it doesn't go to the consumer," he charged. So there may be a financial incentive for a PBM to fill a prescription with a particular brand name drug, but the patient doesn't know there's no disclosure of that information, he explained.

But LaVarne Burton, president of the Pharmaceutical Care Management Association, which represents PBMs, said the legislation is misguided and unneeded. PBMs operate in a competitive marketplace, so many details of how they do business are proprietary. Requiring them to disclose details of the rebate agreements would undermine their ability to serve health plan sponsors, she said.

Buyers of PBM services demand high quality and low prices, Burton noted, and if they don't get those things, they'll go elsewhere. They're not going to pay PBMs "to make money for themselves" at the expense of the plan sponsors, she said.

As for disclosures of gifts to doctors, former New Jersey Congressman Bob Franks, president of the HealthCare Institute of New Jersey, said he favors a "self-policing" approach over federal regulation. Franks said the Pharmaceutical Research and Manufacturers of America's new marketing code, which took effect July 1, recognizes the need to protect the independence of doctors' prescribing practices.

"It's the specific implementation of that marketing code that is going to be valuable," he told Reuters Health.

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