Ready IT Systems Now For State Gift Laws

A growing movement in state legislatures will require pharmaceutical companies to include complete information on gifts their sales representatives make to physicians. So far, six states and the District of Columbia have laws on their books, Lousiana has issued an advisory opinion, and the other 43 states are likely to act in the next 12 to 18 months, according to a new study by Gartner.

Thus, "a pharma company will have to have the functionality to capture all nuances of state gift laws for all 50 states," Dale Hagemeyer, research vice president of Gartner and the author of the report, told PIR. The six states with laws on the books as of March 1 were: Vermont, Maine, Minnesota, West Virginia, California and Michigan.

Of course, state laws do and will vary, and it is vital that pharma sales IT systems be able to track all these variations in reporting requirements, sometimes even for the same physician if he or she has offices in two different states. Hagemeyer calls this the "Baskin Robbins" syndrome, although more than 31 variations are possible -- "people in the know say there could be more than 40," he said.

But that's a "worst case scenario." As a matter of practical politics, it is likely that some states will follow the lead of others in writing their gift laws, creating "patterns among states operating in sync," Hagemeyer said. Still, some level of complexity is inevitable. Of the states that currently have gifting laws, the District of Columbia has enacted a law that is similar to Maine's, but the other five "have unique approaches to compliance timing, as well as what's included in the gift law, the dollar-amount limits and the penalties for noncompliance," the report notes.

Varying State Requirements

Some states may set specific limits on the financial value of the gifts a pharma sales rep may make to a physician -- no more than $1,000 a year, for instance -- and the IT systems must have the capability to determine at any moment whether any given sales rep is close to that limit for any given physician, Hagemeyer said.

In other cases, gifts worth more than a certain amount must be reported. West Virginia, for instance, stipulates that com- panies "need not report any amount which is less than $25, or any series of gifts so long as the aggregate annual amount does not exceed $250."

Other states will want every gift from a sales rep to a physician reported, no matter how small -- even a single bagel or a free drug sample. In such instances, the system should be set up to send a report on each gift to the relevant state regulatory agency automatically.

This kind of requirement should not be totally unfamiliar to pharma companies, as they already have similar systems in place for corrective and preventive action (CAPA) and adverse events, Hagemeyer said. Pharma companies that fail to comply with the state gift reporting laws will face sanctions, he added.

To meet this complex and evolving set of state regulations, pharma companies must:

Develop flexibility in their customer relationship management (CRM) solutions to adapt to state-specific changes as they are enacted. This must include the ability to record dollar amounts by state and analyze them for reporting, for both field sales and marketing-driven spending by physicians; Create alerts to spot trends before they become a problem; Ensure that new applications fit within the compliance architecture framework; and Subscribe to a compliance portal that offers up-to-date information on each state.

"Monitoring the rollout of the various laws and the actual tracking and reporting processes will require flexible, automated solutions that can accommodate the complexity," the report notes.

More specifically, the data compiled from sales reps must then flow to their supervisors, whose job title in most pharma companies is district manager, Hagemeyer said. "There has to be a server-based workflow based on business logic," he said. -- Martin Gidron (mailto:mgidron@fdanews.com)