French Sunshine Act's Scope Expands with Recent French Supreme Administrative Court Decision

Reed Smith’s Global Regulatory Enforcement Law Blog features a post on a recent decision by the French Supreme Administrative Court (Conseil d’Etat) that expands the scope of the French Sunshine Act. “French Supreme Administrative Court Decision Significantly Broadens the Scope of the French Sunshine Act,” written by Reed Smith attorneys Daniel Kadar and Caroline Gouraud, highlights two major changes to the current French Sunshine Act provisions: (1) health care companies will now be required to disclose the contractual remuneration paid to health care providers, and (2) manufacturers and marketers of non-corrective contact lenses, cosmetics and tattoo products will now be held to the same transparency standards as manufacturers and marketers of pharmaceuticals and medical devices. As to the former change, the French Ministry of Health must now decide whether or not the remuneration disclosure requirement should be retroactively applied – potentially back to January 1, 2012, the date of the first reporting requirements.

To read the full post, click here.

Recent Regulatory Actions on Advertisement Disclosures

Reed Smith attorneys Kevin Madagan and Keri Bruce were recently quoted in the January 21st edition of Compliance Week in an article titled “FTC, FDA Take Closer Look at Disclosures,” which discusses recent actions by the Federal Trade Commission (FTC) and Food and Drug Administration (FDA) concerning advertisement disclosures. The FTC launched Operation Full Disclosure in fall 2014, involving the distribution of warning letters to more than 60 companies across “a wide range of industries” for allegedly failing to properly disclose information in their advertisements. In the article, Kevin and Keri note that the letters are a reminder to all companies, even those that did not receive letters, to review their disclosures.

The FDA also recently announced that its “fair balance” doctrine may be amended to only require companies to recite or print a product’s most prominent and common side effects during television commercials. While such changes would undoubtedly be welcomed by pharmaceutical manufacturers, it could actually result in the FDA paying more attention to drug disclosures to ensure their continued effectiveness. Kevin also comments that there is precedent of the FDA following the FTC’s lead in such matters, and the crackdown on advertisement disclosures could end up involving both agencies.

To read the article, click here.

3D Printing Raises Novel Questions About Potential Product Liability

Over on the Drug & Device Law blog, our Reed Smith colleague Jim Beck (aka “Bexis”) has done some deep thinking about possible product liability implications relating to the 3D printed medical devices. With 3D printing, the traditional medical device model – design and manufacture by the manufacturing company, and use or implantation by medical providers in a medical setting – may not fit exactly. Specifically, Jim asks, who is the manufacturer when a medical device is created via 3D printing? The owner of the 3D printer? The designer of the software used to make the 3D device? The manufacturer of the 3D printer? As 3D printing continues to make inroads in health care settings, additional legal issues like this are sure to emerge. Read Jim Beck’s full post here.

Federal Trade Commission Fines Manufacturers of Weight Loss Supplement $9 Million for Alleged Deceptive Advertising

By a vote of 3-2, the Federal Trade Commission (FTC) decided to fine Genesis Today, Inc. and Pure Health, LLC, manufacturers of a green coffee bean extract (GCBE), in the amount of $9 million for making claims that using GCBE could allow consumers to lose body weight and fat. As detailed by Reed Smith attorneys Sulina Gabale and Matthew Kane in a post on our AdLaw by Request blog, the FTC alleges that the companies’ advertised claims of potential weight loss benefits from using GCBE were deceptive and resulted from a flawed research study. However, the two dissenting FTC commissioners wrote that the amount of the fine was unjustified, namely because it incorporated sales attributed to televised statements by the companies’ founder Lindsey Duncan as well as Dr. Mehmet Oz that were constitutionally protected and non-commercial in nature.

To read the full post, click here.

As 3D Printing Emerges, Legal Considerations and Challenges Arise

The January 25, 2015 edition of the Pittsburgh Post-Gazette featured an article in which Reed Smith partner Chris Healy commented on the dramatic rise in popularity of 3D printing technology and the legal issues that have come about – and may arise in the future – as a result of this trend. The article, “3D Printing Advances Open Up Frontier of Legal Fights,” highlights a number of legal areas in which potential disputes involving 3D printing may arise, including product liability, intellectual property and contracts. In fact, there have already been several instances of intellectual property disputes involving alleged “3D piracy,” in which one party attempts to commercially sell a 3D printed product possibly covered by a patent or copyright owned by another. Chris notes that jurisdictional issues may be complex for any 3D printing disputes that head to court – a 3D printed product may be conceived in one state, programmed in another, and printed in a third – and it will be the responsibility of the courts to decide where a particular dispute should be heard.

Life Sciences and Health Care Industries Reap the Benefits of 3D Printing

This post was written by Colleen Davies and Lisa Baird.

The past few years have seen 3D printing – a process that involves the creation of a three-dimensional object from a pre-conceived design – evolve from a futuristic idea into a multi-billion dollar business, and few industries have benefitted more from this technology than life sciences and health care. 3D printing has been used to create models of medical devices, body parts and organs that medical professionals can use in planning treatments. For example, the 3D printing company Stratasys recently debuted its newest printer specializing in the creation of dental applications, including veneer and denture try-ins.

Perhaps the most palpable application of 3D printing in the health care industry has been through the creation of surgical models. As detailed in a recent article in CNET Magazine, doctors at Miami Children’s Hospital used 3D printing to create a scale model of a 4-year-old girl’s heart. The girl, who suffers from a life-threatening heart condition, required a complicated and inventive surgery to fix the issue. The physicians were able to use the printed model to plan the surgery, which was ultimately performed successfully on the 4-year-old patient. Similar models have been printed of a stone-obstructed kidney and an infant’s skull, each of which aided doctors in preparation for a successful surgery.

The surge in 3D printing does raise speculative questions regarding product liability. Liability questions about this technology are only now being asked, and certainly have not yet been answered. For example, this article in LawyerMade Magazine raises hypotheticals about strict products liability for products created by 3D printers.

As this new manufacturing technology continues to be adapted and adopted in more and new settings, the novel legal issues will bear watching as they emerge.

Law360 Article - U.S. and French Sunshine Laws Present Compliance Challenges for Manufacturers

In “From Sea to Shining Sea: French and US Sunshine Laws,” (Law360 subscription required), Reed Smith attorneys Elizabeth Carder-Thompson and Daniel Kadar discuss recent legislation from both sides of the Atlantic designed to increase the transparency of relationships between drug and medical device manufacturers on one hand and physicians and teaching hospitals on the other. While both the U.S. and French Sunshine Acts are intended to address the same general issue, there are several key differences between the two resulting from the respective environments in which they were passed. In addition to providing an overview of the legislation and its immediate effects, the article also discusses some of the compliance issues that have resulted from these laws, including determination of the extent to which non-U.S. headquartered entities or non-U.S. based physicians are subject to U.S. Sunshine Act requirements, and regulation of the amount, organization, and frequency of data disclosure required under the French Sunshine Act.

OIG Advisory Bulletin Addresses Independent Charity Patient Assistance Program Risks

Patient Assistance Programs (PAPs) provide important help to patients of limited means who do not have insurance coverage for drugs and need assistance covering drug costs, often for chronic illnesses. The Office of the Inspector General (OIG) of the Department of Health and Human Services has now issued an advisory bulletin, dated May 21, 2014, intended to expand existing OIG guidelines related to PAPs, which can give rise to anti-kickback statute issues in some circumstances.

The new advisory bulletin, which is summarized in a client alert by Reed Smith partner Joe Metro and summer associate Peter Vogel, focuses specifically on Independent Charity PAPs. Among the issues discussed are the relationship between donors and Independent Charity PAPs, Independent Charity PAPs’ definitions of disease funds and eligible recipients, and the potential illegality of donor actions in relation to support for their own products. The OIG has stated that it will be working with PAPs that previously received advisory opinions to identify potential changes that could provide some clarity to these issues.

A Comparison of the U.S. and French Sunshine Reporting Requirements

This past year both the U.S. and France enacted substantial new reporting and disclosure requirements under their respective Sunshine Acts, which were designed to increase the transparency of the financial relationships between manufacturers and health care professionals and to allow patients to make more informed decisions regarding their health treatments. The U.S. and French Sunshine Acts are not identical, however, as indicated in this alert written by Reed Smith lawyers Elizabeth Carder-Thompson and Daniel Kadar. Their side-by-side review illustrates that the scope and focus of transparency differs between the U.S. and France. This alert includes a summary chart comparing and contrasting the differences in Sunshine Act reporting requirements in a number of areas including effective dates, who must report, what information must be reported, payment thresholds and categories of payments that must be reported as well as those that can be excluded. This information is especially relevant to global manufacturers working to comply with these provisions.

A copy of the full alert and comparison chart is available here.

Supreme Court Decision on Reverse Payments has Significant Implications for Pharmaceutical Manufacturers

Reed Smith’s Global Regulatory Enforcement Law Blog recently featured a detailed analysis of the Supreme Court’s decision in FTC v. Actavis, where the court ruled five-to-three that reverse payments, also called pay-for-delay settlements, can violate antitrust laws and are subject to antitrust review under the rule-of-reason. As reverse payments are commonly used by branded drug manufacturers to settle patent litigation related to generic drug manufacturers’ market entry, this decision will change the approaches courts, drug company litigants, and lawmakers take to the issue of generic entry into a patented brand drug’s market. To learn more about the implications for both branded and generic drug manufacturers, particularly in their approach to resolving patent litigation, read the full alert.

Massachusetts Releases Final Regulations, Restores Annual "Sunshine" Reporting Requirement for Drug/Device Manufacturers

This post was written by Elizabeth B. Carder-Thompson, Katie C. Pawlitz and Nancy E. Bonifant.

On Wednesday, November 21, 2012, Massachusetts’ Public Health Council (“Council”) approved amendments to the State’s Marketing Code of Conduct, which restricts certain gifts and payments by pharmaceutical and medical device manufacturers to Massachusetts health care practitioners (“HCPs”) and requires disclosure of payments and transfers of value to HCPs. The final regulations, effective as of December 7, 2012, primarily adopt the emergency regulations issued by the State in September but make a few substantive changes.

Importantly, the final regulations do not include language from the emergency regulations that eliminated the requirement that manufacturers report annually specific information regarding payments in connection with sales and marketing activities after calendar year 2012 reports. Instead, the final regulations only prohibit duplicative reporting to Massachusetts if manufacturers have already reported the same information pursuant to federal law (for example, the federal Physician Payment Sunshine Act), and such information is available to the Massachusetts Department of Public Health (“DPH”).

The Council also adopted the revised provisions regarding modest meals substantially as written in the emergency regulations. Under the revision, manufacturers are allowed to provide modest meals and refreshments to HCPs at non-CME educational presentations, as long as manufacturers file quarterly reports detailing such meals. Notably, the Council declined to define “modest” with a clear monetary limit or specifically to ban alcohol at industry-funded events and presentations, as requested by public commenters. With regard to the required quarterly reports, the Council did include a new, open-ended category of information that must be reported: “such other information as determined necessary by the Commissioner.” It is not clear whether this requirement will be clarified in further regulations or guidance that DPH is expected to issue.

Looking forward, the full effect of Massachusetts’ final regulations will not be clear until the release of the final rule for the federal Physician Payment Sunshine Act, because that rule will determine the extent to which Massachusetts’ annual reporting requirement will be preempted. Based on Massachusetts’ final regulations, however, it appears the quarterly reports regarding meals at non-CME educational presentations will not be subject to preemption. Massachusetts’ final regulations are available here.

Massachusetts Signals Potential Elimination of HCP Payment Reporting Requirement Through Emergency Regulatory Amendments

This post was written by Elizabeth Carder-Thompson, Katie C. Pawlitz and Nancy E. Bonifant.

On September 19, 2012, the Massachusetts Public Health Council approved emergency amendments to the State’s Marketing Code of Conduct regulations, 105 CMR 970.000, which restrict certain gifts and payments by pharmaceutical and medical device manufacturers to Massachusetts health care practitioners (“HCPs”) and require disclosure of payments and transfers of value to HCPs. The regulations, effective as of September 19, 2012, follow amendments to the underlying statute, Massachusetts General Laws, Chapter 111N, signed into law in July by Governor Deval Patrick as part of the FY2013 State Budget. The July statutory amendments are further discussed here in our earlier Client Alert.

The emergency regulatory amendments include many expected changes as a result of the July statutory amendments, including now allowing manufacturers to provide modest meals and refreshments to HCPs at non-CME educational presentations, as long as manufacturers file quarterly reports detailing such meals. However, the emergency amendments also provide that a manufacturer shall be deemed to have met such reporting requirements if the company makes all disclosures required under federal law (for example, the federal Physician Payment Sunshine Act), and such disclosures are then reported by the Secretary of Health and Human Services to the Massachusetts Department of Public Health (“DPH”).

In addition, and importantly, the emergency regulations include new language eliminating the requirement that manufacturers report specific information regarding payments in connection with sales and marketing activities after such reports are made for calendar year 2012. Therefore, although the July 2012 statutory amendments prohibit duplicative reporting to Massachusetts if manufacturers have already reported the same information pursuant to federal law and DPH can obtain the information, the emergency regulatory amendments go even further by eliminating the Massachusetts reporting requirement altogether.

Notably, emergency regulations remain in effect for only three months unless they are formally promulgated according to the Massachusetts Administrative Procedure Act. Therefore, further regulatory action will be necessary to eliminate fully the reporting requirement in 2013 and going forward.

On October 19, 2012, DPH held a public hearing and solicited public testimony regarding the emergency regulations. While some industry stakeholders supported the current definition of “modest meals,” which focuses on “local standards,” others requested that DPH define “modest” with a clear monetary limit and specifically ban alcohol at industry-funded events and presentations. Additionally, stakeholders disagreed regarding whether quarterly reports related to modest meals and refreshments at non-CME educational presentations should be required, given that similar reporting obligations under federal law. Regardless of whether the reporting requirement is permanently eliminated, however, Massachusetts’ broad restrictions remain with respect to gifts and other benefits provided by manufacturers to HCPs.

As we await DPH’s final determination regarding the emergency regulatory amendments, Massachusetts’ potential elimination of the reporting requirement may portend what can be expected from other states as we near release of the final rule for the federal Physician Payment Sunshine Act.

The Physician Payment Sunshine Act requires applicable manufacturers of drugs, devices, biologicals, or medical supplies covered under Medicare, Medicaid, or CHIP to report annually to the Secretary of the Department of Health and Human Services certain payments or other transfers of value to physicians and teaching hospitals. Once implemented, the federal Act will preempt any state law that requires a manufacturer to disclose the same type of information required to be reported under the federal law. However, the federal Act does not preempt any state laws that require the disclosure or reporting of information that falls outside of the scope of the Physician Payment Sunshine Act. For example, while the federal law only applies to payments and transfers of value to physicians and teaching hospitals, the Massachusetts reporting requirements cover a broader group of HCPs, including nurse practitioners and physician assistants. As such, but for the recent emergency regulatory amendments, certain Massachusetts reporting requirements would still apply, notwithstanding federal preemption.

Massachusetts’ emergency amendments are available here.

As Federal Sunshine Looms, Massachusetts Loosens Manufacturer Gift Ban and Disclosure Law, and Allows Certain Drug Coupons and Vouchers

This post was written by Elizabeth Carder-Thompson, Katie C. Pawlitz and Nancy E. Bonifant.

As drug and device manufacturers continue to await final regulations and subsequent implementation of the federal Physician Payment Sunshine Act, passed as part of the Affordable Care Act, Massachusetts has relaxed its similar state law banning the provision by manufacturers of gifts to health care practitioners (“HCPs”) and requiring disclosure of payments and transfers of value to HCPs. The revisions are intended to loosen certain restrictions related to providing meals and other expenses to HCPs, and also expressly to relieve manufacturers of the duty to report to Massachusetts information that has already been disclosed to federal agencies, such as data reported to the Centers for Medicare & Medicaid Services ("CMS") pursuant to the Physician Payment Sunshine Act. In addition, Massachusetts will now permit pharmaceutical manufacturers to offer drug coupons and other reductions to Massachusetts residents, as long as certain conditions are met.

The Massachusetts gift ban and disclosure amendments come at a time when manufacturers continue to consider how the new federal disclosure requirements will impact state reporting requirements. Massachusetts’ revisions also represent a growing shift in states’ willingness to defer to federal reporting, in lieu of requiring their own reporting.

Notwithstanding this shift, state laws continue to impose their own differing restrictions on certain payments and gifts to HCPs, an issue that is not addressed by the federal law. The Physician Payment Sunshine Law requires manufacturers to disclose to CMS information related to payments and transfers of value to physicians and teaching hospitals, but does not otherwise restrict the types or levels of payments and benefits that may be provided to physicians and teaching hospitals. Multiple states, including Massachusetts, have more prescriptive laws that dictate the types of payments or benefits pharmaceutical and medical device manufacturers can provide to HCPs, including physicians. CMS has indicated that manufacturers may be required to begin tracking reportable payments and other transfers of value for purposes of the Physician Payment Sunshine Act as soon as January 1, 2013.

Amendments to the Massachusetts Marketing Code of Conduct

On July 6, 2012, the governor of Massachusetts signed into law, as part of the FY2013 State Budget, revisions to Massachusetts General Laws, Chapter 111N, the Pharmaceutical and Medical Device Manufacturer Code of Conduct or “Massachusetts Marketing Code of Conduct,” which restricts certain gifts and payments by manufacturers to Massachusetts HCPs.

The revisions to the Massachusetts law include the following:

  • Expenses related to technical training. In a much-needed development, manufacturers are now permitted to provide payment for reasonable expenses necessary for technical training on the use of medical devices, regardless of whether such expenses are covered by a pre-existing purchase agreement. Previously, the law restricted this practice to situations in which such expenses were part of a vendor’s actual purchase contract for the device.
  • Meals Permitted at Non-CME Educational Presentations. Previous Massachusetts law restricted manufacturers from directly providing meals to HCPs except in office or hospital settings. The recent revisions relax this requirement by allowing manufacturers to provide or pay for “modest meals and refreshments” in connection with non-CME educational presentations for the purpose of educating and informing HCPs about the benefits, risks and appropriate uses of prescription products, disease states or other scientific information. The new exception applies only to presentations occurring in a “venue and manner conducive to informational communication.” The term “modest meals and refreshments” is to be defined by the Department of Public Health (“DPH”) through regulations.
  • Detailed Quarterly Reporting of Meals at Non-CME Educational Presentations. To the extent that manufacturers avail themselves of this exception, they must file quarterly reports detailing all presentations at which meals or refreshments are provided. These reports must specify: (1) the location of the non-CME presentation; (2) a description of the products discussed at such presentation; and (3) the total amount expended on such presentation and an estimate of the amount expended for meals and refreshments per participants. This quarterly reporting requirement is in addition to manufacturers’ already-detailed annual reporting requirement with respect to payments or benefits of $50 or more provided to HCPs. However, while the annual reporting requires identification of HCPs, the new quarterly requirement does not appear to be HCP-specific, although amounts per HCP must be disclosed. The revisions make clear that the DPH may require manufacturers to pay a to-be-determined fee to cover the costs of administering this new section.
  • Duplicative Reporting Not Required. The revisions prohibit the DPH from requiring manufacturers to disclose information to the DPH that they have already disclosed to a federal agency pursuant to federal law, if DPH can obtain the federal information. Accordingly, once manufacturers begin disclosing information to CMS under the Physician Payment Sunshine Act, the same information will not need to be disclosed to Massachusetts.
  • Public Availability of Data. Pursuant to a newly added section, the DPH is required to make publicly available and easily searchable on its own website all disclosed data it receives from CMS in annual reports related to manufacturer disclosures pursuant to the Physician Payment Sunshine Act.

As passed on July 8, 2012, these amendments to the Massachusetts Marketing Code of Conduct do not specify an effective date, although the fiscal year of the state budget during which they were passed began July 1, 2012. The DPH has been charged with defining certain terms included in the amendments, and is also expected to make additional conforming amendments to the existing regulations, currently at 105 C.M.R. 970.000. Accordingly, manufacturers should continue to comply with the current regulations, even as they look toward taking advantage of the expanded opportunities for the provision to Massachusetts HCPs of certain meals and expenses consistent with the latest amendments.

Amendments Related to the Coupons, Vouchers, and other Reductions

Separate and apart from the revisions to the Massachusetts Code of Conduct, the FY2012 State Budget also relaxes the Massachusetts anti-kickback statute, which previously prohibited the provision of all coupons, vouchers, and other reductions for prescription medications.

The latest revision limits the prohibition to discounts, rebates, product vouchers or other reductions in an individual's out-of-pocket expenses, including co-payments and deductibles, only to those prescription drugs having an AB-rated generic equivalent. Accordingly, discounts, rebates, vouchers and other reductions can be offered for all drugs except for those with generic equivalents, provided that they are “provided directly or electronically to the individual or through a point of sale or mail-in rebate, or through similar means.” Moreover, manufacturers offering such coupons or reductions cannot exclude or favor any pharmacy for customer redemption

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Device manufacturers need to be able to provide education to physicians and hospital staff regarding actual and contemplated equipment purchases, and permitting the common courtesy of a modest snack or meal in connection with such training is a needed improvement. At the same time, given how comprehensive the federal disclosure requirements will be once implemented, and with results published on the Internet, we question the need for states to impose their own complicated and more expansive prohibitions and disclosure requirements, considering the significant operational and recordkeeping burdens they impose on manufacturers, not to mention the sometimes absurd practices that result (e.g., complex signage at conference booths with differing instructions for practitioners from different states entering the booth). On balance, it seems that funds for such manufacturer activities would be better dedicated to needed research and development.

We continue to monitor developments with respect to state and federal manufacturer marketing reporting requirements and gift bans. Please contact Elizabeth Carder-Thompson (202 414 9213 or, Katie C. Pawlitz (202 414 9233 or, Nancy Bonifant (202 414 9353 or, or any other member of the Reed Smith Health Care Group with whom you work, if you would like additional information or if you have any questions.

Supreme Court Rejects Expansive "Stream of Commerce" Theory of Personal Jurisdiction

This week, the U.S. Supreme Court issued two opinions clarifying the criteria that must be satisfied before a court may constitutionally exercise personal jurisdiction over a defendant—J. McIntyre Machinery, Ltd. v. Nicastro and Goodyear Dunlop Tires Operations, S.A. v. Brown. Both decisions involved product liability suits asserted against non-U.S. manufacturers, but both have relevance as well for domestic corporations defending lawsuits under any liability theory. The decisions were highly anticipated because the cases, J. McIntyre in particular, were expected to resolve a decades-old debate about the contours of the so-called “stream of commerce” theory of personal jurisdiction. The Court delivered.

To read the full alert by Reed Smith Appellate team members Kim M. Watterson and Paige H. Forster, click here.