Louisiana Legislature Clarifies Ethics Decisions on Pharmaceutical Sales Representatives
- United States
- 07/07/2006
- Arent Fox PLLC
On June 22, 2006, Governor Kathleen Babineaux Blanco signed into law two bills, Senate Bill 320 (Act 527, as signed) and Senate Bill 263 (Act 524, as signed), amending state lobbying and ethics law. The bills were introduced to clarify, and in part reverse, a to a two-part advisory opinion recently issued by the Louisiana Board of Ethics addressing whether certain practices of pharmaceutical and biotechnology employees constituted activity regulated under Louisiana state lobbying laws or prohibited by Louisiana’s Code of Governmental Ethics. Each bill is addressed separately below.
*Act 527 (S.B. 320)*
As discussed in a previous Arent Fox alert (www.arentfox.com/legal_updates/content1231.html), last January, the Louisiana State Board of Ethics published the first part of a two-part advisory opinion (No. 2005-560) on ethics and lobbying law. In that opinion, the Ethics Board reasoned that “physicians and other health care professionals practicing or affiliated with public hospitals” were technically executive branch officials and, as such, the execution of these officials’ powers, functions, or duties, including the prescription of medicine, constituted “executive branch action,” as defined by R.S. 49:72(2). The Ethics Board concluded that any direct act or communication intended to influence such executive branch action, like the “detailing” practices of pharmaceutical sales representatives, was, by definition, lobbying. As a result of the board’s opinion, certain pharmaceutical sales representatives working in Louisiana were forced to register as lobbyists and comply with the many reporting obligations imposed on lobbyists by state law.
Act 527 effectively overturns the board’s opinion by explicitly removing from the scope of “executive branch action” those activities that the detailing practices of pharmaceutical representatives were designed to influence. The bill amends R.S. 49:72(2) to exclude from the definition of “executive branch action” those actions taken “by a licensed health care professional, or a person acting under a licensed health care professional’s direction, to diagnose, treat, or provide medical advice to an individual patient, including prescribing a drug or device for use by the patient.” In other words, pharmaceutical representatives who detail the licensed health care professionals at public hospitals are not engaging in lobbying since such detailing activities are designed to influence activities that are no longer “executive branch actions.”
Limitations on the allowable scope of activity for pharmaceutical sales representatives do remain under the new law, however. The new bill explicitly prohibits “pharmaceutical representatives” from “discussing any type of drug or pharmaceutical with members of the Medicaid Pharmaceutical and Therapeutic Committee for the purpose of inclusion into the pharmacopoeia or formulary of any drugs their company produces.”
Furthermore, because Act 527 was not made effective retroactively, pharmaceutical sales representatives who engaged in lobbying during the time period between the issuance of the board’s advisory opinion and the effective date of Act 527 must fulfill all their existing registration and reporting obligations. Pharmaceutical sales representatives who elect to terminate their lobbyist registrations in the wake of the new law must file reports for each reporting period during which they were registered.
*Act 524 (S.B. 263)*
In February, the Ethics Board issued the second part of its advisory opinion (also discussed in the above-referenced Arent Fox alert) and addressed whether prescription drug samples were a “thing of economic value,” as defined by R.S. 42:1102(22)(a) of the Code of Governmental Ethics. The question was critical to determining whether health care professionals at public hospitals could accept drug samples from pharmaceutical sales representatives since state law prohibits public servants, including physicians working for the state, from receiving anything of economic value for the performance of their official duties and from accepting anything of value as a gift or gratuity from a person that has a substantial economic interest affected by performance of the official’s duties. In its opinion (No. 2005-560b), while the board never addressed whether drug samples were things of economic value, it nonetheless concluded that state ethics law did not prohibit “the donation of samples to the physicians at public facilities for the benefit of the patients at those facilities.” (emphasis added).
The Ethics Board’s opinion, however, left unanswered the question of whether physicians at public facilitates could accept donated drug samples for the benefit of patients in their private practices. Act 524 answers this question in the affirmative by amending R.S. 42:1102(22)(a) to exclude from the definition of “thing of economic value” all “pharmaceutical samples provided to physicians or other health care professionals for administration or dispensation to a patient at no cost to the patient.” Indeed, pursuant to the new law, physicians who practice at both public and private facilities may accept donated pharmaceutical samples for the benefit of any patient, regardless of whether they are being treated at a public facility.
CONCLUSION:
Acts 527 and 524 help resolve much of the confusion created by the two-part advisory opinion issued by the Ethics Board earlier this year. Pharmaceutical sales representatives, scared away from calling on health care professionals at public hospitals in Louisiana by the prospect of having to comply with confusing lobbying and ethics rules and regulations, should again feel comfortable returning to the state to go about their business as usual.
Larri Short 202.775.5786 [email protected]David Adkins
202.857.8941
[email protected]
