Legislation Limits Gifts, Incentives for Providers from Manufacturers

State lawmakers seek to restrict gifts from pharmaceutical manufacturers to providers.

A bill recently passed by the California state legislature restricts the gifts and incentives given to healthcare providers by pharmaceutical companies.

The bill, SB 790, proposed by state Sen Mike McGuire (D-2nd District- Healdsburg), was approved in the Senate by a vote of 23-13.

In April 2017, McGuire introduced the bill to regulate gifts received by providers. While this is a common practice throughout the United States, California has fallen behind on implementing safeguards to regulate gifts and incentives received from the pharmaceutical industry, according to a press release.

Although a majority of providers put their patients ahead of financial gains, McGuire said he is concerned that the gifts may change prescribing habits of branded drugs.

“This bill is all about protecting patients from overpriced prescriptions. Extensive research and exhaustive studies have shown there is a direct correlation between medical professionals who receive gifts and the prescription of expensive brand-name drugs,” McGuire said in the release. “Throughout the state, large hospitals and medical centers have realized the importance of limiting gifts from the pharma industry to doctors — it’s time the state of California bans these types of gifts and incentives, which will put patients above profits.”

The growing cost of prescription drugs has caused payers to increase the prescribing of low-cost generics opposed to branded alternatives.

Opponents to the gifts to providers argue that this can cause unnecessary branded prescriptions and drug cost increases, according to the release. However, these interactions between manufacturers and providers can also be beneficial by providing increased education about the drugs.

The bill allows the state to potentially lower drug spending, while also keeping the patient’s best interest in mind. SB 790 would restrict manufacturers from providing gifts or incentives, such as travel, consulting fees, meals, and alcohol, to providers, according to the release.

McGuire believes that the passage of this bill will reduce unnecessary prescribing among vulnerable populations, including those in the foster care system or those insured by Medicare.

“I’ll be the first to say that the vast majority of physicians and medical professionals put the needs of their patients first. There’s a reason why doctors answer the call to practice medicine — to help people in their time of need,” McGuire said. “But growing evidence reveals that financial relationships between some physicians and pharmaceutical companies confirm what has been suspected – financial incentives change minds.”

Specifically, McGuire reported that prescribers in the state’s foster care system receive more than twice the amount of incentives from manufacturers compared with the typical provider. This practice caused McGuire to implement legislation to protect foster children against the over-prescription of certain drugs. However, he notes that this problem is statewide and not just present in the foster care system.

The bill will now be presented in the California State Assembly, according to the release.

“The facts are clear. Current voluntary efforts are not enough. California physicians and medical professionals lead the nation in the number of gifts taken, over $1.4 billion in 2014,” McGuire concluded. “SB 790 will curb financial payments, gifts and incentives to medical professionals and help drive down the skyrocketing costs of prescription drugs for millions in California.”