Chicago to License Pharmaceutical Reps in 2017

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By Stephen Joyce

Nov. 25 — The city of Chicago’s new licensing requirement for drug company sales representatives has spurred opposition from pharmaceutical companies, which label the measure a tax that fails to address its purported goal.

The Chicago City Council Nov. 16 unanimously approved an ordinance that creates only the second licensing regime for pharmaceutical reps in the country. The stated objective for imposing the licensing requirement, which goes into effect July 1, 2017, is to enhance oversight and accountability of pharmaceutical representatives working in Chicago.

Licensing fees are expected to total about $1 million annually and will free up about $700,000 that will be spent on opioid addiction measures.

Critics of the licensing regime, including Amgen Inc., GlaxoSmithKline Plc and Pfizer Inc., said in an early November letter to Chicago City Council members the license requirements are “unnecessary and duplicative” and will “simply result in a tax on the biopharmaceutical industry.” The Epilepsy Foundation of Greater Chicago, Chicagoland Chamber of Commerce, Illinois Biotechnology Industry Organization and others also signed the letter, a copy of which was obtained by Bloomberg BNA.

“The pharmaceutical industry is one of the most highly regulated industries in the U.S. and one of the few to have self-imposed additional, strict marketing guidelines. We share concerns about the current opioid epidemic and are committed to combating prescription drug abuse and misuse. However, this proposal does not directly address the serious problem of opioid abuse. Instead, we should engage in a constructive dialogue about promoting public education and sound policies to prevent and curb opioid abuse,” Caitlin Carroll, Pharmaceutical Research and Manufacturers of America spokeswoman, told Bloomberg BNA in an e-mail.

The only other U.S. city to require a license for pharmaceutical representatives is Washington, D.C., though California, Massachusetts and Minnesota have limits or restrictions on gifts to pharmaceutical representatives.

Addiction Services to Benefit

While the licensing regime may result in reducing the number of prescriptions for opioid medications issued in Chicago that aren’t medically necessary and may combat existing unethical pharmaceutical rep behavior, its primary objective is to provide oversight to currently unregulated practitioners, Molly Poppe, Chicago Office of Budget and Management spokeswoman, told Bloomberg BNA.

“The license was introduced to ensure we have tougher oversight, transparency and accountability of the pharmaceutical reps and are really combating some of the deceptive marketing that we’ve seen from these drug companies, with the ultimate goal of protecting Chicago residents,” Poppe said.

The ordinance requires pharmaceutical representatives, defined as persons who market or promote pharmaceuticals to health care professionals, working 15 or more days in Chicago during a calendar year to obtain a “pharmaceutical representative license.” Applicants for a license will be required to obtain training and education regarding prescription abuse, ethical behavior and marketing practices.

Licensees will be required to track and, upon request, disclose to the city information on the health-care professionals they contacted, the drugs promoted, whether free samples or gifts of any value were provided and whether physicians were compensated for their time. Licensees must complete a minimum of five hours of continuing education every year as part of the license-renewal process.

The entire amount raised through the $750 annual fee for an initial license or renewal, expected to be about $1 million each year, will be used to administer the licensing program. That will free up about $700,000 from the city’s operating budget to fund drug addiction services, Poppe said. Violations will carry penalties of up to $3,000.

Ongoing Litigation

The licensing requirement was approved as the city and Illinois continue to litigate cases asserting fraudulent and deceptive marketing practices involving opioids against pharmaceutical companies.

Illinois Attorney General Lisa Madigan (D) alleged Insys Therapeutics Inc. violated the Illinois Consumer Fraud and Deceptive Business Practices Act by targeting “high-volume opioid drug prescribers” and misrepresenting approved uses and dosages of opioids ( Illinois v. Insys Therapeutics Inc., Ill. Cir. Ct., No. 2016ch11216, complaint filed 8/25/16 ). And the city of Chicago has alleged several pharmaceutical companies promoted their opioids with fraudulent and deceptive marketing practices. The city’s case also alleges consumer fraud and other violations of law ( Chicago v. Purdue Pharma LP, N.D. Ill., No. 14-cv-04361, amended third complaint 10/25/16 ). Both cases are pending.

The ordinance expressly prohibits deceptive or misleading marketing of pharmaceutical products and forbids licensed representatives from using a title or designation that would imply they are licensed to practice medicine if they aren’t. It also prohibits reps from attending patient exams without the patient’s consent.

The city’s Department of Public Health and other city agencies are expected to issue regulations to articulate further how the program will be implemented and a licensee’s continuing education requirements. Subjects that may be included in the continuing education program include ethics and regulations applicable to pharmaceutical marketing.

To contact the reporter on this story: Stephen Joyce in Chicago at sjoyce@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

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