Chicago Proposes Pharma Rep Licensing Rules and Ethical Standards

by Dechert LLP
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The City of Chicago Commissioner of Public Health on Friday, March 17, published proposed Rules to implement the highly-publicized pharmaceutical representative licensing ordinance enacted in November 2016.

The Rules seek to clarify reporting and recordkeeping obligations, to explain professional education requirements, to articulate minimum ethical standards, and to establish monetary and other penalties for violations of the Ordinance, the Rules, and the incorporated ethical standards. While Chicago Mayor Rahm Emanuel stated that the Ordinance, which will take effect on July 1, 2017, is directed at curbing opioid abuse, the Ordinance and the proposed Rules will apply to all pharmaceutical representatives without regard to the types of pharmaceuticals they market or promote. The public comment period runs through Sunday, April 2, 2017.

To assist companies interested in submitting comments on the Rules,1 we summarize below their key provisions and the relevant sections of the Ordinance.2

License Required

The Ordinance requires any pharmaceutical representative who conducts business within the City of Chicago for fifteen or more days per calendar year to obtain a license. Ordinance at § 4-6-310(b)(1). A “pharmaceutical representative” is “a person who markets or promotes pharmaceuticals to health care professionals.” Id. at § 4-6-310(a). To obtain a license, the representative must submit an application to the Commissioner of Business Affairs and Consumer Protection. Id. at § 4-6-310(d). Any changes to the information submitted in the license application must be reported in writing within four days of the change. Id. The license fee will be US$750 per year. Id. at § 4-5-010(36). The Rules will require a pharmaceutical representative to carry the license or a copy of the license when calling on a health care professional, and to show it if asked to do so. See Rules at § 2.

Exclusions from the Licensing Requirement

The Ordinance and the Rules will exclude from the licensing requirements (1) a person who conducts business as a pharmaceutical representative in the City of Chicago “for fewer than fifteen days per calendar year” (Ordinance at § 4-6-310(b)(1)); (2) Medical Science Liaisons, as defined by the Rules to include “a person with an advanced science or medical degree who provides technical assistance to healthcare professionals and does not carry out a marketing or sales function” (Rules at § 1); (3) a person who markets or promotes pharmaceuticals to “health care practitioners who work exclusively with animals,” who the Rules exclude from the definition of “Health care professional” (Id. at § 1); and (4) a person who provides pharmaceutical product information “solely for the purpose of clinical trials, investigational drugs, or a Risk Evaluation and Mitigation Strategy pursuant to the Federal Food, Drug and Cosmetic Act” (Id. at § 2).

Online Course Required Prior to License Application

The Ordinance mandates that all pharmaceutical sales representatives must complete a professional education course prior to applying for a license. Ordinance at § 4-6-310(b)(2). The Rules specify that the pre-application course will be available online on the Chicago Department of Public Health (“CDPH”) website. See Rules § 3. The course will “provide an introduction to the pharmaceutical representative license, an overview of the Ordinance’s ethical standards and disclosure requirements, and other topics appropriate to the license.” Id. The Rules are silent as to how long the pre-application course will take and the format in which it will be presented (e.g., video, written text with questions, etc.). An initial license application will require proof that the applicant completed the online course. Id.

Continuing Education Requirements

A pharmaceutical representative must complete five hours of continuing professional education each year to renew a license. Ordinance at §§ 4-6-310(b)(3); (f)(1); Rules at § 3. The Rules explain that an applicant will affirm “that he has completed five hours of continuing education during the previous year” by applying for license renewal. Rules at § 3. The CDPH will need to approve any institution that provides continuing education, and a list of approved providers will be posted on the CDPH website. Id. While the Rules are somewhat unclear, they contemplate approval of only four categories of providers: “1) a nationally or locally accredited program provider; 2) a governmental unit; 3) a health care facility; or 4) an institution of higher learning recognized by an accrediting body approved by the Secretary of the United States Department of Education.” Id. A pharmaceutical sales representative’s employer may not serve as the continuing education provider, Ordinance at § 4-6-310(f)(3), and the Rules will prohibit any “pharmaceutical company that employs or in any way provides compensation to any pharmaceutical representative” from becoming an approved education provider. Rules at § 3. The Rules enumerate 12 broad subject areas (e.g., “Professional ethics” and “Pharmacology”) that the continuing education coursework will address, and explain that a course will satisfy the continuing education requirements if it is offered “by an approved provider” and if it “is primarily focused on one of the approved subjects.” Id. The Rules provide some flexibility in terms of the format of the course by allowing approval of a program “given at a conference, lecture, seminar, course of instruction, workshop, or on the Internet.” Id.

Continuing Education Recordkeeping and Penalties for Non-Compliance

The Ordinance requires pharmaceutical representatives “upon request” to provide “proof of completion of the continuing professional education requirements.” Ordinance at § 4-6-310(f)(2). The Rules elaborate on this requirement by explaining that applicants will be required to provide upon request (1) the “title and date of the course(s)” completed; (2) the “number of credit hours completed”; (3) the “name of the education provider(s)”; and (4) the “signed certificate(s) of completion.” Rules at § 3. The Rules provide severe penalties for failure to complete the continuing education requirements and/or for “fraudulently” affirming such completion, including: (1) suspension or revocation of the license; (2) “inclusion in a public list of pharmaceutical representatives whose licenses have been revoked”; and/or (3) a fine of US$1,000 to US$3,000 “per day of violation.” Rules at § 3. The Ordinance itself makes no mention of the second penalty – “inclusion in a public list.”

Recordkeeping and Disclosures Regarding Contacts with Health Care Professionals

The Ordinance enumerates specific information pharmaceutical representatives must provide to the CDPH relating to their interactions with health care professionals within the City of Chicago, while the Rules specify the timing of those disclosures. The Ordinance requires disclosure of the health care professionals’ identities; the number, duration, and location of the contacts; the pharmaceuticals promoted; whether any “product samples, materials, or gifts of any value” were provided and their value; and “whether and how the health care professional was compensated” for the contact with the pharmaceutical representative. Ordinance at § 4-6-310(g)(1). The Rules require annual reporting at the end of each license period and specify the time periods covered by each disclosure. Rules at § 4. They also will require a pharmaceutical representative to provide the information within 30 days of a request by the Commissioner of Public Health, which the Commissioner will be able to make at any time. Id.

Mandatory Compliance with Ethical Standards and the PhRMA Code

The Rules list eight mandatory ethical standards, which incorporate by reference the PhRMA Code and include, among others, the ethical standards itemized in the Ordinance. See Rules at § 5; Ordinance at § 4-6-310(h)(1)-(3). The Rules explain that the Ordinance and the Rules control in the event of a conflict with the PhRMA Code. Rules at § 5.

Penalties Include Fines, License Suspension, and 2-Year License Revocation

Pharmaceutical sales representatives who violate any provision of the Ordinance or Rules, including the ethical standards, may be fined US$1,000 to US$3,000 per day for each offense, and may have their license suspended or revoked. The Ordinance prohibits reinstatement of a revoked license “for a period of two years from the date of revocation.” Ordinance at § 4-6-310(j).

Footnotes

1) City of Chicago Department of Public Health, “Pharmaceutical Representative License Draft Rules, March 2017” (“Rules”).

2) City of Chicago Ordinance No. SO2016-7983 (“Ordinance”). The relevant portion of the Ordinance begins at page 95, “Article VII. Pharmaceutical Representatives.” Citations to the Ordinance in this OnPoint include the specific Municipal Code sections that will be amended or added when the Ordinance takes effect on July 1, 2017.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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