Long blog on biotech gift ban

Share on Facebook
Share on Twitter
Share on

Good public policy is built on two pillars – and they pretty much boil down to common sense: Be fair and first do no harm.

Giving preferential treatment to individual businesses or industries is bad public policy. The Governor and Legislature’s $250 million tax giveaway to the life sciences industry (even as they increased taxes and fees on other sectors by $300 million last year alone) isn’t fair. And it’s particularly unjustifiable as we enter a protracted economic downturn – a downturn that has already caused hundreds of millions of dollars in social service cuts.

But it’s hard to comprehend the logic behind it, when we throw money at life sciences companies with one hand, and take it away with the other.

Last summer, a law was enacted banning pharmaceutical companies from giving gifts to doctors, paying personal expenses associated with a conference, or paying for entertainment.

The law matters because about 25-30 percent of Boston’s convention revenue and 40 percent of its economic impact are related to medical industries. Beyond just conventions, the city hosted 2,500 medical/pharmaceutical meetings in 2007 and 2008, which generated $130 million for hotels and $16 million in state tax revenue.

The new legislation puts all that at risk.
– The American Academy of Allergy, Asthma and Immunology (would love to hang out with those guys!) has relocated its 2015 meeting. Its 8,000 doctors are not coming to Boston.
– The Heart Rhythm Society (very hip group!) is reconsidering the 5 meetings it was scheduled to hold in Boston between now and 2021.
– The American Society of Gene Therapy (ok, I’ll stop) just opted out of Boston for its 2015 meeting, because the new rules compromise the content and quality of the event.

Continuing education is a large part of medical meetings, and the law limits the participation of drug company scientists in it. It even prohibits companies with convention booths from distributing free merchandise to doctors.

The law is designed to rein in health care costs by removing incentives for handing out unnecessary prescriptions, and to make doctors’ potential conflicts of interest transparent.

This is an awfully clumsy way to achieve goals based on good intentions. These companies compete against each other. Marketing their products and educating medical professionals about their use is at the core of what they do. The sales that marketing produces is what funds the research that leads to future breakthroughs.

The law harms drug development efforts in Massachusetts. Smaller research firms that already comply with US FDA guidelines will have to soak up the state law’s additional cost of compliance. meanwhile, cost pressures are already chasing drug development efforts to places like China, Russia and South America.

In Massachusetts, 250 medical device manufacturers employ 50,000 people. So much for the death of manufacturing. Won’t the new law harm their ability to educate practitioners about new products and advancements?

Perhaps the best evidence of the law’s impact is an ad from the New York Biotechnology Association. It reads,

“Worried that government red tape is just getting too much in the way of your life sciences work? The answer is just across the border… In New York, you can conduct clinical trials where your royalty and licensing agreements are protected…”

The gift ban and other limits on life sciences companies started with the best of intentions. But their unintended consequences threaten our medical convention and biotechnology industries. In the current economy, that’s not a risk we can afford to take.