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New Federal Law Would Limit Health Care Market Sales
Volume 578


Two U.S. senators have proposed a law that could limit sales to a key market in the ad specialty industry. Senators Herb Kohl (D-WI) and Charles Grassley (R-IA) want to require drug and medical device manufacturers to more fully report to the government payments and gifts provided to doctors. The bill is known as the Physician Payments Sunshine Act of 2009.

If the bill passes, it may create more obstacles in selling promotional products to pharmaceutical and medical equipment companies. The law would force these companies to reveal the gifting of every item, of any value, once the annual threshold of $100 is crossed. Under the current law, only items exceeding $25 must be reported once the threshold is passed. Information would be combined in a national database that could be accessed by the public. 

The bill is a sharper version of legislation that was first introduced in 2007. The new proposal is designed to further rein in larger medical manufacturers, some of which face federal inquiries about their gift-giving practices. The proposed law is supported by industry trade organizations, including the Advanced Medical Technology Association (AdvaMed). In July, AdvaMed will enact a set of voluntary guidelines restricting the gifting of non-educational items to health care professionals. Already in 2009, the Pharmaceutical Research and Manufacturers of America (PhRMA) has instituted a similar code.

While the AdvaMed and PhRMA codes are strictly voluntary directives, the proposed federal law would compel mandatory disclosure. Offenders would face substantial fines up to $1 million per company. The legislation, which has also been introduced in the U.S. House of Representatives, could come to a vote later this year.

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Promotional products, also known as ad specialties, make up a $20.5 billion dollar industry and are used by virtually every business in America. Why? Items like mugs, pens and t-shirts are memorable and provide a better cost per impression for advertisers than almost every major marketing effort like prime time TV, magazines and radio.

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