Today the Joint Committee on Community Development and Small Businesses heard testimony on multiple bills, including S. 1849 – archly titled, “An Act Relative to Restaurant Rejuvenation.” The bill would add a restaurant loophole to the state’s Pharmaceutical and Medical Device Ban law. House chair Rep. Linda Dorcena Forry, Senate Chair Sen. Sal N. DiDomenico, Rep. Lori Ehrlich, Rep. Paul McMurty, Rep. Angelo L. D’Emilia, Rep. Kate Hogan, Sen. Katherine Clark, and Rep. James Lyons, Jr. were in attendance. Three panels presented testimony on the proposed bill – one in support of the bill and two opposed.
A Massachusetts Restaurant Association legal representative, the owner of Dalya’s Restaurant in Bedford, Massachusetts, and the chef and owner of Sonoma Restaurant in Princeton, Massachusetts made up the panel in support of the bill. They observed that since after the Pharmaceutical and Medical Device Ban took effect in July 2009, industry representatives can still host educational presentations and seminars in hospital and medical office settings, which can be catered by Massachusetts restaurants. They argued that revising legislation to allow such events to be hosted at the restaurants would simply level the playing field. Both restaurant owners testified that they experienced a 10% loss in business due to the gift ban, which was exacerbated by the economic downturn. Reps. D’Emilia and Lyons were sympathetic to these small business owners and conceded that the gift ban bill may have had unintended consequences. However, it is still unclear what the standard amount of lost profits is for all Massachusetts restaurants and there was interest in determining the losses in terms of dollar amount.
The second panel, in opposition to the bill, was made up of Amy Whitcomb Slemmer, Executive Director of Health Care For All, Deborah Banda, State Director of AARP MA, Deirdre Cummings, Legislative Director for MASSPIRG. All three organizations strongly opposed weakening the gift ban law. They testified that pharmaceutical and medical device industries spend $30 billion a year on marketing, $6 billion of which is spent on direct to physician marketing. These costs are passed on to consumers through higher drug prices and premiums. Research has shown that marketing and gift giving creates a sense of obligation in physicians and changes their prescribing behavior, even if they don’t intend to be influenced. Drugs and devices that are aggressively marketed see an increase in sales. Often, these products are at a higher cost than generics and are unnecessary, which also leads to an increased cost of health care.
The panel also testified that the restaurant industry does not have the evidence to back up their claim that the gift ban is the cause of claimed profit losses. Although it is true that restaurant sales dropped in 2008 and 2009, every other sector also experienced losses due to the economic downturn. They presented statistics from the Department of Revenues, which has found that the Massachusetts restaurant industry is poised for a comeback. In 2011, restaurant receipts are on track to be up 4% from 2010. Also, the current gift ban does not prohibit industry representatives from holding events at restaurants altogether – doctors just have to pay for themselves.
The final panel that testified in opposition to S. 1849 was made up of two Harvard Medical School students and Marcia Hams, Director of Prescription Access and Quality at Community Catalyst. The students testified that their future profession is based on public trust and integrity and pharmaceutical and medical device marketing tactics create conflicts of interest that lead to unintended bias in prescriber decision making. Although the representatives of the restaurant industry argued that the seminars and presentations they want at their restaurants are simply to educate physicians, the students argued that it is never only about education, the industry practices aim to influence prescribing decisions. They testified that the medical field supports full disclosure and limits on gifts and is moving in the direction of establishing similar regulations. Marcia Hams spoke to the trend in gift bans in other state and national laws. Minnesota, Vermont and Connecticut have similar gift ban laws in place while the national health reform law contains a disclosure mandate, but only for physicians. Hams reiterated that there is solid scientific evidence that the marketing tactics of industry representatives influence prescriber behavior and that before the ban, drug and device prices rose as a result of marketing.
Sen. Clark and Rep. Forry recognized that the real issue here is the need to look at the overall problem and figure out how to lower health care costs comprehensively. A major issue that small businesses, such as restaurants, face is the cost of health insurance. The needs of consumers and small business owners are aligned and it reorganizing the way we pay for health care must be a legislative priority.
Before the hearing, opponents of the bill held a press conference. Leading the event was Senator Mark Montigny, long-time champion of affordable prescription drugs, and an author of the gift ban law. Montigny emphatically pointed out that the current law itself represents a compromise from the original Senate position. He called on the budget conference committee to reject a House provision to repeal the gift ban, as well as opposing the restaurant loophole.