“Sunshine” Turns to Sunburn As Pharma Waits for Physician Payment Reporting Rules

Medical and pharmaceutical manufacturers seeking guidance on their responsibilities to track and disclose payments to physicians will have to wait a little longer. Despite assurances to the contrary, it looks like the Department of Health and Human Services (HHS) is not going to meet its October 1 deadline for publishing a rule directing companies on how to comply with the federal requirements.

The health care reform act signed into law last year, the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), includes the Physician Payment Sunshine Act (Sec.6002), which requires pharmaceutical, medical device, biological, and medical supply manufacturers to report to HHS any “payment or other transfer of value” to physicians and teaching hospitals. The first reports will be due March 31, 2013 for the calendar year 2012 reporting period which begins in three short months.

Although HHS will not post the data on a public website until September, 2013, the trigger date for data that will be reported is January 1, 2012.

Under the law, the report must include information about the amount of the payment, the date on which the payment was made, the form of payment, and the nature of the payment (e.g., gift, consulting fees, entertainment). The law specifically excludes certain transfers of value from this disclosure requirement.

The measure is based on a bill that was introduced more than two years ago by Senators Charles Grassley (R-IO) and Herb Kohl (D-WI). The senators believe that physicians who receive benefits from drug and device makers are more inclined to prescribe the priciest products. Consumer advocates have complained that industry compensation can affect a doctor’s choice of drugs or treatment and that exposing the doctors will dissuade such behavior.

While the new federal law stops short of banning gifts, it does promise to increase the public’s understanding of how companies interact with physicians. HHS is charged to present the information in a format that is easily aggregated and searchable by manufacturer, by physician and hospital recipient. Rather than simply listing names and dollar amounts, the federal database will likely include explanations of what services the physicians provided in return for the payments, making it simple for patients to parse the data by name, type of gift received, and other specifics. The long-awaited proposed rules will establish procedures for the submission of the information as well as its public availability.

To date, industry payments to physicians have been disclosed under state sunshine laws and corporate integrity agreements between prosecutors and pharmaceutical and device companies. As a result, numerous pharmaceutical companies already disclose payments to physicians on publicly accessible websites.

With data collection due to begin soon, reporting requirements are quickly becoming top of mind at medical and pharmaceutical firms everywhere. Companies are feeling challenged by the implementation of such far-reaching legislation. The collection and detailing of virtually any payment, gifts, food, trips, samples, rebates, speaking fees and other types of compensation crosses departments, sales forces and clinical areas of the organization. Couple that with the learning curve and technology requirements of reporting and many companies are, quite frankly, scrambling.

Complying with the new federal rules – whenever they are released – won’t be an easy task. For example, during a forum hosted by HHS in March, one mid-sized pharmaceutical company estimated it would likely have to report information about more than 1 million transactions with over 300,000 physicians, in order to comply, costing millions of dollars.

There is also considerable debate about whether the benefits of transparency will outweigh the administrative and resource burdens required to report details about payments to physicians under the new law. HHS cannot possibly meet the October 1 statutory timeline for publishing a final rule. Pharma companies and others will likely ask for a delay of the first reporting period, which is slated to begin on January 1, 2012, letting the sunshine in at a later date.