Waiting in the Dark, Wondering About Sunshine Act Requirements

Any day now, final regulations are expected to be released to implement the Physician Payment Sunshine Act. Incorporated into Section 6002 of the Patient Protection and Affordable Care Act (P.L. 111-148), the Sunshine Act requires manufacturers to submit a list of physicians and teaching hospitals who received from them a transfer of value of $10 or more, or multiple transfers of less than $10 that cumulatively exceeds $100. It also requires manufacturers to list any physicians, or their immediate family members, who hold ownership stakes in their companies. Some items, such as drug samples and educational materials intended for patients, are exempt from being reported. 

Pharmaceutical companies, medical device manufacturers, and biotech companies will be required as of January 1, 2013 to begin collecting data. The problem is, the final regulations are nowhere to be seen.

While we wait for CMS, many are looking to the state of Vermont for an example of how this Act will work and for an indication as to what CMS might do. Vermont’s Prescribed Products Gift Ban and Disclosure law bans most gifts to Vermont health care providers and requires manufacturers of prescribed products, such as pharmaceuticals, biological products and medical devices to disclose expenditures deemed appropriate by the legislature, which is very similar to Physician Payment Sunshine Act, only even more strict. Eight other states and the District of Columbia already have laws requiring manufacturers to report payments to physicians as well as financial penalties for failing to submit reports. The new regulations will preempt the state regulations, although any more broad state regulations will remain in effect.

 According to the American Medical Association, “The Sunshine Act, as written, could give physicians and their patients the chance to have an open conversation about why those relationships exist.  For example, in many cases they are related to physicians’ participation in clinical trials.  Such disclosure is in line with positions the American Medical Association has put forth calling for informed judgment for patients and a focus on their benefit, all the while requiring meaningful independence from industry for doctors.” 

While we wait to gain some insight into these relationships, many are wondering, why is it taking so long? CMS, in a blog post, stated that the longer time was due to its desire to review the over 300 comments on the proposed regulations. CMS stated that additional time was needed to address operational and implementation issues in a thoughtful manner, and the ability to ensure the accuracy of the data that is collected.

In September, U.S. Senator Chuck Grassley (R-Iowa) held a roundtable discussion on CMS’ delay in implementing the Physician Payments Sunshine Act, questioning CMS on what is taking so long to implement the regulations. Grassley mentioned that he had exposed numerous cases where there were vast disparities between drug company payments received and reported by leading medical researchers.  Two examples of disparities included: (1) At Stanford University, the chairman of psychiatry received a National Institute of Health (NIH) grant to study a drug, while partially owning as much as $6 million in stock in a company that was seeking FDA approval of that drug. After exposure, the NIH removed the individual from the grant; and (2) at Harvard University, three professors failed to report almost a million dollars each in outside income while heading up several NIH grants.  In response to Grassley’s investigation, he contends that Harvard revised the conflict of interest policies and conducted an internal investigation of these professors.

While we wait, pharmaceutical, medical device, biological and medical supply manufacturers can familiarize themselves with what they will need to do so that they are able to file annual reports on payments to physicians and teaching hospitals. Although they may be in the dark now, the Sunshine is coming.

For other articles on the Sunshine rule see “CMS Issues Long- Awaited Proposed Sunshine Rule,”  “Sunshine” Turns to Sunburn as Pharma Waits for Physician Payment Reporting Rules and Still No “Sunshine” in the Name of Ligher Regulatory Burdens.”