Sunshine Act Still in the Shade

April 1, 2012

Pharmaceutical Executive

Pharmaceutical Executive, Pharmaceutical Executive-04-01-2012, Volume 0, Issue 0

Phase in of the Sunshine Act will force a reconsideration of the ethical consequences of all types of pharma meetings. How and to what extent remains to be seen.

The issue isn't meetings, or companies paying doctors to present at meetings to their colleagues about a drug. After all, who knows more about a new drug than the company that made it? The issue between drug companies and physicians is transparency.

Would you as a physcian receive the information differently if you knew how much the presenter was being paid? And does anyone really believe a very good meal is enough to sway a scientist? Context matters, but so often what are shouted out are sensational cases and the subsequent cover-ups (like all scandals, the cover-up can be more egregious than the event itself). When Pfizer paid $2.3 billion and pleaded guilty to one felony count in 2009 to settle federal criminal and civil charges that it illegally promoted its Bextra painkiller and other drugs, it was the largest healthcare fraud settlement in history.

The amount of money gave pause, and brought home the severity of the crime, but in truth it was a relatively rare incident. Nonetheless, the headlines increased. A tipping point finally was reached when Senator Grassley proposed the Physician Payments Sunshine Act (PPSA), which was passed by the federal government and rolled into the broader healthcare reform package. It was signed on March 23, 2010 and will be fully implemented on March 23, 2013.

By requiring public disclosure regarding the monetary relationship between a doctor and a drug company, the hope is that it will cleanse medicine of the perceived conflicts of interest by shaming doctors. But will it work? After all, there is no data that proves quid pro quo corrupts. Will it be worth the costs of implementing it? And does it go far enough?

Not everyone thinks so (see "Sunshine Act Still in the Shade"). Will it change meeting attendance? Or more seriously, will it dissuade doctors from working on the clinical trials pharma companies need to get their drugs through the Food and Drug Administration approval process?

Tranparency is good, but so is discourse, accuracy, and taking the time to consider all the ramificatuons before it's too late.

Traversing the shifting sands of the Physician's Payment Sunshine Act (PPSA) is difficult at best. First there's the Act itself and its disclosure demands; second there's the confusion of what it entails; and third there's the new deadline.

Rolled into a section of the Patient Protection and Affordable Care Act (PPACA), the so-called Sunshine Act was slated to be implemented Jan. 1, 2012. That deadline evaporated when The Centers for Medicare and Medicaid Services (CMS) published in December 2011 a notice of proposed rulemaking for a provision that stated any gift or payment of more than $10 to physicians from a pharmaceutical or medical device maker must be reported publicly. Now, the new date for implementation is March 2013.

Background

While this territory has been trampled over and over again, it still causes confusion. Also, what does the reprieve mean, and how are companies preparing to meet the terms of the law?

It all started, of course, when public outcry over physicians' conflict of interest with commercial pharmaceutical companies reached a tipping point after details of some doctors' cozy consulting relationships with drug makers began making headlines. Senator Grassley proposed the Physician Payments Sunshine Act (PPSA), which was passed by the federal government and then became part of the broader healthcare reform package. It was signed on March 23, 2010.

With some states (see sidebar) already having similar laws on the books and other states making plans for future regulation, the federal law attempts to create a single reporting model, which covers most of the requirements currently in place—and in doing so, will stem the tide of future regulation.

The overriding hope is that it will help cleanse medicine of the perceived egregious conflicts of interest between physicians and drug companies. According to some surveys, over 90 percent of all physicians have some interactions with pharmaceutical and device companies, and over 80 percent received something of value from such companies, including food, honoraria, consultant fees and research grants.

But now the transparency efforts will languish yet another year. This reporting will not be happening during this year, as was originally expected.

According to Robert Bennett, the American Academy of Family Physicians (AAFP) federal regulatory manager, CMS' proposal means that drug and device manufacturers and group purchasing organizations, or GPOs, do not need to begin data collection until final regulations are issued.

"Essentially, what CMS has done here is indicate that data collection will not begin in 2012," Bennett said. "So, for now, there's no need to worry, because it's (only) a proposed regulation."

Health writer Matt Brown, an editor at AAFP, wrote recently that the delay has drawn criticism. The sponsors of the original stand-alone legislation, known simply as the Physician Payments Sunshine Act, that then rolled into the reform's Affordable Care Act—Sens. Charles Grassley, R-Iowa, and Herb Kohl, D-Wis.,—wrote a joint letter to outgoing CMS Administrator Donald Berwick, M.D., on Oct. 3, demanding to know why publication of procedures to implement the provision had been delayed beyond the Oct. 1, 2011, deadline outlined in the health reform law. Berwick's response three weeks later included no future timeline. That raises the question that perhaps even the March 31, 2013 deadline is not firm.

The clarification CMS offered was—depending on the timing of the final rule—that manufacturers and GPOs be required to submit partial-year data on March 31, 2013. After that, the agency will aggregate the data "at the individual physician and teaching hospital level" before then providing a 45-day review period for physicians and other covered entities to contest any data with which they do not agree. The results will be made available to the public by Sept. 30, 2013.

"Under the proposal, the burden is on the manufacturer to report the information," Bennett said. "Regarding the review period, I wonder how our physicians are going to have time to do all of that."

Bennett said another item of note was that despite the time frame noted, CMS indicated that some manufacturers and GPOs might begin to collect certain data voluntarily this year. In addition, CMS is excluding OTC drugs and Class I and II devices, such as tongue depressors and elastic bandages, from the reporting requirements, choosing instead to limit reporting to drugs or biologicals that require a prescription. According to the CMS proposal, each report must include the following elements:

» Recipient's name

» Recipient's business address

» Specialty

» National Provider Identifier number, if appropriate

» Amount of payment

» Date of payment

» Form and nature of payment, including:

» Consulting fees, compensation for services other than consulting, honoraria, gifts, entertainment, food, travel, education, research, charitable contributions, royalties or licenses, current or prospective ownership or investment interest, direct compensation for serving as faculty or as a speaker for a medical education program (including CME), and grants

» Description of associated covered items

» Any other information deemed appropriate.

CMS further stated that it estimates "roughly 150 drug or biologic manufacturers, 1,000 device or medical supply manufacturers, and 420 GPOs will be required to submit information" on an annual basis pursuant to the provision.

Bennett said it is important to note that, although implementation is months down the road, the new rules eventually will affect all physicians, regardless of specialty.

Does it go far enough?

While the PPSA mandates reporting of uncommonly large payments by drug companies to doctors, some think it still does not go far enough. The argument is small gestures can result in undue gratitude that could compromise prescribing doctors with the drug companies. There have been studies that suggest a little goes a long way to forming a relationship that—however subtly—leaves the receiver beholden or simply in a more favored disposition towards its giver.

Andrew L Younkins, in his recent paper, "The Physician Payments Sunshine Act and the Problem of Pharmaceutical Companies' Influence," released in March, believes the PPSA "does not confront the panoply of more subtle yet more powerful methods the drug industry uses to influence prescriber behavior."

Young argues that industry-sponsored CME, small gifts, drug samples, and drug detailer contacts unconsciously influence physician prescribing behavior, and that the PPSA and reporting requirements in general are a particularly poor way to deal with physician conflict of interest.

He examines the probable failure of professional codes of ethics and criminal statutes to limit conflicts of interest. His conclusion is that the only real solution is to prohibit all gifts and all direct pharmaceutical company sponsorship of any physicians' activities.

"Gift giving is central to business and to our way of life," says Young. "Yet, there are professionals who are not permitted to accept gifts: sports referees, judges, prosecutors, journalists, and others in whom we place a great deal of trust to make objective decisions. Doctors do not sell us drugs or medical devices, they prescribe them to us. Accordingly, a series of proposals should be enacted into law, or adopted by the industry and combined with strict enforcement, in order to end the common practices that lead to conflict of interest."

Not covered

Elizabeth J. Cappiello, an attorney writing at Ober & Lawler, points out in an article in her company's publication, the Health Alert Newsletter, that not covered by the PPSA is direct-to-consumer advertising expenses and marketing costs. State laws that require disclosure of this type of spending will not be preempted. Accordingly, companies will need to continue reporting this type of information to state authorities if required to do so by state law.

The PPSA also expressly excludes certain types of payments from its disclosure requirements. Under the PPSA, manufacturers are not required to disclose information concerning the following types of payments or transfers:

» A transfer of anything with a value of less than $10, unless the aggregate amount transferred to, requested by, or designated on behalf of the covered recipient by the applicable manufacturer during the calendar year exceeds $100, subject to increase each year using the consumer price index

» Product samples that are not intended to be sold and are intended for patient use

» Educational materials that directly benefit patients or are intended for patient use

» The loan of a medical device for a short-term trial period, not to exceed 90 days, to permit evaluation of the covered device by the covered recipient

» Items or services provided under a contractual warranty, including the replacement of a covered device, where the terms of the warranty are set forth in the purchase or lease agreement for the covered device

» A transfer of anything of value to a covered recipient when the covered recipient is a patient and not acting in the professional capacity of a covered recipient

» Discounts (including rebates)

» In-kind items used for the provision of charity care

» A dividend or other profit distribution from, or ownership or investment interest in, a publicly traded security and mutual fund

» In the case of an applicable manufacturer who offers a self-insured plan, payments for the provision of health care to employees under the plan

» In the case of a covered recipient who is a licensed non-medical professional, a transfer of anything of value to the covered recipient if the transfer is payment solely for the non-medical professional services of such licensed non-medical professional

» In the case of a covered recipient who is a physician, a transfer of anything of value to the covered recipient if the transfer is payment solely for the services of the covered recipient with respect to a civil or criminal action or an administrative proceeding

However, Cappiello stresses again that state laws which require the disclosure of information pertaining to these types of payments are not preempted by the PPSA and companies are required to continue reporting such payments to state authorities if required to do so by state law. There is one exception. The PPSA does preempt state laws which require disclosures similar to that described in item one above.

Start now

Still, proponents believe that with the passage of the federal PPSA, the need to accurately document and aggregate a company's spend on physicians will increase dramatically. And that it will serve the issue of transparency on some level, requiring all pharmaceutical, device and biotech companies to report detailed financial relationships with prescribers throughout the United States.

And although the first reports for the calendar year 2012 won't be due until March 2013, those companies that have not begun to publicly disclose physician payments have a lot of catching up to do. While there is still some time to start capturing the data, prudent companies should consider begining the process as soon as possible. The task can be formidable, and there's every possibility that technical solutions may need to be devised, implemented and tested well in advance of the 2013 date for collecting this data. So get ready and go.

State's versions of the Sunshine Act

California

» Applies only to pharmaceutical companies whose medicines are not over the counter

» Covers only HCPs, medical students and formulary committee members

» The pharmaceutical company must have a compliance program including self-imposed limits on gifts and incentives

District of Columbia

» Applies only to pharmaceuticals or manufacturers of prescription drugs, biological, and affiliates

» Covers HCPs and HCIs

» Must disclose Direct to Consumer expenses

» Covers gifts, meals and entertainment, educational programs and materials, travel expenses and any value transfer less than full market value

Maine

» Applies only to pharmaceuticals or manufacturers of prescription drugs, biological, and affiliates

» Covers HCPs and HCIs

» Must disclose Direct to Consumer expenses

» Covers gifts, meals and entertainment, educational programs and materials, travel expenses and any value transfer less than full market value

Massachusetts

» Applies to pharmaceutical and device manufacturers

» Applies only to prescribers licensed in Massachusetts

» Prohibition on meals, gifts, etc.

» Requires adoption of code of conduct, training, investigation of misconduct, etc.

» Must disclose gifts, meals and entertainment over $50

Minnesota

» Applies to wholesale drug distributors (manufacturers)

» Two separate laws: restrictions and disclosures

» Restrictions: No more than $50 gifts and meals per prescriber per year

» Applies to all Minn. practitioners; payments totaling more than $100 per year per practitioner must be reported, including value transfers such as honoraria, consulting services, and educational aid

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