Life Science Compliance Update

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June 22, 2009

Physician Payment Sunshine Act: Democrat House Draft for Healthcare Reform -- Physician Payment Sunshine Provisions


On Friday the House released its discussion draft of the health care reform bill and included in the draft is a Physician Payment Sunshine Provision.  Which requires reporting of payments by manufactures, and distributors to all types of healthcare providers.

 Overall, the provisions incorporated all the MedPAC recommendations including: adding a laundry list of covered recipients, added drug samples,and reporting of reporting of ownership interest by physicians in hospitals and other entities that bill Medicare.  It also replaced aggregate reporting of $100 with a de minimus of $5.00.  This version does not include an exclusion for small business, or prevision for pre-emption of state laws.

In addition, they added some additional provisions not seen in the MedPAC recommendations, including:

·         Fines for knowing violations up to $1 million or 0.01% of your total revenue;

·         Enforcement through State Attorneys’ offices; and

·         A Definition of distributor that includes any entity engaged in the marketing or distribution of a covered drug or device.

·         In the House version, disclosure on payments and transfers of value will begin in 2011. 

Companies will report:

·         Recipient Information;

·         Name;

·         Business address;

·         Physician specialty;

·         National provider identifier;

·         Value and date; and

·         Name of related drug, device or supply if available.

Description of Payment:

·         Cash or cash equivalent;

·         In-kind items or services; and

·         Stock, stock options, or other ownership interests.

For Drug Samples (In addition to the recipient information):

·         Product Name;

·         Number;

·         Date; and

·         Dosage units of the samples.

Aggregate Reporting

            Includes the aggregate amount of all payments or other transfers of value.

Special Rule

If the payment is designated to another entity (charity, institution), the payment is disclosed under the name of the covered recipient.

Items required to be reported:

·         Gifts, Food, or Entertainment;

·         Travel or trips;

·         Honoraria;

·         Research funding or grant;

·         Education or conference funding;

·         Consulting fees;

·         Ownership or investment interest; and

·         Royalties and license fees.

Clinical Trials

·         Reporting upon date of FDA approval; or

·         Within two years of payment (whichever is first).


·         Payments of less than $5.00;

·         Loaned equipment for 90 days or less;

·         Items provided under a warranty agreement, including replacement of device;

·         In-kind items used for charity;

·         Dividends or other profit sharing distributions in publicly traded securities or mutual funds; and

·         Employee compensation (for those physicians working in industry).

Covered Recipients

·         Physicians;

·         Physician practice groups;

·         Any other prescribers of a drug, device, or medical supply;

·         Pharmacies or pharmacists;

·         A health insurer, group health plan, including employees of such plans;

·         Pharmacy benefit managers;

·         Hospitals;

·         Medical schools;

·         Sponsors of a Continuing Medical Education program;

·         Patient advocacy or disease specific groups;

·         An organization of healthcare professionals; and

·         Biomedical researchers.

Physician Ownership in Healthcare Facilities

·         Reporting of shares of ownership in healthcare facilities includes physicians immediate family members.                 

Information available on a website:

·         Searchable;

·         Clear;

·         Understandable;

·         Easily aggregated and downloaded;

·         Description of enforcement actions and penalties;

·         Contains background information on industry physician relationships;

·         Information on remuneration for clinical trials;

·         Other information from the HHS Secretary; and

·         Drug samples will only be available to researchers or legitimate business purposes.


·         Failure to report:

o   Not less than $1,000 or greater than $10,000 for each payment; and

o   Limit up to $150,000 per year.

·         Knowing failure to report:

o   Not less than $10,000 or greater than $100,000 for each payment; and

o   Limit up to $1,000,000 or if greater 0.01 percent of the total annual revenue of the manufacturer, distributor, or entity.

This version without pre-emption, serves as a floor for states to add more restrictions. 

The vagueness of the term distributor, could apply to every company working in advertising and marketing.   This could lead to double or even triple reporting of physician payments.

For CME it will require reporting of grants to CME providers, but would not require reporting of attendees or faculty.

This is by far the most restrictive version introduced to date, the house which did not solicit input on this issue is much more dictatorial in their position than the version being worked on by Senators Baucus and Grassley.  Transparency has always been a secondary issue in the House of Representatives. 

It will be interesting to see the differences between this version and Senator Baucus version which be included in his health care reform package to be released later this week.


Health Care Reform House Discussion Draft: Physician Payment Sunshine Provisions

Physician Payment Sunshine Act: Senate Finance Committee Grassley-Baucus Plan 2009

Physician Payment Sunshine Act: MedPAC Sends Formal Recommendations to Congress

Physician Payment Sunshine Act: Key Differences 08 - 09

Physician Payment Sunshine Act 2009 Introduced

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