Life Science Compliance Update

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November 29, 2012

Physician Payment Sunshine: Final Rule Sent from CMS to OMB for Final Review

Throwing a ball
According to the Office of Management and Budget Website the Physician Payment Sunshine Final Rule has been completed by the Centers for Medicare and Medicaid Services (CMS) and has been sent over to OMB for review.   The OMB review is conducted by the Office of Information and Regulatory Affairs (OIRA) and will look at the likely economic impact of the rule on the government and to industry.  Once the review is done, it may be sent back to CMS for changes or issued within 90 days.

The final rule has to be issued 90 days after receipt of the final rule by OMB which is Monday, February 25, 2013.  Typically, the review period at OMB is 30 days but given the number of rules in front of this regulation currently at the OMB, it could take slightly longer.

Earlier this fall the Senate Select Committee on Aging held a round table to encourage  CMS to complete the rule.  In addition, stakeholders including the American Medical Association, industry and consumer groups have recently sent letters asking for CMS to issue the rule in time to be implemented in 2013. 


RIN: 0938-AR33

TITLE: Transparency Reports and Reporting of Physician Ownership of Investment Interests (CMS-5060-F)

STAGE: Final Rule


RECEIVED DATE: 11/27/2012



 Thanks to King & Spalding for the link to the OMB website.

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Obamacare or the Affordable Care Act (ACA) has the laudable goals of extending health care insurance coverage and reducing overall health care costs. However, hidden in the over 2400 pages of this bill are a number of provisions, many as yet unrecognized, which will have detrimental effects on our national economy, multiple parts of the health care industry and most medical practitioners.

One of the most onerous aspects of the ACA is the Sunshine Act which is intended to bring transparency to any and all financial relationships between industry and physicians. This ACA provision mandates that everything a drug company or medical device maker provides to a physician must be disclosed and, after September 30, 2013, published in detail on the internet. These disclosures must include pens, thumb drives, shirts and meals, as well as grants for research or travel to present data at meetings and consultant fees for proctoring cases in which new devices are used by physicians unfamiliar with them. The purpose of this provision is to expose any financial bias or conflict of interest which might increase costs or influence and thereby corrupt research findings, medical education and ultimately medical practice.

On its face governmental involvement in this area might seem justified by the facts that such financial conflicts might lead to care which is unnecessary or harmful to patients (the public), and that government and the taxpayer are largely paying the bills. Moreover, there have been a few flagrant abuses of the industry-doctor financial relationship in which conflicts of interest have risen to the level of gross commercialism with physicians receiving outlandish sums for providing fraudulent data or promoting drugs or products in a way unjustified by the scientific evidence. So the goal of providing more transparency to the financial relationships between industry and doctors seems a reasonable one.

Don’t be fooled. The Sunshine Act’s specifics are anything but reasonable. Doctors’ judgments and actions are clearly not going to be corrupted by a pen, a thumb drive or a meal. It is also reasonable that physicians be compensated fairly for the time spent away from their practice in providing consultant services, participating in educational activities or conducting industry sponsored research, some of which produces valid and important scientific data unobtainable without industry support. The JUPITER trial is one such example, proving the value of statins in decreasing strokes and myocardial infarctions in high risk patients with normal lipid profiles. To lump funds received from industry for such meritorious activities together with excessive financial rewards for unjustified promotional activity, as the Sunshine Act’s reporting will do, is unfair. Doctors should not be presumed to be corrupt just because they are paid for legitimate services – just as are all other professionals.
In addition, the Sunshine Act will require industry to expend many millions of dollars in tedious record keeping and documentation of multiple miniscule details. This plus the implication of taint will discourage relationships between industry and physicians which will have many detrimental effects on medical education and more importantly on US medical innovation. The latter is already lagging far behind that in other parts of the developed world because of stringent FDA requirements. All these unintended consequences of the Sunshine Act will have a profound negative effect on patient care in our country and thus be harmful to the US public at large.

There are two possible solutions to the problems resulting from the Sunshine Act in its present form. The first is to remove the negativism and unfairness of its reporting requirement by several modifications. The requirement of reporting small and trivial items like pens, thumb drives and meals should be eliminated. Reporting of only substantial sums in excess of $10,000 or $25,000 should be required. This would decrease markedly the administrative burden of Sunshine reporting. Moreover, it should be mandated that all funds received from industry by a physician not be listed as a lump sum, but be qualified by the time involved and the type of service rendered. Just because a physician receives a large payment does not mean it is evil, a bribe or unjustified. In all other fields, excellence, creativity, knowledge, contribution and time commitment are rewarded financially, and this should be the case in the industry-doctor relationship arena as well.

A second solution to fix the Sunshine Act and make it fair is to apply all its provisions to Members of Congress and all other elected and non-elected employees of our Federal Government. After all, just like medical practitioners and those in the health care industry, our federal officials’ and employees’ actions impact on the well-being of our society, and all these individuals in government are paid by the taxpayers. So let’s be fair and apply the same Sunshine Act reporting requirements to those in government to avoid corruption of their actions by unfair and opaque conflicts of interest.

Thus, the Sunshine Act should be fixed. More importantly the transparency of its requirements should be allowed to shine on Congress and other Federal employees who are paid by the public to support its interests. If these two corrective actions cannot be taken, the Sunshine Act should be done away with entirely.

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