Life Science Compliance Update

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January 09, 2014

Physician Payment Sunshine Act: CMS Responds to Congress that Medical Textbooks and Peer-Reviewed Journals Must Be Reported

The Centers for Medicare and Medicare Services (CMS) recently stated that medical textbooks and journal articles must be reported under the Sunshine Act (Open Payments). By law, drug and device manufacturers are required to categorize each payment or transfer of value made to physicians into one of 15 categories, and report them to the Secretary of Health and Human Services. The general public will have access to the information September 31, 2014. The statute, however, lists several exclusions, including "educational materials that directly benefit patients or are intended for patient use," which do not have to be reported. CMS apparently does not believe medical textbooks and journal articles fall within this educational carve out.

In late November 2013, a bipartisan group that included 23 members of the United States House of Representatives sent a letter to CMS Administrator Marilyn Tavenner, seeking clarification on the textbook and journal issue. The members of Congress expressed concern that having these items reported would prevent timely distribution of the information to clinicians, and urged CMS to place textbooks and scientific peer-reviewed medical journals among the items excluded from Sunshine reporting requirements. "The importance of up-to-date, peer-reviewed scientific medical information as the foundation for good medical care is well documented," the letter stated.

Furthermore, Congress had already specifically excluded "educational materials that directly benefit patients or are intended for patient use," from reporting requirements. CMS' interpretation that reprints and textbooks do not fall under the exclusion would be "inconsistent with the statutory language on its face, congressional intent, and the reality of clinical practice where patients benefit directly from improved physician medical knowledge."

Marilyn Tavenner responded in a letter to the 23 congressman that the CMS agrees that peer-reviewed journal reprints and medical textbooks are educational to physicians. "However," she stated, "we do not believe these materials fall within the statutory exclusion." CMS believes these items only have "downstream benefits" for patients. Medical textbooks and journals are "not intended for patient use or directly beneficial to patients," as compared to "wall models and anatomical models," which are intended to be used with the patient and are excluded from reporting requirements. Thus, medical textbooks and peer-reviewed journals must be reported either as "education" or a "gift," depending on the circumstances of the transfer of value.

John Kamp, Executive Director of the Coalition for Healthcare Communication, expressed strong disagreement with the CMS' response:

This reading of the statute by Ms. Tavenner is a choice by CMS, not a result that is compelled by the words of the statute. It's very disappointing that the Administrator of CMS makes such an unfortunate choice. Quality physician education and patient care point to a much different choice.

The CMS interpretation is troublesome because the reporting requirement presents a disincentive for clinicians to accept high-quality, independent peer reviewed journals. Tavenner stated in her letter that "the mere existence of a financial relationship between the industry and physicians does not necessarily signify an inappropriate relationship." The reporting requirements are "not meant to encourage or discourage any particular transaction or type of transaction; it simply reports the information in a neutral and non-judgmental way for the use of physicians, patients, researchers, or any other member of the public."

Tavenner's response ignores the fact that broad generalizations about Open Payments information will unquestionably chill or call into question beneficial interactions between physicians and manufacturers. This is especially unfortunate in the area of medical textbooks and scientific journals, where clear Congressional intent points to excluding such materials under the educational provision.

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