Life Science Compliance Update

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April 04, 2014

Physician Payment Sunshine Act: Effect on Smaller Companies

In our ongoing coverage of the Physician Payment Sunshine Act, we frequently write about the law's unintended consequences. We have noted that the Sunshine Act will hurt innovation by diminishing industry-physician collaboration. Additionally, the Act's administrative burdens add yet another hurdle for life science companies, especially those smaller in size, in their efforts to save lives.

With that in mind, Dave Franchino's recent narrative offers an authentic look into the consequences of the Sunshine Act. His story is told here and we would like to share it with you.

Emphasis in bold is added:

"One interesting and unintended consequence of the Sunshine Act has hit our business specifically.  We do a lot of innovation work in the healthcare and medical device markets and a key element of our design methodology is 'immersing' ourselves with the 'users' of medical products and pharmaceuticals.  That's how we can design and develop tomorrow's healthcare – by studying today's healthcare and looking for opportunities, paint points, mistakes and shortcomings.

When doing this type of work it is customary to pay a modest honorarium to doctors for a few hours of their time –compensating them for the interruption as they allow us to interview them or observe them as they work.

Our research certainly isn't intended to sway doctors into prescribing or using any particular device – we're trying to study behavior and determine habits, needs, features or functions that would improve care.  The flow of information in these interviews and observations is almost entirely from the doctors to us – not vice versa.  And of course most of our research pertains to drugs, products and services that aren't even on the market yet.  There'd be nothing for the doctors to promote even if they wanted to.

But the Sunshine Act can't (understandably) make any distinction between our research to help design new products and experiences – and payments to doctors that might create a conflict of interest with prescribing current treatments.  So our research gets trapped up in the Sunshine Act. Our clients grapple with how to make sure they are fully complying with the intent – and the letter of the agreement.  Seemingly simple tasks get layered with complexity, forms, policies, procedures and confusion.   And our design firm ends up needing to painstakingly and exhaustively document any payments to doctors for our clients.   It's not terrible – we've actually gotten pretty good at it – but it's laborious, time-consuming, expensive and inefficient. Exactly the types of things that the affordable care act was designed to combat.  Hmmm.

And it's getting a bit more challenging to find doctors to agree to talk with us. They're busy and it's becoming a pain.  They need to fill out W9s and sign scary forms.  Increasingly they realize they'll end up in a database and might one day have to explain a payment that could be construed by someone with an axe to grind as a conflict of interest.  So many of them are figuring it's just not worth it. This is a real shame since there's no better way to design solutions to the huge problems facing modern healthcare than to actively involve doctors.  Probably not what the people drafting the Sunshine Act had in mind."

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