Life Science Compliance Update

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February 23, 2015

Market Research and the Physician Payments Sunshine Act: Has Physician Participation Declined Due To Open Payments?


The market research space is an interesting one as far as Sunshine reporting is concerned because it implicates many of the same challenging “indirect payment” issues we have seen related to continuing medical education (CME). This article describes a number of those reporting challenges and also looks at a recent survey that sought to measure physicians’ current awareness of Open Payments and to assess the impact the release of the data was having on physician participation in manufacturer sponsored market research.

Market Research and Sunshine – Indirect Payments and the Indirect Payment Exclusion

One of the most difficult aspects of compliance with the Sunshine Act is accounting for "indirect payments" that pharmaceutical and device manufacturers make to third parties—such as market research firms—that end up going to physicians (covered recipients).

Indirect payments are defined in the Sunshine regulations as transfers of value made by a manufacturer to a covered recipient through a third party, where the manufacturer “requires, instructs, directs, or otherwise causes the third party to provide the payment or transfer of value, in whole or in part, to a covered recipient.”

Manufacturers must report indirect payments under the Sunshine Act, but there is an “indirect payment exclusion,” that excludes otherwise reportable indirect payments where the manufacturer is “unaware of the identity of the covered recipient.” In implementing the Sunshine law, the Centers for Medicare and Medicaid Services (CMS) decided to create an “ongoing” awareness standard. Thus, indirect payments are only excluded if the manufacturer does not find out the identity of the covered recipient during the reporting year or by the end of the second quarter of the following reporting year.” CMS specifies that manufacturers may not act in “deliberate ignorance or reckless disregard” of a physicians’ identity.

In CMS’s explanation to the regulation, they stated:

“[W]e will not consider an applicable manufacturer to be acting in deliberate ignorance or reckless disregard of a covered recipient’s identity in situations when the reason a payment or other transfer of value is being made through a third party is that the identity of the covered recipient remains anonymous. For example, an applicable manufacturer may hire a market research firm to conduct a double-blinded market research study, which includes paying physicians $50 for responding to a set of questions. The applicable manufacturer clearly intends a portion of the payment to be provided to physicians, but given that the reason for the third party’s involvement is specifically to maintain the anonymity of the respondents and sponsor, we do not intend this to be considered a reportable indirect payment or other transfer of value.”

Like many of CMS's Sunshine examples, however, their particular language leaves a lot to be desired for stakeholders who regularly deal in the space. Here, the exclusion, as written, clearly applies to double-blind research, where neither the manufacturer nor the physician knows the other's identity. CMS provided less clarity, however, as to single-blind research, where the pharmaceutical or device manufacturer doesn't know the identities of the physician participants but the participants may know, or may infer, the identity of the manufacturer. 

Amidst the regulatory uncertainty, market research companies were unsure how either manufacturers or physicians would react--from a funding and a participation perspective, respectively. MedPanel, a market research company for the life science industry sought to answer these questions in a recent survey

Market Research Survey

Late last year, MedPanel invited expert physicians to participate in a survey about the Sunshine Act and the Open Payments website. A total of 461 physicians across diverse specialties contributed their perspective. The participants received no honoraria for their answers.

Awareness of the Sunshine Act and Open Payment website: Only 37% of surveyed physicians believed they were "very familiar" with the Sunshine Act, with 47% stating they were "somewhat familiar," and still 16% indicating they were not at all familiar with the law. Fewer physicians were aware of the Open Payments website than were aware of the Sunshine Act, with almost one-third of physicians having no awareness of the website. The MedPanel article notes that the primary way surveyed physicians heard about Open Payments was from the news (79%), while a much smaller proportion found out through a compliance officer or a colleague's suggestion. View our articles on the media coverage of the Sunshine Act, here and here

What Drove Physicians To Open Payments? "For those physicians who had visited the Open Payments website since launch, curiosity about what was reported about themselves, and checking for inaccurate reports were the two major drivers," notes the report. For physicians who had not visited Open Payments, 53% said it was because they didn’t care what had been reported about them, while 18% said they were sure nothing had been reported. Nearly half of physicians said they had not visited simply because they had not found the time to do so. It will be interesting to see whether there is an uptick this year in dispute resolution as more news outlets have covered and scrutinized this data, and potentially even exposed incorrect payments. 

Accuracy of Payment Data: Of the surveyed physicians who visited the Open Payments website, about half found inaccuracies in the reported data, with 30% of physicians reporting that they had been attributed payments by manufacturers that the physicians had not been aware of. Additionally, 14% of physicians said that payments they know they received were not reported in the system.

Impact of Payment Disclosures on Market Research Participation: "As one would expect, passage of the Physician Payment Sunshine Act did not drive an increase in paid market research or consulting participation, with only 3% of surveyed physicians indicating such a trend," stated the report."The large majority of our expert physicians say that their participation has remained stable since passage of the Act, but 21% of physicians say that their participation has decreased." MedPanel speculated that physicians' fear a stigma attached to the payments maybe driving some of this behavior.


With only five months of data so far published in the system, it is tough to know what the true deterrent effect the Sunshine Act will be on various industry-physician interactions. Even with third party intermediaries keeping a firewall between manufacturers and physicians, both manufacturers and doctors have moved tentatively due to ambiguity around Sunshine reporting. Hopefully within the next few reporting cycles, the process is demystified a bit and accredited CME, blinded market research, and other important informational exchange will continue to thrive.  


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