Ontario Open Payments: Proposed Rule for the Health Sector Payment Transparency Act

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Pharmaceutical and Device Payment Transparency is making its way to our Northern neighbor, Canada. On December 12, 2017, the Health Sector Payment Transparency Act, 2017 (HSPTA) received Royal Assent and became part of the Strengthening Quality and Accountability for Patients Act, 2017. The passage and enactment of the HSPTA allows Ontario to claim the title of the first Canadian province or territory to require the reporting of transfers of value between the pharmaceutical and medical device industry to health professionals and hospitals. The information must be reported to the Minister of Health and Long-Term Care for publication in an online database.

Recently, the Ontario government issued draft regulations that lay out how the transparency law is expected to work, including the way anyone will be able to search the name of a health charity or non-profit in the online database to access funding information.

HSPTA was enacted in an attempt to strengthen the transparency and increase patient trust in the health care system. Under the Act, payors (those that provide a transfer of value to a recipient in relation to “medical products”) will be required to report information about both direct and indirect transfers of value over a prescribed threshold. Transfers of value, as defined in the legislation, is overly broad and includes items such as meals and hospitality, travel expenses, financial grants, referral fees, items provided on a value-added basis in connection with a procurement, renovations or leasehold improvements, and fees paid for consulting on speaking events. Medical products is also broadly defined and includes drugs, medical devices, or other prescribed products used in the healthcare system.

Different from the Open Payments system we are used to in the United States, the definition of a payor includes:

  • a manufacturer that sells a medical product under its own name or trademark, or a name or mark that is owned or controlled by the manufacturer;
  • a person who fabricates, produces, processes, packages or labels a medical product on behalf of a manufacturer;
  • wholesalers, distributors, importers or brokers facilitating the sale of medical products;
  • pharmacies;
  • laboratories or specimen collection centers;
  • marketing firms and individuals performing activities to market or promote a medical product;
  • persons who organize continuing education events for members of a health profession on behalf of a manufacturer; and
  • any prescribed person or entity.

The proposal excludes the following transactions from the reporting requirements:

  • Those with a dollar value of less than $10;
  • Salaries and benefits provided as part of employment;
  • Medical products intended to be provided to patients free of charge;
  • Educational materials and items intended for use within a clinical setting;
  • Compensation for expert testimony or other services with respect to a legal proceeding; and
  • Benefits that are provided by a drug manufacturer in accordance with ordinary commercial terms as set out in the regulations under the Ontario Drug Benefit Act.

Also included in the proposed regulation is a correction process, which includes the following:

  • A payor is required to notify recipients in writing of the information it intends to report to the Minister about each transfer of value it provided to the recipient in the previous calendar year.
  • The payor must provide the information to the recipients no later than March 31st and provide a minimum of 45 days for the recipient to review the information before it is submitted to the ministry.
  • If the recipient wishes to have the information corrected, the recipient must ask the payor to correct the information and provide substantiating materials to support the request.
  • Once the payor receives a request to correct information, the payor must respond to the recipient with its decision within 30 days.
  • If the payor agrees with the recipient’s request to correct information, the payor must provide the corrected information to the ministry within 15 days.
  • If the payor denies the recipient’s request to correct information the payor must, within 15 days, submit to the Minister a request to mark the information as “disputed”.
  • The recipient or the payor can submit a request to the Minister to correct information up to 12 months after the information has been published.

Both payors and recipients are required to retain all records of any qualifying transactions. Payors would then have to report transfers of value to the Minister of Health and Long-Term Care no later than June 30th of the following calendar year via an electronic data collection platform created and maintained by the Minister. The ministry is proposing that the Act and regulation would come into force on January 1, 2019, with the first annual reporting to the ministry from payors required by June 30, 2020.

However, while both parties to any transfer of value are required to retain records, the law places the burden for reporting the payments on the medical-device makers, not the recipients. Durhane Wong-Rieger, the president of the Canadian Organization for Rare Disorders (CORD,) a national network of patient-advocacy groups, said she has “no problem” with revealing the specifics of CORD’s funding, as long as the administrative burden of reporting the information is not placed on small non-profits such as those she represents.  The inclusion of continuing medical events is unique to Canada as there is still no viable rigorous self-regulation for CME in Canada as there is in the United States.

The regulations are open for public comment until April 5, 2018. You can submit comments here.

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