After long delay, Sunshine Act regulations are now final

Industry data collection to begin Aug. 1, with a first report to CMS on March 31, 2014

Some 16 months after they were due to appear, the regulations for complying with Section 6002 of the Affordable Care Act, also known as the Physician Payment Sunshine Act, have now been released. At first glance, there appear to be few major changes from when the proposed rules were released last year; CMS received, by its count, 373 comments, but after addressing these comments and after the final review by the Office of Management and Budget, nearly all of the proposed rules appear to be in place.

As befits a complex, 286-page regulation and accompanying notes, reaction was initially guarded. “The AMA will carefully review the new Physician Payment Sunshine Act rule,” said AMA President Jeremy Lazarus, MD. Senator Charles Grassley (R-IA), who had been hectoring OMB to get the rules out as recently as two weeks ago, issued a statement saying “The lack of transparency regarding payments made by the pharmaceutical and medical device community to physicians has created a culture that this law should begin to change substantially. The reform represented by the Grassley-Kohl Sunshine Law is in patients’ best interests. I will stay vigilant about how this law is implemented, especially after the delays seen already. The goal is straightforward, and CMS needs to make certain the reporting and disclosure are complete and clear.”

The original goal of the Sunshine Act was to reveal financial relationships between prescribing doctors and pharma and med device companies, presumably so that patients can assess the impartiality of what their doctors recommend. But it remains to be seen whether this will alter patients’ preferences, because the Act covers not just direct payments (such as meals, entertainment or honoraria) but also indirect payments, such as money flowing from a pharma company, through a contract research organization, to a principal investigator. Owner relationships between prescribing physicians and group purchasing organizations will also be quantified.

Also up in the air are the sunshine rules of a handful of states, including some where the value of product samples (which is a roughly $15-billion expenditure by pharma in the US) is collected; the federal Sunshine Act exempts product samples and, moreover, pre-empts state rules.

Industry appears to have been preparing for the law, despite the delays. A June 2012 survey sponsored by Deloitte found that 66% of life sciences executives surveyed said their companies were either “100% ready” or “50% done and hoping to be ready in time.” That survey also measured physicians’ current involvement: 23% said that less than 1% of their annual income comes from financial relationships with life sciences companies, and 7% said 1-10%. Preparations for the law center on installing IT systems to collect data from sales reps, marketing functions and clinical research operations; staff training and—a surprisingly complex task for the life sciences industry—identifying which healthcare providers are their customers, and avoiding duplication or misallocation of expenditures.