This client alert provides a brief update on the status of the regulations to be issued pursuant to § 6002 of the Patient Protection and Affordable
Care Act (PPACA), which is commonly known as the Physician Payment Sunshine Act (“Sunshine Act”).
This alert also provides an update on certain state laws related to
marketing expenditures by life sciences companies. The Sunshine Act requires covered manufacturers to
track and report certain financial and ownership relationships with physicians and teaching hospitals. The Sunshine Act requires the Center for
Medicare and Medicaid Services (CMS) to issue regulations that provide details on the process and requirements for reporting of physician payments and
financial relationships as required by the Sunshine Act provisions. The Sunshine Act requires the government to issue regulations no later than
October 1, 2011, to allow reporting entities time to adapt before January 1, 2012, when such entities are required to commence data collection. As of
November 8, 2011, CMS has not yet issued regulations or provided stakeholders with a timetable in which it will issue these regulations.
On October 3, 2011, Senator Herb Kohl, the ranking member of the Senate Special Committee on Aging,
issued a letter to CMS Administrator Donald Berwick expressing his
dismay at the delay in the issuance of these important regulations. Commissioner Berwick responded without providing a timetable for issuance.
Senator Kohl and Senator Charles Grassley commented on the
commissioner’s response, expressing disappointment over the lack of new information provided by the commissioner in his letter. Grassley labeled the
response “inadequate” and concluded his comments by stating, “I’ll continue to press for answers from CMS.” Additionally, a coalition of medical
device and pharmaceutical trade organizations has
urged CMS to issue the Sunshine regulations
without further delay.
Until CMS issues the regulations providing direction on how and what to report to CMS, pharmaceutical and medical device companies are left with only
the statutory guidance to prepare for the January 1, 2012, start date for data collection. The statute leaves a number of questions unanswered
regarding what information must be collected, and how reports must be made. For example, CMS may define additional categories and forms of payment to
be reported (above the categories and forms provided in PPACA), and the definition of “group purchasing organization” is subject to regulatory
definition, leaving many companies in the dark regarding whether they will need to make disclosures regarding physician ownership. Upon promulgation
of regulations, reporting companies may need to dedicate significant time and money to customize systems, train employees and ensure compliance with
the requirements of the rules.
State Update: Vermont
Vermont law prohibits pharmaceutical and medical device manufacturers from providing gifts to healthcare professionals. Additionally, Vermont requires
registration with the Attorney General’s Office and reporting of certain expenditures, including expenditures on samples and clinical trials. Vermont
and processes for its gift restriction and sample reporting requirements to be effective in 2012. Notably, the reporting requirements apply not only
to pharmaceutical manufacturers but also to medical device companies. Certain of the Vermont reporting obligations are preempted by the Sunshine Act
but some obligations remain. The Vermont Office of the Attorney General will hold a conference call to obtain feedback on the draft guidance on
Wednesday, November 16, 2011, at 1 p.m. (EST). Participants can join by dialing 888.757.2790 (Pass Code: 134936#).
State Update: Connecticut
In 2010, Connecticut enacted Senate Bill 428, which requires pharmaceutical and medical device manufacturers to adopt a compliance plan and take
certain additional actions. Connecticut requires all medical device and pharmaceutical manufacturers to adopt a marketing code of conduct that is
consistent with the AdvaMed Code, the PhRMA Code and the compliance guidance issued by the United States Department of Health and Human Services.
Additionally, the state of Connecticut requires pharmaceutical and medical device companies to establish an annual limit of marketing dollars that will
be expended on individual physicians. This limitation is similar to the requirement that has been promulgated by the state of California.
State Update: Maine
On July 8, 2011, the state of Maine officially repealed its pharmaceutical transparency and reporting requirements. Me. Rev. Stat. Ann. tit. 22, §
2698-A, required manufacturers and labelers that employed or used marketing representatives in Maine to submit an annual report of certain marketing
costs to Maine’s Department of Health and Human Services. The Maine law would have largely been preempted by the federal disclosure law. Following
repeal, Maine no longer has any marketing transparency reporting requirements, code of conduct or other marketing limitations that apply to
pharmaceutical and medical device manufacturers.