CMS Issues Physician Payments Sunshine Act Proposed Rule

In the December 19, 2011 Federal Register, the Centers for Medicare and Medicaid Services (“CMS”) issued its proposed rule for the Physician Payments Sunshine Act (“Proposed Rule”), which was promulgated as a result of Section 6002 of the Patient Protection and Affordable Care Act (“PPACA”). Section 6002 requires applicable manufacturers of drugs, devices, biological, or medical supplies to report annually to the Secretary certain payments or other transfers of value to physicians and teaching hospitals. Similarly, applicable manufacturers and group purchasing organizations (“GPOs”) must disclose any ownership or investment interest in such entities held by physicians or their immediate family members, as well as information on any payments or other such transfers of value provided to such physicians. Applicable manufacturers must report the required information to CMS by March 31, 2013 and on the 90th day of each subsequent calendar year. CMS, in turn, will publish the reported data on a public website.

According to a CMS fact sheet:

Applicable manufacturers are required to report numerous types of payments to physicians and teaching hospitals. These are outlined in the statute and include categories, such as consulting fees, food and beverages, and research payments. The proposed rule provides special consideration to research payments since collaboration between physicians and teaching hospitals, and manufacturers is essential to the development of new products. Research payments often include payment for all research activities, including patient tests and supplies, and the administration of the study, so the proposed rule outlines procedures to ensure that the nature of these relationships is understood, but there is also sufficient information on the extent of the research relationship. In addition to including information on the nature of these relationships, the statute also protects applicable manufacturer’s competitive interests, by allowing CMS to delay publication of certain research payments until the earlier of FDA approval of the product that is the subject of the research or four years after the payment date. CMS is proposing to require manufacturers to report these payments must be reported in the year they were made, but to delay publication until the earlier of FDA approval or four years has passed.

CMS estimates that about 150 drug or biologic manufacturers, 1000 device or medical supply manufacturers, and 420 GPOs will be required to submit information to CMS on an annual basis as a result of this new requirement.

For more information, please contact Adrienne Dresevic, Esq. or Carey F. Kalmowitz, Esq. at (248) 996-8510 or (212) 734-0128 or visit the HLP website.