Legislative: Sunshine on a cloudy day: Act would establish national standards for reporting payments

March 1, 2009

"Doctors may need to reconsider practices of accepting financial compensation or significant gifts from drug, device and biologic companies if bipartisan legislation introduced in the Senate in January gains momentum and is approved. "

Key Points

The Physician Payments Sunshine Act of 2009 would establish a nationwide standard requiring drug, device and biologic makers to report payments to physicians to the Department of Health and Human Services, and for those payments to be posted online on a public, searchable Web site no later than Sept. 30, 2011.

The bill marks a continued effort by Sen. Chuck Grassley (R-Iowa) and Herb Kohl (D-Wisc.) to achieve public disclosure of financial relationships between physicians and the drug, device and biologic industries. The legislation is similar to a bill they introduced two years ago, which was never considered.

The measure also tracks recommendations to Congress last November by the Medicare Payment Advisory Commission (MedPAC), which said that physician surveys, state records and legal cases show that "financial relationships between physicians and pharmaceutical and device manufacturers are pervasive."

According to MedPAC, a physician survey showed that in 2003 and 2004, more than 75 percent of physicians had received meals or drug samples from drug manufacturers in the preceding year, and more than 25 percent were paid for consulting, lectures or enrolling patients in clinical trials.

Conflicts

Acknowledging that physician-industry relationships can lead to advances in medical technology and better patient care, MedPAC said they "may also create conflicts between physicians' obligation to do what is best for their patients and the commercial interests of drug and device manufacturers."

The MedPAC report said that physician interactions with the pharmaceutical industry are associated with rapid prescribing of newer, more expensive drugs, decreased prescribing of generic drugs, and physician requests to add drugs to a hospital formulary.

The commission told Congress that a federal law requiring drug and device companies to publicly report their financial ties to physicians "could encourage physicians to reflect on the propriety of those relationships, perhaps discouraging inappropriate arrangements."

"Shedding light on industry payments to physicians would be good for the system," Sen. Grassley tells Dermatology Times.

"Transparency fosters accountability, and the public has a right to know about financial relationships," he says.

Support

Sen. Kohl says that since the bill was first introduced two years ago, "there has been a groundswell of support from every corner," noting that "patients want to know that they can fully trust the relationship they have with their doctor."

Sen. Kohl, chairman of the Senate Special Committee on Aging, says he is "confident" the bill will be approved during the current Congress.

Reacting to the new Sunshine Act, Pfizer states, "We agree with the senators that sharing this information publicly in a simple, uniform manner is the best way to provide a complete picture."

Merck & Co. supported the earlier legislation, and Eli Lily announced it would expand a planned online registry detailing payments it makes to U.S. physicians to include the bill's provisions by 2011.

Requirements, penalties

The Sunshine Act requires disclosure of payments to all physicians and physician practices, including compensation, food, entertainment or gifts, travel, consulting fees or honoraria, funding for research, funding for education, stocks or stock options, ownership or investment interest, and any other economic benefit described by the Secretary of Health and Human Services.

Penalties for noncompliance would include fines of up to $10,000 for each transfer of value not reported (not to exceed $150,000 annually) and up to $100,000 for knowingly failing to report (not to exceed $1 million annually).

Former congressional aide Bob Gatty covers Washington for businesses specializing in healthcare and related issues. He has written Dermatology Times' Washington Report for more than 20 years, and welcomes comments and suggestions. Mr. Gatty may be reached at: bob@gattyedits.com