Numerous physicians consult for medical device, pharmaceutical and medical supply manufacturers, receive training in the use of products, receive other medical education, or have other types of relationships in which some form of payment or other remuneration is received from these companies. Many people have concerns that these types of relationships and payments create a conflict of interest for physicians, causing physicians to prescribe, utilize, or recommend products they would not otherwise endorse, which in turn increases the cost of care. Others argue that such payments fund research that may not otherwise be available, and regulation of these payments may slow medical advancement. Regardless, physicians, hospitals, as well as pharmaceutical, medical device and medical supply manufacturers must be aware of federally mandated disclosure requirements on the horizon.
In October 2008, the Medicare Payment Advisory Commission (MedPAC) recommended that Congress establish a national database to publicly reveal financial relationships between physicians and the pharmaceutical industry. On January 22, 2009 Senators Chuck Grassley (R-IA) and Herb Kohl (D-WI) introduced the Physician Payments Sunshine Act of 2009 as a follow-up to a bill they originally introduced in 20071. The 2009 bill requires certain drug, device, and medical supply manufacturers to disclose anything of value given to doctors, including compensation, gifts, honorarium, speaking fees, consulting fees, travel, services, dividends, profit distributions, stocks or stock option grants, or ownership or investment interests. Companies would be required to submit information to the Department of Health and Human Services regarding (i) the name of the physician receiving payment; (ii) the business address of the physician; (iii) the value of payment; (iv) the dates on which payments were made; (v) a description of the type of payment; (vi) the reason for the payment; and (vii) the name of the drug, device, biological, or medical supply the payment was related to. Information would be reported online beginning in March 2011 and quarterly thereafter. As introduced, the bill requires manufacturers to disclose information relating to payments greater than $100. Penalties for failure to report include civil monetary penalties ranging from $1,000 to $10,000, with a cap of $150,000 per year. Those who knowingly fail to report may be faced with increased fines of $10,000 to $100,000, with a cap of $1,000,000. Information would be searchable by the public on an internet website. The bill would pre-empt any state laws requiring disclosure of payments to physicians. Similar efforts to pass a disclosure bill in the House of Representatives are underway.
Although the 2009 Senate bill is only in the first step of the legislative process, on March 2, 2009 MedPAC reiterated its prior recommendations regarding the benefits of reporting. On April 28, 2009 the Institute of Medicine published a report specifically encouraging Congress to create a national reporting program. Industry groups including PhRMA and the Advanced Medical Technology Association (AdvaMed), as well as several large medical device and pharmaceutical manufacturers believe that a physician disclosure bill is imminent and are lobbying hard to make sure that any legislation passed is favorable to their industries. Upon the effectiveness of such disclosure requirements, all payments to physicians will be under increased scrutiny. Physicians must be aware that the details of any relationships they enter into with medical device, pharmaceutical and medical supplies manufacturers, as well as any gifts or other remuneration they receive from such companies may soon be available for public scrutiny, and should enter into such relationships or receive such remuneration accordingly. Manufacturing companies must be aware that they may soon have the obligation to publicly disclose these relationships and payments and act accordingly. Hospitals must be aware of these changes as they will affect hospital medical staffs. All parties should continue to monitor the proposed federal legislation.
Brynne R. Goncher is an associate in the firm’s Healthcare Practice. Ms. Goncher concentrates in representing healthcare providers in various business and regulatory matters. Ms. Goncher received her bachelor’s degree from the University of Pennsylvania and both her law degree and master of public health administration from Emory University.
1S. 301, 111th Cong. (2009).