Here comes the Sun(shine Act) … and it’s not going to be alright for pharma and device reps

2:49 pm by | 5 Comments

Sunshine ActThey say it’s better late than never.

The Centers for Medicare and Medicaid finally issued the final rules related to the Physician Payment Sunshine Act   on Friday, nearly three years after the law that required its creation was signed in March 2010.

Medical device manufacturers and group purchasing organizations need to begin collecting data related to how they compensate physicians starting Aug. 1, and report those to CMS by March 1, 2014.

The federal law pre-empts any state laws addressing such relationships, a big relief to medical device manufacturers like Medtronic who have operations nationwide and would have been hamstrung by 50 different versions. Medtronic has been supportive of the federal bipartisan bill and fretted loudly at CMS’ delay in issuing the final regulations.

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“In May 2010, Medtronic was one of the first companies to voluntarily disclose consulting and royalty payments to U.S. physicians on our public website, well ahead of these new federal disclosure requirements under the Affordable Care Act,” said Cindy Resman, a Medtronic spokesmwoman via email Monday. W”e supported the Physician Sunshine Payment Act when it was first introduced and are pleased that final regulations have now been released.”

This bit of regulatory burden is going to cost the industry $269 million the first year and $180 million annually in subsequent years, according to CMS estimates.

“The burden is not trivial,” said Gunter Wessels, partner and healthcare principal at consulting firm Total Innovations Group Inc. “This new layer of regulatory compliance will have some adverse consequences; providers will have less access to educational meeting support, and educational grants are going to affected.”

Not to mention that life as a sales and pharma rep is not going to be easy.

“It’s going to be a lot less ‘fun’ to be a pharmaceutical and device rep in this era. The parties, events, and luncheons are going to be heavily constrained,” Wessels said.

Still, the benefits outweigh the burden, at least as Wessels sees it.

“Vendors need to be able to clearly communicate how their solutions solve a real healthcare problem, whether it’s an unmet clinical need, an operational improvement, or a financial risk mitigation,” Wessels said. “It will be very difficult to gain adoption of a product or service because there is some alternative financial incentive; a very good thing for the industry.”

Medical device attorney Mark Gardner with DuVal & Associates is less sure about that. He believes that aside from being expensive, it might chill innovation.

“Physicians, like most Americans, don’t want their private affairs known to the public,” Gardner said. “Some of the best physicians are those that will show up in the public database. Perhaps some will no longer help companies with their free time due to privacy concerns.”

Still, he is swallowing the bitter pill that the several hundred page rule represents and looking on the bright side.

“We noted some good things while perusing it,” he said. “For example, companies will not be responsible for reporting payments for grants for accredited medical education. We are happy to see this.  We were also happy to see how CMS will require allocation of meals for example. If a company is holding a meeting and providing food buffet style, the  physician attending will not be responsible for having all the payments to his staff reported under his ID.”

 

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Arundhati Parmar

By Arundhati Parmar

Arundhati Parmar is the Medical Devices Reporter at MedCity News. She has covered medical technology since 2008 and specialized in business journalism since 2001. Parmar has three degrees from three continents - a Bachelor of Arts in English from Jadavpur University, Kolkata, India; a Masters in English Literature from the University of Sydney, Australia and a Masters in Journalism from Northwestern University in Chicago. She has sworn never to enter a classroom again.
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5 comments
TAXPAYER234
TAXPAYER234

DOES THE SUNSHINE ACT APPLY TO POLITICIANS AT THE STATE AND FEDERAL LEVEL OR ARE POLITICAL CONTRIBUTIONS EXEMPT BECAUSE OF THE KNOWN HIGH  INTEGRITY LEVELS OF SO MANY OF THE POLITICIANS. WHY ARE HEALTHCARE PROFESSIONALS SINGLED OUT???aND LAWYERS FOR EXAMPLE ARE TOTALLY  IGNORED. NOT COMPLAININGJUST CURIOUS

Medrep69
Medrep69

This is not fair because the independent dealer reps can do whatever they want in this industry. This puts physicians "under the table" and gives a huge competitive advantage to the IDN. Doctors are going to flock to the dealer who wines and dines them with their big money and no regulation. Working for a device company any more is just idiotic. Good luck being hamstrung by Sunshine when IDNs kill the company rep.

WCIR
WCIR

The Pharma and Medical Device organizations can look at the Sunshine Act in two ways –  Either as a threat of stiff fines on non-compliance or as an opportunity to analyze their spends carefully for spend optimization. This presents a case to get into the details of spends, derive insights and finally arrive at ways to optimize spends. A holistic relook at spend management is necessary for companies to achieve the efficiency and transparency outlined by the act. A recent paper from Wipro proposes an approach to doing just this  and also discusses in detail the implications for companies.(http://www.wipro.com/Documents/transparency_in_physician_payments-leads-to_business_efficiency.pdf )

WCIR
WCIR

The Pharma and Medical Device organizations can look at the Sunshine Act in two ways –  Either as a threat of stiff fines on non-compliance or as an opportunity to analyze their spends carefully for spend optimization. This presents a case to get into the details of spends, derive insights and finally arrive at ways to optimize spends. A holistic relook at spend management is necessary for companies to achieve the efficiency and transparency outlined by the act.

Rob Gregg
Rob Gregg

Ask me about the Sunshine Act solution we put together for a prominent west coast pharma company.

Rob Gregg

949 813 3503

[email protected]