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

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.


“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.”