By Michael J. Summerhill and Lauren S. Berheide
Now that the dates for collecting data and reporting under the Physician Payment Sunshine Act have been set, the Sunshine Act is becoming a reality for physicians, pharmaceutical companies, and medical device manufacturers. On Aug. 1, 2013, manufacturers must begin to collect data, which must be reported by March 13, 2014. With these dates fast approaching, it is important for manufacturers and physicians to make sure they are ready to deal with the Sunshine Act.
For “Applicable Manufacturers”
First, determine if the reporting requirements under the Sunshine Act apply to your company. For most medical device and pharmaceutical companies it is clear that your company will be an “applicable manufacturer” and that the reporting requirements apply to you under the Sunshine Act. An “applicable manufacturer” is any entity that fits both these criteria:
- Engaged in production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply that operates in the United States
- Under common ownership with an entity described above which provides assistance or support to such entity with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered drug, device or supply.
Therefore, consider your parent companies, subsidiaries, and any other entities with 5 percent or more of total ownership when determining if you, and the companies with which you have a relationship with, must report under the Sunshine Act. The comments make clear that this definition also includes distributors or wholesalers that hold title to any covered drug, device or supply. Also consider whether you operate in the United States. Even if you are a foreign entity or only manufacture products outside the United States, if you operate in the United States, you must report.
Finally, the comments to the Sunshine Act also make clear that if you attempt to make payments indirectly through a foreign company to avoid compliance, you still must report these payments as they are “indirect payments” or “other transfers of value” that must be reported.
Second, if you haven’t already, establish a system for gathering data and reporting. As early as possible, applicable manufacturers should determine how they will track and gather data as well as how they will compile and report that data. Examine your company’s data management system. Determine whether you need additional employees or resources, such as software, in order to collect and record data. Identify what employees or individuals will be in charge of managing or overseeing this process. This also might be a good time to decide who you will use as your two points of contact to be used in communications related to submitted data—you must register and designate these individuals when you transmit your report.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Likewise, determine who will be the “authorized representative” who will submit a signed attestation certifying the report’s timeliness, accuracy, and completeness. Decide if this will be your CEO, CFO, CCO, or another representative and what process that individual will use to review the report and data before it is submitted.
Third, be aware of and determine what information you will likely need to gather and what data you will have to report—anticipate and be strategic! Your company should review what payments you’ve made in the past and what you anticipate making in the future to determine what types of data you will need to gather and what you will have to report before your obligation to collect data begins. Doing this will assist your company in thinking strategically about what information it will be gathering and reporting in the next year and, likewise, what information the public will have access to.
While you should refer to the Sunshine Act for a more complete explanation and list of exclusions, in general you should be looking for:
- Any payment, including cash, compensation, food, gift, consulting fees, honoraria, research, education, or conference funding, grants, stock, stock options, ownership and investment interest, royalties or licenses, or charitable contributions;/li>
- To a physician (who is not a bona fide employee of your company) or a teaching hospital [a list will be published on the Centers for Medicare and Medicaid Services (CMS) website, CMS.gov]; and
- Over $10, or if the annual payments are greater than $100, all payments even those less than $10.
Note which items may fall under the exclusions to the Sunshine Act.
Now your company should think strategically about what practices it might change or plans for the next year when you must collect data and report. Review the information that would be reported today and your future plans and consider what the implications might be—how will this impact your relationship with physicians, hospitals, or researchers? What are your customers’ concerns? If your company doesn’t know these concerns, open a dialogue and communicate with your customers. If possible, also begin gathering information about the payments you will likely have to report such as: physician names, business address, and national provider identifier (NPI) and specialty.
Fourth, begin drafting an “assumptions” document. Along with establishing a system for gathering the data, analyze what types of payments your company has historically made and to what physicians. The Sunshine Act allows your company to submit a document that will not be made public that can describe what assumptions you used to categorize nature of payments. While the document may need to be revised after you determine what payments you must report, doing so in advance may help you organize and collect the data so that it is more manageable when it is time to submit your report.
Note that the “nature of payment” categories include: consulting fees, compensation for services other than consulting, honoraria, gift, entertainment, food and beverage, travel and lodging, education, research, charitable contribution, royalty or license, ownership or investment interest, direct compensation for service as faculty or a speaker at a medical education program, grant, and space rental or facility fees.
For Physicians and Hospitals
First, register with CMS so that you can receive notifications about what information is reported.
Second, determine what payments you have received in the past that would be reported under the Sunshine Act. (See #3 above).
Third, consider how future reporting could impact your business and the likely response of customers and patients. Communicate and open a dialogue with any “applicable manufacturers” from whom you anticipate receiving payments. If you voice your concerns ahead of time, this will save both physicians/hospitals and applicable manufacturers any unneeded surprises at reporting time.
Fourth, keep track of what payments or transfers you receive that must be reported. (See #3 above). Fifth, consider preparing explanations for these payments to communicate to patients who inquire about them. Finally, review the data after is submitted. If you’ve registered with CMS you will be notified about a 45 day period to review any data submitted and you have the opportunity to dispute reported data and request corrections.
Michael J. Summerhill is a partner and Lauren S. Berheide is an associate in the Litigation Practice Group at the Chicago law firm of Freeborn & Peters LLP. Michael represents clients in a variety of industries including healthcare, software, medical devices and consumer products. Lauren represents clients in industries that include consumer products, banking and healthcare. Reach Michael at 312-360-6466 or [email protected]. Reach Lauren at 312-360-6253 or [email protected].
