What Is the Sunshine Act?

The Physician Payment Sunshine Act was signed into law in 2010 as part of the Affordable Care Act. But its genesis goes back to 2007 when an investigator for Sen. Chuck Grassley (R-Iowa) began looking into large undeclared payments from pharmaceutical companies to doctors for research, lectures, and consulting on new drugs.

That led to a bill, coauthored by Sen. Grassley and Sen. Herb Kohl (D-Wisc.), intended to let the public know as much as possible about the relationship between physicians and the drug and medical device industries to help consumers make informed decisions and to discourage physician conflicts of interest.

How that will be accomplished has not yet been decided. CMS released the proposed rules for implementation in December 2011 and solicited comments, but as of mid-July it had not handed down the final rules. In May, CMS postponed the beginning of data collection for the second time, until at least Jan. 1, 2013.

What is known are the provisions written into the statute:

• Manufacturers of drugs, devices, biologicals, and medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program must annually report payments (cash, in-kind items or services, stock or stock options) with a value of $10 or more, or a total of $100 or more from a manufacturer to a recipient over the course of a calendar year.
• Manufacturers and group purchasing organizations must report physician ownership or investment interests.
• Reportable payments include consulting fees, honoraria, gifts, entertainment, travel, food, royalty or license fees, charitable contributions, speaker fees, grants and compensation for research, education, ownership or investment interests, and serving as CME faculty or speaker.
• Items exempt from reporting include product samples for patient use (not intended to be sold); educational materials intended for patient use; a loan of a device for up to 90 days; items or services provided under a warranty; discounts, including rebates; in-kind items used for charity care; and dividends or profits from investments in publicly traded securities or mutual funds.
• Manufacturers can be fined up to $10,000 for each unreported payment, up to $150,000 each year.
• The report will be released online on Sept. 30 each year. Recipients will have 45 days prior to that to review and submit corrections to the report.
• Issues still up in the air, pending the final rules, include indirect payments, disputed reports, and explanatory information. For indirect payments, the statute specifies reporting for payments made to third parties at the request of or on behalf of a physician, but CMS’s proposed rule extends that to include instances in which the manufacturer learns the identity of the recipient after the payment. For disputed reports, neither the statute nor the proposed rule offers a process for arbitrating disputes. For explanatory information, the proposed rule includes a statement to be posted with the report explaining that payments do not indicate either legitimacy or wrongdoing.