Sunshine Act ushers in new era of physician–industry transparency

A provision in the Affordable Care Act designed to increase transparency and accountability among health care professionals will take effect Aug. 1.

The Physician Payment Sunshine Act will require the manufacturers of drugs, devices, biologics and medical supplies reimbursed by Medicare, Medicaid or the Children’s Health Insurance Program to disclose payments of at least $10 to physicians and teaching hospitals. Manufacturers and group purchasing organizations also must report physician ownership and investment relationships.

The federal government will post the disclosures on the CMS website by Sept. 30, 2014.

Physicians, analysts and industry advocates have voiced support for transparency during the past decade.

Efforts to report even the most tangential disclosure information have become a matter of course at scientific meetings and in peer-reviewed literature. Consequently, the Sunshine Act may have little effect on the average oncologist or hematologist, according to Johnathan M. Lancaster, MD, PhD, president of the Moffitt Medical Group and chair of the department of women’s oncology at Moffitt Cancer Center in Tampa, Fla.

“In the last few years, we have seen an increasing movement away from people receiving funds or gifts from industry,” Lancaster told HemOnc Today. “Both pharma and health care systems have imposed their own rules to the point that representatives can’t even give a doctor a pen.”

However, some experts are concerned about specific reporting requirements and the cost of compliance, particularly for smaller drug and device companies.

The Sunshine Act also will invite false allegations of abuse from adversaries of drug and device companies, according to Thomas P. Stossel, MD, senior hematologist at Brigham and Women’s Hospital in Boston.

“The Sunshine Act has to be one of the most intrusive invasions of privacy of a single group in the history of the republic,” Stossel said in an interview. “The final report admits that no empiric basis exists for justifying it. It is a stimulus plan for critics of and litigators against the pharmaceutical and medical device industries and physicians who have relationships with them.”

HemOnc Today spoke with a cross-section of experts about how and why the Sunshine Act was developed, as well as its anticipated effect on physicians, patients, industry and government.

Reporting requirements

The original version of the Physician Payment Sunshine Act was introduced in 2007. An amended version was incorporated into the Affordable Care Act, which was signed into law in March 2010 and upheld by the US Supreme Court in June 2012.

The final rule primarily clarifies reporting requirements, but it leaves a few unanswered questions, according to Thomas A. Gustafson, PhD, a public policy adviser with Arnold & Porter LLP, a law firm based in Washington, D.C. Gustafson summarized key provisions outlined in an advisory posted on the Arnold & Porter website.

“Now we know what we are up against in terms of how CMS is going to implement this,” Gustafson said. “It does not remove all uncertainty because you have a bunch of lawyers with all kinds of additional questions, and people will be raising those as they unpack this rule and try to figure out what it is going to mean for them operationally.”

Gustafson said the Sunshine Act does not prohibit proper financial relationships.

“The Sunshine Act … is all about transparency,” Gustafson said. “There are extensive reporting requirements. They give dates and specifics. They lay out exactly what needs to be reported [and] what is excluded from being reported.”

Physicians and teaching hospitals will not be required to disclose payments made to them, but they should check the website to make sure reports of those payments are accurate, Gustafson said.

“CMS says there will be an opportunity for physicians to register and receive information about what is being reported before it is made public. You do not have to wait passively for it to go up somewhere and find out about it,” he said. “They have a 45-day window after CMS makes the information available for review to look at what is there and to raise a dispute if they see that something is wrong. That can be as simple as a matter of somebody slipping a digit and reporting a $5,000 payment as a $50,000 payment.”

The rule requires eligible entities to report consulting fees and other compensation, honoraria, gifts, entertainment, food and beverages, travel, lodging, education and research. All payments of $10 or more must be reported.

“It is basically a $10 standard with, plausibly enough, the notion that they will inflate it in the future, so it is not like it is going to be $10 for the next 100 years. It will grow up over time,” Gustafson said. “The minimum standards are statutory for 2013. I do not know the degree to which they can do more than inflate it. … They will redo it on a regular basis.”

Those who make payments to physicians must find a category in which to report, Gustafson said.

Some provisions are more subtle. For example, when a physician has an ownership interest in a manufacturer or group purchasing organization, the manufacturer or group purchasing organization must report that arrangement.

Reporting of physician stock holdings in publicly owned companies is not required. Physicians who invent products and have a vested financial interest in the companies that develop and market those products, however, will see those arrangements reported.

Information also will be posted about physicians who are involved with research paid for by manufacturers. However, manufacturers may defer public reporting of some research-related information for up to 4 years, Gustafson said.

“At the end of the 4 years, or if the deferral does not apply, then your information is going to be up on the website,” he said. “There is nothing wrong or underhanded about that. It is just that information that used to be more private is more public. We expect that some companies are going to find this interesting because they will be able to see what their competitors are doing at a more detailed level than they had previously in terms of the kinds of investigations that they are undertaking.”

A proactive measure

The Sunshine Act is simply a reflection of industry and health systems being proactive, Lancaster said.

“These organizations saw that if they did not do something to curb gifts and funding activities, rules would be imposed upon them,” he said. “The feeling was, ‘You guys need to clean it up or someone is going to clean it up for you.’ While there certainly has been some excess in the past, the pendulum has probably gone a little further than it needed to.”

Ultimately, patients will pay little or no attention to disclosures made under the Sunshine Act, according to Stossel.

“Vanishingly few patients have the time, interest or competence to interpret the complex and superficially explained disclosures,” Stossel said. “Even if they did, most survey data indicate that patients have few concerns about physicians’ industry relationships.”

Disclosures posted on the CMS website will be weighed down with small details, Stossel said.

“Anyone reading the final report and its elaboration of detailed provisions and responses to comments by diverse stakeholders will be struck by its extensive minutiae,” he said. “A partial list of such content, in addition to detailed catalogues of types of payments, includes definitions of a ‘covered entity,’ of whether a global company has a sufficient US presence to have to report, of the tipping point for exclusion of entities with less than 10% of their business being manufacturing or less than 5% involved in common ownership with other entities, how to estimate device-related payments bundled into hospital charges, how to deal with parsing out individual payments within consolidated reports and how to determine if ‘research’ payments satisfy criteria for a 4-year reporting delay because of competitive considerations. Several pages deal with the small details, such as to how to calculate food provided to physicians.”

The required disclosures will not tell the whole story of relationships between industry and physicians that are inherently appropriate and productive, said B. Sonny Bal, MD, JD, MBA, an associate professor of surgery at the University of Missouri Health System School of Medicine.

“There are surgeons who consult with industry. It is a necessary thing we do,” Bal said. “Many surgeons own patents. Many of them develop products with industry. They deserve to be compensated for their time, for intellectual property. Until the context of what the compensation is for is understood, the mere listing of what somebody got from a company is misleading at best. I am just not sure what purpose it serves.”

Additionally, the Sunshine Act does not require physicians to disclose the actual tasks that they perform to earn payments from industry, Bal said.

Misguided emphasis

Paul A. Volberding, MD, a professor and vice chair in the department of medicine at the University of California, San Francisco, said most physicians are advocates of transparency and disclosing relationships.

However, the Sunshine Act’s focus may be a bit off target, he said.

“The focus is too much on the money and not enough on the nature of the relationship,” said Volberding, who was trained in medical oncology early in his career and now serves as director of the UCSF AIDS Research Institute. “Many physicians have relationships with industry that are solely based on science and helping to facilitate drug development. However, there is no way to differentiate between those physicians and physicians who are conducting promotional lectures for drug companies. The two physicians could be paid the same amount, but the nature of the relationships is vastly different. The type of relationship needs to be disclosed, not just the dollar amount received.”

Lancaster discussed the issue from a more systemic perspective.

“Right now, across the board, we are reimbursed based on how much we do,” he said. “This fee-for-service model is part of the reason why health care costs spiraled out of control. Unfortunately, our outcomes are not comparable to the cost.”

Americans are paying the most for health care, but they are not getting the best outcomes, Lancaster said. That model is not sustainable, he added.

“We are trying to transition away from paying more for doing more to paying more for the best outcomes,” he said. “[The Sunshine Act] will force health systems to cut a lot of the fat. It will change fundamental business models, and it will change the way health systems market.”

Another by-product of the Sunshine Act is that hospitals and providers will take on more of the risk.

“A system will be given a certain amount of money to care for a patient,” Volberding said. “The risk will all of a sudden be with health care systems to achieve outcomes for the price.”

Effect on clinicians

Lancaster said the Sunshine Act will affect clinicians — particularly those with small practices — in at least one key way: They likely will become part of a larger group.

“Instead of Dr. Smith or Jones, it will be Dr. Smith, member of an oncology group with affiliates in the area,” Lancaster said. “Small groups are going to merge into larger groups, and larger groups are going to merge with health care systems. Size is going to matter.”

It will be increasingly difficult for smaller practices to sustain operations, prosper and show quality metrics while reimbursement margins are going down, Lancaster said.

“However, as long as value and quality are at the forefront, this system can be beneficial,” he said.

Candace Johnson, PhD, deputy director of Roswell Park Cancer Institute, said the financial effect that the Sunshine Act has on health care professionals will be minimal.

“I don’t think it is going to affect the real day-to-day life of a clinician,” Johnson told HemOnc Today. “Sure, there are those who count on the income from a speaking circuit. But this will not significantly impact their livelihood.”

More importantly, these changes will not affect prescribing habits or behavior in the clinic, Johnson said.

“Most doctors do the right thing for patients,” she said. “However, the Sunshine Act will assure that physicians are prescribing a drug because it is the right drug.”

Johnson said, in the past, pharmaceutical companies would provide considerable funding for lab research studies with no real experimental plan or with “no strings attached.”

“Those dollars don’t exist anymore,” Johnson said. “This results in focused research projects with defined objectives.”

Drug companies can still play a role in sponsoring research projects, but not in such a loose format.

“Now an investigator may approach a company and say, ‘This is what I want to do. Would you be interested in funding it, no matter what the results are?’” Johnson said. “Therefore, drug companies will pay for studies, and the results will be the results, period.”

Regulatory burden

Although designed to close loopholes that may lead to abuse, the Sunshine Act places an inordinate burden on industry and government, Gustafson said.

“The whole rule is set up in a comparatively reasonable way to try to avoid loopholes that would allow people to avoid their responsibilities, at least in some obvious ways,” he said. “But it is going to impose an expensive burden for those reporting and for CMS, [which is] receiving all these reports and translating them into what needs to go into a Web presentation.”

The annual cost of compliance will be about $269 million in the first year and $180 million the second year, according to CMS estimates.

“These estimates depend entirely on guesses regarding compliance management by individual physicians and industry and corporate accounting officials,” Stossel said. “It makes no mention of the predictable requirement for far more expensive legal advice that will be necessary to navigate the minutiae. Most importantly, the estimates do not take into account the opportunity costs of diverting resources from research, development and education to compliance activities. Dollars far better applied to innovation and education will shift to Sunshine Act management. This regulatory burden disproportionately compromises small companies at the cutting edge of innovation.”

The Sunshine Act may ultimately hinder product development and innovation, Bal said.

“It may prove to be chilling in terms of product development and innovation, as surgeons want to steer clear of relationships with industry and are concerned about their own safety and reputation and do not want to deal with these things,” he said. “I see a diminished level of otherwise helpful and productive relationships between industry and … surgeons. I do not see anything good coming out of this.”

Industry concerns

Representatives of the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Advanced Medical Technology Association (AdvaMed) voiced overall support for the Sunshine Act but expressed a few basic concerns.

“We support the Physician Payment Sunshine Act because we think transparency is important,” said Marjorie E. Powell, PhRMA’s senior assistant general counsel. “We, frankly, are pleased with some aspects of the final rule. We think CMS drastically streamlined the reporting of research. That will make it much more accurate and comprehensible. So, rather than doing all of the direct and indirect payments, you just send the entity to whom the payment goes and you identify the principal investigator.”

Powell said PhRMA appreciates that the final rule does not require companies to report the cost of producing and distributing items that are used for patient education, such as anatomic models and brochures used in physicians’ offices.

However, she said she is concerned about a requirement that a company providing a grant must track the grant payment for the remainder of the year, plus an additional 6 months.

“In case the grantee makes the decision to spend some of that money by hiring a doctor to come and doctor their people, the pharmaceutical company has to know that and report that as a payment from the company to the doctor,” Powell said. “We think that is sort of a false statement that the pharmaceutical company pays the doctor because the doctor may not even know where the money came from.”

The Sunshine Act will enhance public understanding of industry–physician relationships, according to Christopher L. White, AdvaMed general counsel and senior executive vice president.

“We think it helps the public to better understand the benefit of these relationships,” White said. “Relationships are based in research, consulting and education. They lead to advances in medical technology and benefit patient care. It is our view that the disclosure of this information should also include detail on the context of these relationships, so that it is not simply a name and a dollar amount but, instead, the type of information that leads patients and the public to understand the reasons for and the benefit of these important relationships.” – by Matt Hasson and Rob Volansky

References:

Advanced Medical Technology Association. Physician Payments Sunshine Law. Available at: www.advamed.org/issues/16/physician-payments-sunshine-law. Accessed June 25, 2013.

Arnold & Porter LLP. Final rule issued for Physician Payment Sunshine Provisions of the Affordable Care Act. Available at: www.arnoldporter.com/resources/documents/Advisory%20Final_Rule_Issued_for_Physician_Payment_Sunshine_
Provisions_Affordable_Care_Act.pdf. Published February 2013. Accessed June 25, 2013.

CMS. Affordable Care Act “Sunshine” rule increases transparency in health care. Available at: www.cms.gov/apps/media/press/release.asp?Counter=4520&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=1%2C+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date. Published Feb. 1, 2013. Accessed June 25, 2013.

Pharmaceutical Research and Manufacturers of America. PhRMA statement on Sunshine proposed rule. Available at: www.phrma.org/media/releases/phrma-statement-sunshine-proposed-rule. Published Feb. 17, 2012. Accessed June 25, 2013.

For more information:

B. Sonny Bal, MD, JD, MBA, can be reached at 1100 Virginia Ave., Columbia, MO 65212; email: balb@health.missouri.edu.

Thomas A. Gustafson, PhD, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; email: tom.gustafson@aporter.com.

Candace Johnson, PhD, can be reached at Roswell Park Cancer Institute, Elm and Carlton streets, Buffalo, NY 14263.

Johnathan M. Lancaster, MD, PhD, can be reached at Moffitt Cancer Center, 12902 Magnolia Drive, Tampa, FL 33612; email: johnathan.lancaster@moffitt.org.

Marjorie E. Powell, Esq., can be reached at Pharmaceutical Research and Manufacturers of America, 950 F St. NW, Washington, DC 20004; email: mpowell@phrma.org.

Thomas P. Stossel, MD, can be reached at Hematology Division, Brigham and Women’s Hospital, 1 Blackfan Circle, Karp 6, Boston, MA; email: tstossel@partners.org.

Paul A. Volberding, MD, can be reached at VAMC Building 203 1A81, San Francisco, CA 94143-111; email: paul.volberding@ucsf.edu.

Christopher L. White can be reached at Advanced Medical Technology Association, 701 Pennsylvania Ave. NW, Suite 800, Washington, DC 20004-2654; email: amcmaster@advamed.org.

Disclosure: Bal, Gustafson, Johnson, Lancaster, Powell, Stossel, Volberding and White report no relevant financial disclosures. The Arnold & Porter law firm provides a monthly column for Healio.com, a SLACK Incorporated website.

Will the Sunshine Act stifle medical innovation?

Potentially, if data are inaccurate or misinterpreted.

Physicians should be supportive of the transparency that is at the goal of the Sunshine Act. However, they must be diligent about the systems that are used to provide that transparency and the accuracy of the data.

There is the potential for considerable damage if the data that are entered are inaccurate, imprecise or interpreted incorrectly. Such errors could result in misinterpretations that hurt the reputations of ethical investigators and discourage physician participation in industry-supported research, thereby reducing the interactions between industry and practicing physicians that are vital for progress.

For example, it is common for industry to support clinical trials at academic centers. A portion of such funding reimburses physicians for the time it takes them to participate in the trial. However, most of the funding goes to support subject costs and clinical trials personnel. Such funding does not go directly into the pockets of the physicians. It is appropriate that such funding be disclosed; however, its purpose needs to be clear in that disclosure.

George J. Weiner, MD, is director of Holden Comprehensive Cancer Center, C.E. Block chair of cancer research and professor in the department of internal medicine at University of Iowa Health Care. He can be reached at Holden Comprehensive Cancer Center, 200 Hawkins Drive, Iowa City, IA 52242. Disclosure: Weiner reports no relevant financial disclosures.

Public education can ensure medical innovation is not stifled.

Transparency of relationships between pharmaceutical companies and physicians and researchers, as a concept, can only be a good thing.

In practice, however, there is always room for things to have unintended consequences.

Theoretically, the Sunshine Act should not be damaging to medical innovation. But what we may see is that the transparency results in all financial consideration being viewed as the same, and then further assumed to reflect some sort of tainted exchange. If that tone is taken with this information, it could be detrimental to ongoing relationships.

The drug companies of which I’m aware are both ethical and interested in providing regulators with whatever information they need. The reason is that this is a highly regulated industry. Most people might suggest that these companies are committed to providing value to their shareholders, and that the desire for profit can be somehow unethical. From my perspective, these companies behave as though the best way to provide value to their shareholders is to develop truly innovative products that improve the lives of patients.

The fact that we are even asking the question of whether the Sunshine Act will stifle innovation implies that there is something less than ideal in the perception around this exchange of money. The concept that any physician can be enticed to prescribe a certain drug with a dinner or a payment for their time is grounded in previous experience and what people have seen, but it is probably rare. Transparency in these relationships will make it less likely that anything unsavory is going on.

The key to making sure that innovative and untainted collaborations continue is to teach the public about these relationships and how they can be important. If we manage education around what the Sunshine Act means and what the disclosures mean, it doesn’t have to stifle innovation in any way.

I have some suggestions about how to conduct this education. We need to ensure first that all compensation for services is justified and legitimate. Second, we have to acknowledge that collaborations between the pharmaceutical industry and the clinical community are important, especially when they involve collaboration in drug development (as opposed to marketing). Third, we need to educate people that legitimate collaborations are necessary and important, but that excessive marketing is neither condoned nor being promoted.

Mike N. Neuss, MD, is chief medical officer at Vanderbilt-Ingram Cancer Center. He can be reached at Vanderbilt-Ingram Cancer Center, 691 Preston Building, Nashville, TN 37232. Disclosure: Neuss reports no relevant financial disclosures.