Sunshine Act to Shine Light on Pharmaceutical Dollars Paid to Doctors

by Mark Friedman  on Monday, Apr. 8, 2013 12:00 am  

Starting in September 2014, a record of all payments that drug companies make to doctors will be publicly available, a situation raising concerns among both physicians and drug companies.

The main rules under the federal Physician Payment Sunshine Act will require pharmaceutical or medical device manufacturers to report anything of value given to doctors or teaching hospitals. The act was designed to cut down on potential abuses between the parties.

The payments will cover “a wide array of purposes, including consulting, speaking engagements, advisory board service, travel, food, royalty payments, and clinical research,” according to an August 2011 report by Tracy Miller, a senior member of the Health Care Group at the law firm Cadwalader Wickersham & Taft LLP in New York.

The drug companies and manufacturers will have to submit the information to the Department of Health & Human Services’ Centers for Medicare & Medicaid Services (CMS), which will post it to a website that will allow users to root around for information.

The disclosure of the payments to doctors and teaching hospitals poses risks to them, Miller wrote. The information might indicate fraud or abuse “or may present a reputational risk due to the appearance of impropriety,” Miller said in the report.

“No doctor wants to be on this list,” said Dr. Richard Willner, executive vice president of the America’s Medical Society of San Diego, which is a competitor to the American Medical Association.

But the Arkansas Medical Society thinks the Sunshine Act isn’t a big deal. “In our meetings and discussions with physicians from around the state about a variety of issues, this is not one that comes up,” said David Wroten, executive vice president of the association of Arkansas physicians.

Some doctors and teaching hospitals have already made changes to how they deal with drug companies. But a recent study found that many doctors still don’t know about the new law and its implications.

The study — conducted by MMIS Inc., a technology company in New York that develops communication products, and Healthcare Data Solutions Survey of Irvine, Calif., and released in February — showed that half of the 1,000 doctors surveyed said they didn’t know the details of the law.

The survey also showed about two-thirds of the doctors “were deeply concerned that a record of these payments will be available in a publicly searchable database.”

Before the payment information is published, doctors will have 45 days to review the information and appeal anything that’s wrong.

A startup company out of Searcy is trying to profit from the Sunshine Act. Clinicpass Inc. has a product that will help doctors manage a database of their dealings with pharmaceutical and device companies. With Clinicpass, doctors will have detailed records of their interactions that could help them quickly verify the information that will be submitted to federal regulators, said Padgett Mangan, business development director of the company.

He declined to release more information about the company, which will be launched in the next two months.


Pharmaceutical companies said they support the transparency that the Sunshine Act will bring but are concerned that dollar amounts listed will be taken out of context.

The Centers for Medicare & Medicaid Services website isn’t final yet, but it doesn’t appear that the website will contain a detailed analysis of what the money received went for, according to CMS information.

That doesn’t make the pharmaceutical companies happy. The database should have enough description to let the public know the background for the transaction and why a doctor might need to meet with a pharmaceutical rep, said Marjorie Powell, senior assistant general counsel at the Pharmaceutical Research & Manufacturers of America, a trade association for pharmaceutical companies.

“It’s really important that everybody understand how important it is that doctors and other health care practitioners and pharmaceutical companies have interaction,” she said.

That interaction educates doctors about new drugs and leads to the development of new medications, she said.

In addition, if a pharmaceutical company is paying for a research project, it might be a large dollar amount, but not all of that money will be income for the doctors. She said the money will have to cover expenses such as paying for nurses.

“It’s not like it’s just extra money,” Powell said.

The Need

Sen. Chuck Grassley, R-Iowa, takes credit for helping launch the Sunshine Act.

He said in a February news release that his investigation and oversight work exposed a number of “questionable financial relationships between drug companies and doctors.”

“For example, at Stanford University, the chairman of psychiatry received a federal grant to study a drug, while partially owning as much as $6 million in stock in a company that was seeking federal approval of that drug,” the release said. “After exposure, the federal government removed the individual from the grant.”

The Act was approved in March 2010 and CMS published its final rules in February.

Starting on Aug. 1, drug companies and device manufacturers will begin collecting information on the amounts of money they give doctors and teaching hospitals. The first reporting period ends at the end of the year. The companies will then submit the information to CMS by March 31, 2014, and the government will have the data publicly available by the end of September 2014. Companies face fines of $150,000 if they don’t report and $1 million if they knowingly fail to report to CMS.


It’s unclear, though, how the relationships will change between doctors and pharmaceutical companies.

“You’re always going to see physicians involved in research. … with advisory boards. I’m not sure where some of the other interactions may go,” said Seth Whitelaw, director of health sciences compliance at Deloitte & Touche LLP, which released a physician survey on the subject in June. “I think that’s an open question right now.”

ProPublica of New York, a nonprofit news organization, has a database on its website that shows what doctors receive from drug companies. But the information is limited to what the companies have publicly reported, and not all companies have reported the information.

Even with the limited reports, “some doctors have told us that they have curtailed their financial relationships with drug publication of payment information, but others have indicated that it hasn’t made a difference,” Charles Ornstein, a senior reporter for ProPublica, said in an email to Arkansas Business last week.

The University of Arkansas for Medical Sciences, which has the state’s only teaching hospital, said it implemented a policy about two years ago that prevents UAMS physicians from accepting items of value from drug reps, said Charles Smith, the executive associate dean at UAMS’ College of Medicine.

UAMS also established an approval and disclosure process for employees who do provide work for drug companies.

Smith said UAMS wanted to prevent any instance where a physician might develop a “close relationship” with a drug company and then have to buy products from that company.

“We … thought it was time to ratchet down,” Smith said. “There was a time in the medical community in which this was pretty much standard operating procedure to have drug companies” provide items of value to doctors.



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