Let The Sunshine In – The Risks To Pharmaceutical And Medical Device Companies From Open Payment Transparency

by Michael Volkov
Contact

sunshine4Pharmaceutical and medical device manufacturers (as well as group purchasing organizations “GPOs”) have a major compliance challenge ahead — the Physician Payment Sunshine Act regulations.  The Sunshine Act requires drug and device manufacturers and GPOs to report to HHS/CMS any “payment or other transfer of value” to physicians and teaching hospitals.

The Payment Sunshine Act reporting is scheduled to start on March 31, 2014, for the period of August 1 to December 31, 2013.  All information required by the Sunshine Act will be published by CMS on a public website.

The term “payment or other transfer of value” is very broadly defined with a very low threshold.  Anything over $10 with certain exceptions must be reported. The failure to report may result in monetary penalties, the amount which varied depending on whether the failure to report is “knowing.”

The final regulations which were issued in February 2013 have done little to clarify a host of issues as to the application of the reporting requirements.  CMS has issued a number of Fact Sheets applicable to types of manufacturers; three Frequently Asked Questions to clarify a number of issues; and CMS has posted templates for reporting forms.sunshine3

Drug and device manufacturers have to report detailed information about a “covered recipient,” including the doctor’s name, specialty, business address, National Provider Identifier, state professional license number(s), amount of payment, date of payment, form of payment, name of the related drug or device, any indirect payments to other entities, and an optional statement of the circumstances.

Payments or other transfers of value include: consulting fees, compensation for services including speaking at an event other than a continuing education program, honoraria, food and beverages, entertainment, traveling, education, research, charitable contributions, royalty or license payments, investment interest, grants, office space rental or facility fees.

HHS is wrestling with a number of issues which reflect the broad application of the statute and regulations. Questions have been raised as to the reporting obligation for payments made at certified and accredited Continuing Medical Education programs, payments for clinical research, food and beverages at group functions, medical textbooks, medical journals, and a host of practical questions relating to a variety of items which drug and device companies may provide to physicians.

sunshine2Prosecutors will have an important source of information for enforcement of the federal Anti-Kickback statute which prohibits the exchange of anything of value to induce (or reward) the referral of federal health care program business. See 42 U.S.C. § 1320a-7b.  Investigators can review the payment information to review suspect arrangements and launch investigations.

Anti-Kickback investigations often begin from relator claims under the False Claims Act or HHS – Office of Inspector General inquiries and audits.  Whistleblowers will now have access to data which can corroborate their claims.  HHS-OIG investigators will be able to use data analytics to spot “suspicious” transactions and relationships.  And criminal prosecutors will have the ability to generate leads and corroborating evidence for criminal kickback schemes.

All of these risks are separate and apart from those which can arise from a failure to comply with the reporting requirement (called the “open payment” system).  Enforcement of the reporting requirement itself could lead to civil penalties.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

Written by:

Michael Volkov
Contact
more
less

The Volkov Law Group on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.