The Federal Payment Sunshine Law


On January 1, 2012, Will You Know Where Your Payments Are Going?

On January 1, 2012, manufacturers of drugs, biologics, devices and medical supplies covered under Medicare, Medicaid and the Children’s Health Insurance Program must begin tracking payments and other transfers of value made to physicians and teaching hospitals in order to comply with federal requirements known as the federal payment sunshine law (“Sunshine Law”).1

Compliance Challenge

Manufacturers currently face a challenge in ensuring timely compliance with the Sunshine Law. Although many manufacturers have been preparing for the implementation of the law, the law contains a number of ambiguities that must be resolved in order for manufacturers to establish the policies, procedures and tracking systems necessary for compliance. Ambiguities include:

• Which manufacturer has the reporting obligation when manufacturers share responsibility with respect to the manufacture or promotion of a single drug, biologic, or device? For example, which company or companies report transfers of value in a co-promote arrangement?

• How are teaching hospitals defined and identified? For example, how will a manufacturer know if a hospital has a teaching component? What about payments to a university that has a teaching hospital? Are payments to teaching hospital employees reportable?

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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.

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