The Sunshine Act and Authors

The Physician Payment Sunshine Act, part of the Patient Protection and Affordable Care Act, requires applicable manufacturers of drugs, devices, and biological and medical supplies covered under Medicare (or a state plan under Medicaid or CHIP) to report annually to the secretary of the US Department of Health and Human Services some payments or other transfers of value to physicians and teaching hospitals. The secretary is required to publish the reported data on a public Web site. The law raises multiple issues for authors of medical publications; some of the most important issues are highlighted below.

Under the Sunshine Act—and accompanying regulations issued by the Centers for Medicare & Medicaid Services (CMS)— applicable manufacturers were required to begin collecting data on payments made as of 1 August 2013, and they were required to begin reporting to CMS on 31 March 2014. How the law and regulations are applied and how manufacturers and others proceed remain to be seen. But legal requirements and issues that they raise can be identified.

The purpose of the Sunshine Act is to promote transparency. As CMS has noted, although collaborations among physicians, teaching hospitals, and industry manufacturers contribute to the design and delivery of life-saving technologies, payments from manufacturers can also introduce conflicts of interest that may influence research, education, and clinical decision making in ways that compromise patient care and can lead to increased costs. Thus, the law and accompanying regulations require manufacturers to report. The law and accompanying regulations do not prohibit or restrict the activities being reported; that task is left to other laws and regulations.

As a threshold matter, the law and regulations require (1) an “applicable manufacturer” of (2) a “covered product” to collect data and to submit reports regarding (3) “transfers of value” to (4) “covered recipients”. Generally speaking, an “applicable manufacturer” is a manufacturer that operates in the United States; a “covered product” is a drug, device, or biological or medical supply for which payment is available under Medicare, Medicaid, or CHIP and that requires a prescription (in the case of a drug or biological) or premarket approval by or notification to the Food and Drug Administration (in the case of a device or a medical supply that is a device); a “transfer of value” is anything of value; and a “covered recipient” is a licensed physician, other than a physician who is an employee of an applicable manufacturer, or an employee of a teaching hospital. CMS’s regulations identify numerous refinements, exceptions, and specific applications of those definitions, but the foregoing generalizations can serve as a guide in evaluating—at the outset—whether a particular situation may fall under the new reporting requirements.

With specific regard to publications, it appears that a manufacturer’s publication support could be considered a reportable transfer of value; CMS’s report accompanying its issuance of its final regulations specifically mentions payments for medical research writing and/or publication. There may be questions as to the appropriate category under which a manufacturer might report support; for example, depending on the circumstances, a manufacturer might report support as a research payment or as compensation for services other than consulting. Note that publication support might include any support provided to an author for any publication to be submitted to a scientific or medical journal or provided for submission or presentation to a professional congress, and it might be provided either directly by a manufacturer or indirectly by an agency hired by a manufacturer.

Assuming that there is a reportable transfer of value, a manufacturer and a covered recipient need to determine the amount of value; CMS’s report accompanying its final regulations seems to indicate that reportable value is value that is received by a covered recipient and that is economically discernible. Thus, for example, there might be costs in developing a publication that are not borne by an author, such as legal expenses for drafting appropriate contracts, or that otherwise are not of discernible economic value. If those elements are parts of the total cost, it might be appropriate to subtract them from the reportable transfer of value.

There might also be a concern, with a multiauthored publication, of allocating value among the authors. CMS’s report accompanying its final regulations does not appear to address that in detail. But it appears that such allocation might be done in numerous ways, depending on the relative contributions of the authors and whether all authors constitute covered recipients.

In addition to those issues regarding the development of publication content, there might be questions regarding the distribution of content. As noted above, support for presentations might constitute a reportable transfer of value. Furthermore, distribution of written publications might constitute reportable transfers, depending on how and to whom distributions are made. For example, CMS’s regulations exclude from the definition of reportable transfer of value (1) transfers representing less than $10 and (2) transfers that directly benefit patients and that are intended for patient use.

Even if a manufacturer has made a reportable transfer of value, for some transfers the law and regulations provide for delayed publication by the secretary on the public Web site. According to CMS’s report, such transfers include those made in connection with research that is pursuant to a written agreement for research related to new products. CMS’s report adds that for transfers of value related to research for new applications of products already on the market, publication can be delayed only if the research does not meet the definition of “clinical investigation”. CMS’s report states that “clinical investigation” includes phases 1 through 4 clinical research for drugs and biologicals and approved trials for devices (including medical supplies).

The Sunshine Act and accompanying regulations largely, but not entirely, preempt state and local laws and regulations. Thus, manufacturers and recipients must determine whether any additional laws or regulations are relevant to specific situations. For most journals, authors must disclose conflicts of interest and funding support. The Sunshine Act provides yet another mechanism for transparency in those relationships and adds the force of law behind the failure to make such a disclosure.

JOHN GLICKSMAN was counsel to the firm of Parrish Law Offices and DEBRA PARRISH is a partner with Parrish Law Offices, Pittsburgh, Pennsylvania.