Federal Sunshine Bills: Where Do We Stand?

I was asked by some of my friends at the National Physicians Alliance for comments on the Physician Payment Sunshine Act now before Congress. I had not commented previously because I was waiting to see what version of the proposal seemed to be going forward. There is now a House bill, and a Senate bill that has been revised from the earlier Senate version. Our colleagues at the Prescription Project seem to believe that some action is imminent on the Senate side, and have prepared a Fact Sheet on the legislation comparing the House and revised Senate bills. (The Fact Sheet may be a working draft as I cannot find it on their website.)

I’m relying here on the Prescription Project summary plus the text of the revised Senate bill. I’ll state first the facts as shown by those sources and then my own comments in bold italics.

The Senate bill would apply to any drug or device company. The House bill applies only to companies with annual revenues greater than $1M. I see no reason to restrict reporting requirements to larger companies. If they make enough bucks to give physicians some, then they can report.

Payments to docs that would have to be reported (in the Senate version) includes gifts, food, entertainment, travel, honoraria, speaking and consulting frees, stocks or options, and funding for clinical trials. The House version excludes clinical trial funding but does include funding for non-clinical trials such as health services research. The House version, unlike the Senate, includes also participation in continuing education and items provided at less than market value. I would agree with the House version that costs related to continuing education, if paid directly from the company to the physician, amount to a cash equivalent and should be reported. I also would include both types of research in the reporting requirement. Commercial bias can be even more blatant in non-clinical trials such as cost-effectiveness analysis.

The Senate also exempts more items from the reporting requirement compared to the House. Both exempt gifts and payments less than $25, samples, things provided to the physician when the physician is a patient, and compensation to a physician who is a company employee. The Senate additionally exempts payments to individuals unless the aggregate annual value per company reaches $500 (from which calculations all gifts less than $25 are excluded); discounts and rebates; educational materials intended for patient use; and “the qualitative value of training or education,” whatever that means. I would argue that the $500 aggregate, excluding the $25 individual gifts, is way too big a loophole and encourages companies to break up gifts into smaller pieces. On the other hand, the Prescription Project is worried about the educational materials for patient use as a loophole, and I admit that I cannot quite see how that would be a big problem, so I’m inclined to give the industry a pass on that one.

The bills proceed to require that disclosures be made regularly to DHHS, and that the reports be placed within a reasonable time on a public website that is easily searchable, listing the doc’s name, address, facility affiliation, amount of payment, and category of payment. The bills have varying penalties for noncompliance; the House bill has no cap but the Senate bill would cap possible penalties at $50,000 for failure to report and $250,000 for “knowingly” failing to report. We have seen in Minnesota that having a required reporting law without the corresponding requirement that the information be easily publicly available and searchable yields no disclosure, so the requirement for the website and its specifications seems essential. The problem with any capping of possible fines is that we are talking about an industry which appears ready to spend at least $50 billion annually marketing drugs to physicians. Fines of even many millions of dollars are like mosquito bites to the large drug firms. I can see no justification of any cap. How you get a fine to be big enough so that the industry will take notice is as yet an unanswered question.

The Senate but not the House bill would pre-empt existing state reporting laws. I agree with the industry argument that it would be onerous to have to report one set of figure with one set of specifications to the Feds and a completely different set to a state like Vermont or Minnesota. On the other hand, this entire measure of legally required disclosure as a tool to fight undue industry influence over physician prescribing is a work in progress. It is highly unlikely that any Federal law will get it just right the first time out. I think we need to permit states, at least for a while, to experiment with more stringent requirements if the political will exists. I doubt there will be so many such states as to create huge hassles for the industry. Remember, these are data that the industry routinely tracks on its own for internal purposes. We are not asking companies to start gathering a completely new sort of data. If the Federal reporting process works well, individual states can be expected to repeal their own reporting requirements, if for no other reason than to save state officials the hassle.

Finally, the Senate bill would not take effect till 2011. I would agree with perhaps a year’s lead time, but I see no reason at all for that long a delay.