Sunshine Act Revised as State Gift Bans Loom

Earlier this month, Senators Charles Grassley (R–IA) and Herb Kohl (D–WI) introduced a somewhat softer version of the Physician Payments Sunshine Act (S 2029), a piece of legislation that has garnered significant interest among members of the medical device community.

The legislation would require medical device manufacturers with annual revenues of more than $100 million to submit quarterly and annual reports of payments and other transfers of value made to physicians and affiliated entities. The latest draft of the bill addresses some, but not all, of the concerns raised by industry association AdvaMed ( Washington, DC) upon its review of the bill's earlier iteration. The revised legislation would impose significantly lower penalties on entities failing to meet physician payment reporting requirements. It would also preempt state-level reporting requirements, some of which would be more stringent.

“Physicians play a vital role in medical technology innovation, and their contribution, which leads to improved patient care, needs to be valued and understood,” said Michael A. Mussallem, chairman and CEO of Edwards Lifesciences ( Irvine, CA) and AdvaMed board chairman. “This revised legislation lays out a framework for the appropriate disclosure of financial relationships between physician innovators and the companies that make their vision a reality.”

In commending the revised legislation, AdvaMed noted that continued innovation in healthcare is driven by the ability of medical technology manufacturers to work closely with physicians and other care providers. “Their input often leads to significant product improvements and is critical to our industry's iterative development process and improved patient care,” AdvaMed stated. “It also is essential that physicians receive education and training to ensure that technologies are used safely and effectively.”

“While AdvaMed is pleased with the direction this bill has taken, we believe it should address our concerns that many medical device companies are small businesses that may lack the resources to meet the administrative requirements set forth in the bill,” said Stephen J. Ubl, president and CEO of AdvaMed. “We appreciate the willingness of the Senate sponsors to consider our concerns on the original threshold based on annual revenues and will continue to work to adopt an alternative approach that would exempt companies that make payments to physicians of less than $250,000 annually.”

Debate surrounding the Physician Payments Sunshine Act is only one part of a much broader move to limit the perceived financial influence that pharmaceutical and medical device manufacturers wield over their customers. In several instances, states have proposed wholesale bans on manufacturers' gifts and payments to physicians. And although the revised Senate version of the Physician Payments Sunshine Act would preempt state-level reporting requirements, it is unclear what—if any—implications the legislation might have for gift bans.

In March, the Massachusetts State Senate unveiled a far-reaching healthcare reform bill that would, among other provisions, impose a ban on all gifts to healthcare providers and their immediate family members. The gift ban provision of the bill—titled An Act to Promote Cost Containment, Transparency, and Efficiency in the Delivery of Quality Healthcare (S 2526)—would apply to medical device manufacturers as well as pharmaceutical and biotechnology companies. The state senate passed the legislation on April 17, leaving the gift ban provision intact.

And, just this month, New York Governor David A. Paterson announced that he has proposed legislation that would ban gifts and payments in excess of $50 per year from drug companies to physicians and other prescribers. Text of the new legislation was unavailable at press time, and it is unclear whether the proposed legislation would also apply to medical device manufacturers. The governor's announcement can be found at www.state.ny.us/governor/press/press_0515085.html.

© 2008 Canon Communications LLC

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