Sunshine Act Update

By Jill | Medical Devices

When the Affordable Care Act was passed in 2010, the law included a provision called the Physician Payment Sunshine Plan. However, the U.S. Centers for Medicare & Medicaid Services (CMS) did not release final regulations to implement the Sunshine Act until February 2013.

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The Sunshine Act deals with the promotional materials, stock options, gifts, meals, and consulting fees that pharmaceutical and medical device companies provide to physicians. The act was the result of questions posed in recent years about the impact of these materials on physicians’ prescribing and purchasing habits and the effect on patients.

In order to provide greater transparency about the financial relationships between physicians and industry, medical device and pharmaceutical companies are required to report annually on “payments or other transfers of value” to “covered recipients,” that is, physicians and teaching hospitals. In addition, pharmaceutical and medical device companies are obligated to disclose on an annual basis any ownership or investment interests physicians or their immediate family members have in those companies. The companies must also report to the CMS any payments or transfers of value made to those investors.

Dr. Terry Canale explains further provisions of the Sunshine Act: “Physician-owned distributorships (PODs) that purchase covered products (drugs, devices, biologics, or medical supplies paid for under any U.S. government healthcare program) for resale or distribution are covered, but entities that purchase covered products solely for their own use are not.”

Since September 2014, the information provided to the CMS has been available to the public on a searchable government database. Beginning in April 2015, summaries of information from each medical device and pharmaceutical company will be submitted annually to Congress as well as each state.

Payments of less than $10 do not need to be reported unless they total more than $100 annually. This $10 threshold is pegged to the Consumer Price Index and will be adjusted annually for inflation. Other exemptions include things like notepads and pens of nominal value along with samples and coupons to obtain samples, devices, and medical supplies. Doctors who have financial relationships to medical device and pharmaceutical companies need to understand the Sunshine Act and consider its impact on their daily activities as well as how it alters the perceptions of patients.