Physician Payment Sunshine Act: MedPAC Sends Formal Recommendations to Congress

“Comprehensive information about physicians’ financial relationships with drug and device manufacturers would help payers, plans, and the general public better understand how they affect physician practice patterns and health care costs.” (MedPAC, March ‘09, page 321)

The Medicare Payment Advisory Commission (MedPAC) presented their March recommendations to Congress. Their report discusses a broad range of payment issues from hospital billing and Medicare Part D premiums to hospice care. Included in this report is a series of recommendations on transparency: Public reporting of physicians’ financial relationships.

This report and subsequent recommendations focus on the cost side of the healthcare equation. They readily admit that the majority of interactions between physicians and manufacturers are beneficial in developing drugs and devices by overseeing clinical trials, inventing products, and providing expert advice, they also acknowledge the role that this interaction plays in the education and training of physicians.

As in all payor recommendations (government, health plans), they focus on the role that in at least some interaction with physicians are associated with rapid prescribing of newer more expensive drugs and with physician requests that such drugs be added to formularies.

The Commission recommends that manufacturers of drugs and medical devices be required to publicly report their financial relationships with physicians to the Secretary of Health and Human Services.

According to MedPAC the benefits to reporting include:

· Discouraging physicians from accepting gifts or payments that violate professional guidelines;

· Helping media and researchers to shed light on physician industry relationships and explore whether manufacturers and physicians are complying with industry and professional standards;

· Helping The Centers for Medicare and Medicaid Services and other payors to be able to use this information to examine whether physicians’ practice patterns are influenced by their relationships with industry.

They have also added product samples to their list of disclosed items stating that more information about the distribution of samples will:

· Enable researchers to study their impact on prescribing patterns and overall drug cost; (notice nothing about studying the patient benefits of such interactions)

· Help payors and health plans target their counter-detailing programs, in which they provide information on drugs (cheaper is better) through educational visits.

Key Features of the Recommendations

The Congress should require all manufacturers and distributors of drugs, biologicals, medical devices, and medical supplies (and their respective subsidiaries) to report to the Secretary their financial relationships with:

· Physicians, physician groups, and other prescribers;

· Pharmacies and pharmacists;

· Health plans, pharmacy benefit managers, and their employees;

· Hospitals and medical schools;

· Organizations that sponsor continuing medical education;

· Patient organizations; and

· Professional organizations.

The Congress should direct the Secretary to post the information on submitted by Manufacturers on a public website in a format that is searchable by:

· Manufacturer;

· Recipient's name, location, and specialty (if applicable);

· Type of payment;

· Name of the related drug or device (if applicable); and

· Year.

The Congress should require manufacturers and distributors of drugs to report to the Secretary the following information about drug samples:

· Each recipient's name and business address;

· The name, dosage, and number of units of each sample; and

· The date of distribution.

The Secretary should make this information available through data use agreements.

The Congress should require all hospitals and other entities who bill Medicare for services to annually report the ownership share of each physician who, directly or indirectly, owns an interest in the entity (excluding publicly traded corporations). The Secretary should post this information on a searchable public website.

The Congress should require the Secretary to submit a report, based on the Disclosure of Financial Relationships Report, on the types and prevalence of financial arrangements between hospitals and physicians.

· Manufacturers should report payments or transfers of value to a recipient if the total value of payments made to the recipient exceeds $100 in a calendar year. This reporting threshold should be adjusted annually based upon inflation.

· The following types of payments or transfers of value should be reported to the public database: gifts, food, entertainment, travel, honoraria, research, funding for education and conferences, consulting fees, investment interests, and royalties (but not discounts or rebates; product samples are addressed in Recommendation 5-3).

· Manufacturers should report the value, type, and date of each payment; the name, physician specialty (if applicable), Medicare billing number (if applicable), and business address of each recipient; and the name of the related drug, device, or supply (if applicable). Medicare billing numbers of physicians and other providers would be available only to researchers through a data use agreement with the Secretary.

· Manufacturers should be allowed to delay reporting of payments related to a clinical trial until the trial is registered on the National Institutes of Health website. Manufacturers should also be allowed to delay reporting of other payments related to the development of a product until the Food and Drug Administration approves or clears the product but no later than two years after the payment is made.

· This federal reporting law should pre-empt state reporting laws except those that collect information on additional types of payments or recipients.

· The Secretary should have the authority to assess civil penalties on manufacturers who fail to meet the law's requirements.

· The Secretary should monitor the impact of the law on potentially beneficial arrangements between physicians and manufacturers.

MedPAC’s recommendations are consistent with the recommendations voted on in December. Their perspective represents a view of industry that gives little-to-no credit for manufacturers’ medical research and the need to recover the cost for that research in the quick adoption of new therapies and the benefits to patients that those therapies ultimately have.

The MedPAC Committee Members represent the views of the payors (insurance companies, health plans and government agencies), there is no manufacturer or researchers and little provider representation on the Committee (see Breakdown).

Carrier Type	Number
Health Plans	6
Government Payers	2
Hospitals	2
Employer Groups	1
Pension Fund Managers	1
Health Economist (editor of managed care journal)	1
Academic-Private Practice Surgeon	1
Private Practice Urological Surgeon	1
Family Practice (Rural Health)	1
Medical Researcher (PhD)	1

From their bios, it is clear that MedPAC has little clinical expertise on the Committee and no one on the Committee would be directly affected by their recommendations.

If Congress is serious about this type of legislation, it would be helpful to open the process to a wider group of stakeholders which would still include the payors but also researchers, private practice physicians, academic physicians, physician and patient groups, manufacturers and others who these proposals would affect.

Senator Baucus referred to these recommendations (prior to publication) in his white paper “Call To Action Health Care Reform” released this past November.

A recent MedPAC Report to Congress outlined several advantages of such a requirement (public reporting). It may discourage inappropriate arrangements between physician and industry, allow the media to explore potential conflicts of interest, enable payors to examine physician practices that may be influenced by particular relationships, and highlight those physicians who have decided not to take part in inappropriate relationships.

Senator Grassley’s staff has also called attention to MedPAC’s recommendations as a potential reason to expand the Physician Payment Sunshine Act.

The MedPAC recommendations will have a profound effect on public policy going forward. It is disappointing that only the payor perspective is presented.

MedPAC:

Press Release

Full Report

Public Reporting of Physicians Financial Relationships

Previous Articles on MedPAC:

MedPAC: Votes for Disclosure — Payer Perspective