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CMS to Make Drug-Makers Disclose Dealings with Physicians: Senators Prompt Action

Senators Kohl, Grassley force action by agency on their bill which also includes other medical device-makers and teaching hospitals

Sen. Herb Kohl (D-Wis.), Chair, Senate Select Committee on AgingSen. Chuck Grassley (R-Iowa)Dec. 15, 2011 – The Centers for Medicare and Medicaid Services yesterday issued a rule that will make public the often questionable financial relationships between drug and device manufacturers and certain health care providers. The action caused Sen. Herb Kohl, chairman of the Senate Special Committee on Aging, to postpone a hearing scheduled today aimed at getting this long-delayed Physician Payments Sunshine Act implemented.

Kohl (D-Wis.) and Sen. Chuck Grassley (R-Iowa) developed the Physician Payments Sunshine Act, which was signed into law as Section 6002 of the Patient Protection and Affordable Care Act.


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The law requires public disclosure of the financial relationships between physicians and the pharmaceutical, medical device and biologics industries, according to the senators.

The law also required the Department of Health and Human Services (HHS) to establish reporting procedures for applicable manufacturers to submit information, as well as procedures for making that information available to the public, by October 1, 2011. CMS issued that guidance yesterday.

The CMS news release on its action, not acknowledging the pressure from the senators, said, “This is one of many steps under the Affordable Care Act designed to increase transparency in the health care system, which can lead to better care at lower costs.”

“When people are faced with the difficult task of choosing the right doctor, they need all the information they can gather. If your doctor is taking money from manufacturers of prescription drugs, suppliers of wheelchairs or other devices, you deserve to know about it,” said Peter Budetti, M.D. CMS deputy administrator for Program Integrity.

“Disclosure of these relationships will discourage the inappropriate influence on clinical decision-making that sometimes occurs while still allowing legitimate partnerships.”

Sen. Kohl said, “The Sunshine Act guidance is a welcome, if late, step toward ensuring that the financial links between physicians and the drug, biologics and medical device industries are transparent.”

“As we move forward, it’s vital that stakeholders have a voice in this process to ensure transparency and accountability in our health care system.”

 “The completion of the guidance is good news,” Grassley added. “It came after a lot of follow-up from Sen. Kohl and me to find out the status and to press for results from CMS. It shows Congress has a responsibility not just to make laws but also to see that they’re carried out as intended. Companies need this guidance to do their part.”

Kohl and Grassley say they have been pushing for the timely release of regulatory guidance for more than a year. In November 2010, Grassley and Kohl urged HHS Secretary Kathleen Sebelius to implement the Sunshine Act with adequate time for time for comment and review. And, on October 3, 2011, Kohl and Grassley urged CMS to issue guidance and sought an explanation for having missed the October 1, 2011 deadline.

The two senators said they plan to review the newly issued guidance to see if it fulfills all of their goals in developing the law. Kohl plans to reschedule the hearing early next year.

Below is the rest of the statement from CMS.

“The proposed rule would require manufacturers of drugs, devices, biologicals, and medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program to report to CMS payments or other transfers of value they make to physicians and teaching hospitals.

“The proposed rule would also require manufacturers and group purchasing organizations (GPOs) to disclose to CMS physician ownership or investment interests.

“This increased transparency is intended to help reduce the potential for conflicts of interest that physicians or teaching hospitals might face as a result of their relationships with manufacturers.

“Drug and biologic manufacturers, medical device or supply manufacturers, and GPOs would be affected by the new reporting requirements. These organizations, as well as the physicians and teaching hospitals, would be allowed an opportunity to review and correct information prior to its publication.

“The Affordable Care Act provides that violators of the reporting requirements will be subject to civil monetary penalties (CMPs), capped at $150,000 annually for failing to report, and $1,000,000 for knowingly failing to report.

“CMS is proposing that data collection will not begin on Jan. 1, 2012 and that manufacturers and GPOs do not need to begin data collection until final regulations are issued. Depending on the timing of the final rule, CMS is proposing that manufacturers and GPOs will be required to submit a partial year on Mar. 31, 2013.

“Once the data has been submitted, CMS will aggregate manufacturer submissions at the individual physician and teaching hospital level, provide them with a 45-day period to confidentially review and, if necessary, correct the data, and make the data publicly available by Sep. 30, 2013.

“CMS will accept comments on the proposed rule until Feb. 17, 2012, and will respond to them in a final rule to be published in 2012.”

The proposed rule can be downloaded as a pdf document – click here.


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