Sens. Herb Kohl, D-Wis., and Chuck Grassley, R-Iowa, have narrowed state pre-emption provisions in their latest Physician Payments Sunshine Act.

As a result, the ¹ bill to create a federal program for informing the public about drug and device company gifts to physicians no longer protects drug and device companies from all state laws and regulations that serve a similar purpose.

Instead, the pre-emption language specifies that states can require disclosure or reporting of information not required to be disclosed or reported by the federal program.

The Pharmaceutical Research and Manufacturers Association endorsed the senators' previous sunshine bill in 2008 after the legislators made changes to S. 2029 to pre-empt state reporting laws so industry would have a single set of disclosure requirements to meet (² Also see "Sunshine Bill Gains Momentum From PhRMA But Time May Be Running Short" - Pink Sheet, 26 May, 2008. p. 17).

The drug industry organization is reviewing the current bill, Senior Vice President Ken Johnson said in a Jan. 22 statement.

But he reiterated PhRMA's position that "any federal legislation should establish a uniform, national reporting standard that pre-empts state marketing, reporting or disclosure laws."

In contrast, Sharon Treat, executive director of the National Legislative Association on Prescription Drug Prices, praised the new pre-emption language as a "real improvement."

More Reporting And Larger Fines

Other changes to the bill from the 2008 version that are subject to a cool reception from industry are lower triggers for reporting and higher penalties for reporting.

Under the new bill, a company would report to HHS its payments to a physician, physician medical practice or physician group practice if the aggregate of payments to a recipient exceeds $100 during a calendar year. Last year, the senators had raised the trigger to $500 to increase the bill's appeal to industry (³ Also see "Grassley, Kohl Retool Physician Gift Reporting Bill To Defuse Opposition" - Pink Sheet, 19 May, 2008., p. 3).

Civil penalties have gone up to not less than $1,000, nor more than $10,000, for failure to report a single payment, with a cap of $150,000 for each annual report.

Penalties increase to a minimum of $10,000 and maximum of $100,000 per incident for "knowing" failure to report, with a cap of $1 million for each annual submission.

Who Reports

The bill would require reporting by manufacturers of drugs, devices, biologicals or medical supplies for which payment is made by Medicare, Medicaid or the State Children's Health Insurance Plan.

Group purchasing organizations, as well as manufacturers, would have to report if a physician holds an ownership or investment interest, other than a publicly traded security and mutual fund, in the organization or manufacturer.

The bill would not require reporting by continuing medical education organizations or patient and physician advocacy groups, as recommended by the Medicare Payment Advisory Commission (⁴ Also see "Physician Payment Disclosure Bill Should Include Other Entities – MedPAC" - Pink Sheet, 8 September, 2008. p. 20).

What Is Reported

It would, however, require reporting of payments for items such as speaking on a CME program, education, honoraria and royalties or licenses, as desired by MedPAC.

The cost of items, such as discounts (including rebates) and product samples, would not be included in aggregating the payments. Information reported is to include the specialty and Medicare billing number of the recipient, where applicable.

Reporting of payments associated with product development agreements and clinical investigations may be delayed until after FDA approves the product, or until two calendar years after the date the payment is made, whichever occurs first.

The database of reported payments is to be searchable, on the Internet, and include enforcement actions for failure to report.

- Cathy Dombrowski (c.dombrowski@elsevier.com)

Some Clouds For PhRMA In Sunshine Act: Revised Bill Loosens Pre-emption

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