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Counting value under the US Sunshine Act

International in scope, the implication of the transparency legislation are anything but clear
Counting value

New rules introduced in the US to make the financial relationships between pharma companies and physicians more transparent are themselves lacking in clarity, it would appear.

In February 2013, the Centers for Medicare and Medicaid Services (CMS) published its final rule requiring manufacturers of medicines and medical devices to report payments exceeding $10 or other 'transfers of value' (TOV) made to physicians and teaching hospitals, as well as physician ownership and investment interests.

Under the Act, all applicable manufacturers were required to start collecting data from August 1, 2013, and submit it to the CMS by March 31, 2014. Physicians and hospitals started the registration process on June 1, with a review process kicking off in July.

At the moment that information is still under wraps, but will become open for scrutiny by the public in September, and it is widely anticipated that journalists and other interested parties will be sifting through the data to highlight the biggest spenders and recipients.

Coverage confusion
One the face of it the situation is fairly straightforward: the CMS has set out pretty clear guidance when it comes to financial payments and an informal straw poll of pharma companies suggests they are comfortable with what is covered. However, that is not the case with transactions that come under the TOV category.

One area of confusion is support for medical writing and editorial services, such as may be provided by pharma companies to authors of clinical studies. As reported by PME recently, some pharma companies, such as Pfizer and AstraZeneca, consider this is in scope, while others, such as Shire, believe it is not reportable. 

“There is still no consensus as to the definition of or reporting of TOV for publication support provided by applicable manufacturers to covered recipients who are authors on medical publications,” according to Al Weigel, president of the International Society for Medical Publication Professionals (ISMPP).

An informal survey of companies at ISMPP's annual meeting in April revealed a little over 60 per cent of respondents felt publication support was a reportable TOV, with around a quarter indicating it was not reportable and 10 per cent undecided.

While some companies believe physicians gain some value from the support, others consider it is only of benefit to the company and so is not reportable. A third viewpoint adds another layer of complexity, suggesting it is reportable when recipients ask for assistance or are preparing review articles, for example, but not if the support was tied to original research.

“These interpretations may vary for a number of reasons, including company corporate culture and legal guidance,” says Weigel. For those in agreement that publication support is a reportable TOV, practical interpretation also varies.  For example, some will consider agency-provided medical writing support a TOV, but not medical writing support that is provided by internal employees. 

Meanwhile, for the pharma companies at the sharp end of the implementation process it has been a somewhat painful process, according to trade association the Pharmaceutical Research and Manufacturers of America (PhRMA), although in general terms the organisation is wholly supportive of the aims of the Sunshine Act.

“There have been a lot of new updates, policy and reporting changes, as well as a few inconsistencies along the way and this has required a significant amount of compliance and technical investment by our member-companies to ensure they're are fully compliant,” said John Murphy, assistant general counsel at the PhRMA.

While its member companies want to fully comply with the reporting and disclosure requirements of the Act, “this has been somewhat complicated, however, by the varying nature of guidance and regulations put forth by CMS during this implementation phase.”

Not just for the US
What is clear is that under the definitions of the Act, any company selling these products in the US is covered by the legislation - even if it has no physical offices there - so companies in Europe and elsewhere in the world must also comply with the requirements if they have any financial interactions with US physicians.

And while the Sunshine Act is clearly international in scope, it has been developed with the US national operating environment firmly in mind and there have been reports of difficulties for overseas pharma companies trying to register to submit information on the Open Payments website. 

“We have heard that the process was established really for domestic companies and several hasty workarounds were necessary for foreign reporting entities,” said Murphy.

In terms of its scope the Sunshine Act also covers US physicians who practice abroad but maintain a US licence, according to specialist lawfirm Fulbright & Jaworski, which confirmed that entities that operate in the US cannot circumvent reporting requirements by paying recipients indirectly through foreign organisations that do not operate there. 

Benjamin Koplin, a senior associate at Fulbright & Jaworski, said: “Manufacturers are having to address the global nature of the Open Payments programme,” adding that this involves designing processes to collect not only their own data, but also standardised data from their transaction partners which is a “more difficult [and] time-consuming process.” 

Voluntary codes 
With an eye on the Sunshine Act in the US, the European pharmaceutical industry has taken steps to bolster its own policies on physician payment transparency with the adoption of a new code of practice in June 2013 that should have been transposed by national member associations into their own codes by the end of last year.

The code requires companies to disclose all 'transfers of value' to healthcare professionals for consultancy fees, payment for travel or congress fees, as well as a complete ban on all 'gifts'.

The code has been interpreted in some quarters as an attempt by the industry to forestall any rule-making by European legislators by bringing a common set of principles to the table as to what constitutes a TOV, which is fairly variable at the moment between EU member states. The organisation has just published a website ( and Twitter handle (@Pharma2015_16) to raise public awareness.

“We as an industry have said we will be absolutely transparent about our relationships with healthcare professionals and organisations,” said EFPIA director general Richard Bergström .

“But we have only just begun to communicate with the three million medical professionals in Europe about how this will be put into practice. The launch of this campaign continues the conversation using dynamic channels to optimise the reach and connectivity with those who need to know and act on the changes taking place,” he added.

Nevertheless, the EFPIA code has a somewhat looser interpretation of TOV than the Sunshine Act, as it excludes items like medical samples, food and drink/hospitality and ordinary purchases between a healthcare professional and a pharmaceutical company, while doctors can withhold or revoke consent to disclose information.

It also allows aggregate rather than individual research-related payments to be compiled if individual consent is not given and so it is feasible that - if doctors prove reluctant to embrace transparency on a wide scale - European governments may be tempted to force disclosure via legislation. 

France has already started down that path with the passage of the Bertrand Act which is similar to the US policy, while other European countries - including Portugal, Ireland, Denmark, Romania and Slovakia - are also looking at new legislation.

“EFPIA is demonstrating leadership in this area through their code of practice, however any legislative requirements will be mandated by local regulatory bodies,” said Weigel. “With that said this still represents the best opportunity to standardise things across Europe.”

Meanwhile, there is little activity in the Middle East, Africa, South America or Asia regarding transparency guidelines - with the exception of Australia and Japan - so EFPIA's efforts may provide the best opportunity for the development of a global standard. 

A key obstacle, however, is that the situation in the US and Europe is far from being either standardised or finalised. Moreover, additional complexity arises as the US and France are pursuing a legislative route while Japan and other EU countries - led by EFPIA - are pushing for voluntary codes. 

In the meantime, American companies may also be advised to think about expanding data collection and spend-tracking systems to their overseas operations and evolve a more global approach to reporting.

“Given the activity that we are seeing in terms of other countries beginning to levy disclosure requirements, it might be a good idea for companies to begin thinking along those lines,” said Weigel, although progress in this area has been limited due to a multitude of reasons.

Waiting game
With the deadline for filing now passed, the industry is now in wait-and-see mode to see how the publication of the data plays out. It is likely that the media will search for the most egregious examples and leverage them into 'bad pharma' stories, according to Weigel, who notes the result could be continued public distrust of the pharma industry. 

Equally, physicians could also come under scrutiny as patients will now be able to see what financial ties their own doctor may have with a drug or device maker, and there will no doubt be reports of physicians declining authorship and medical writing support. Companies will need to be prepared to explain that these payments to healthcare professionals are necessary, and bona fide reimbursements are critical to the development of new medicines.

Either way, it is important to keep sight of the benefits of transparency in avoiding conflicts of interest and helping companies to be more efficient in managing their relationships with and payments to healthcare professionals. 

On the other hand, it could have an impact if the payment of sums for research ends up being interpreted - and publicised - as the pharma industry paying researchers for results, rather than for the research. In turn, this could make it more difficult to conduct clinical trials.

That view was supported by Murphy, who went on to note that in part the onus is on the CMS to make sure that payment and TOV data are not taken out of context.

There is a statutory requirement for the CMS to provide context regarding the value of physician-industry interactions, said Murphy, adding that PhRMA is also trying to educate the public via initiatives such as its Partners For Healthy Dialogues website.

“Without the appropriate context …it is likely that many patients and physicians will be unable to determine why the Sunshine database exists and could actually determine - inappropriately as a result - that certain physician-industry interactions are somehow inappropriate,” he continued. 

“Given how crucially the drug development process relies on physician input and interaction, this potential consequence to a lack of context regarding Sunshine could be extremely unfortunate.”

Article by
Phil Taylor

freelance journalist specialising in the pharmaceutical industry

17th June 2014

From: Sales, Marketing



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