CMOs, CROs will Report Payments to Doctors Under Final 'Sunshine' Rule

By Zachary Brennan

- Last updated on GMT

Related tags: Manufacturing, Report

'Sunshine' Act gives CMOs, CROs and sponsors a short time to report physician payments
'Sunshine' Act gives CMOs, CROs and sponsors a short time to report physician payments
CMOs and CROs must notify sponsors of payments made to physicians on their behalf under long-awaited US 'Sunshine' rules published last week.

The final rule, released on Friday​, requires drug manufacturers, including CMOs, to begin collecting data on relationships with doctors from August and report it to CMS by March 31, 2014. CMS clarified in its final rule that CMOs would fall under it. 

Payment categories will include consulting fees, honoraria, gifts, food, entertainment, travel and charitable contributions, among others. Industry players are required to report their payments if they are covered by any federal health program. The information will be published on a public website on September 30, 2014.

However, there are some caveats. If a contract manufacturer does not manufacture a covered drug, device, biological, or medical supply “except pursuant to a written agreement to manufacture the covered product for another entity, does not hold the FDA approval, licensure or clearance for the product, and is not involved in the sale, marketing or distribution of the product, then the manufacturer is only required to report payments or other transfers of value related to the covered product​.”

Similarly, most payments related to research and CROs also must be reported, even if they are made through a chain of agreements.

For example, agreements between an applicable manufacturer and a CRO, between a CRO and an [site management organization (SMO)], and then between an SMO and a teaching hospital would be considered a continuous chain of agreements from the applicable manufacturer to a covered recipient and would be considered a research agreement​,” CMS said. 

But due to the complexities of some of the payments, there are certain areas where CROs and other sponsors or manufacturers would be exempt from reporting requirements. Those exemptions include:

  • Payments or gifts of less than $10 in value;
  • Educational materials that directly benefit patients or are intended for patient use;
  • Discounts and rebates;
  • Product samples; and
  • Short-term loans.

Payments for accredited continuing medical education will also be excluded from the finalized rule, which was made into law as part of the Affordable Care Act.

Manufacturers, CMOs, group purchasing organizations, as well as physicians and teaching hospitals, will have an opportunity to review and correct reported information prior to its publication online.

ProPublica, a nonprofit journalism site, has already released a database​ of industry payments from 12 pharma companies and the doctors receiving the payments, though the CMS database will be broader in scope.

Cost of Compliance

The costs of compliance will largely fall to manufacturers and group purchasing organizations and the estimated total cost of these provisions will be approximately $269 million in the first year and $180 million annually thereafter, according to CMS. 

The rule also stated that it preempts similar state laws, creating the possibility of "cost-savings, since a single reporting system for reporting this information is less burdensome than multiple programs​." 

For companies that fail to comply or provide false information, the maximum total penalty that can be assessed by CMS is $1.15m.

The Association of Contract Research Organizations (ACRO) told that they are still reviewing the rules. ACRO previously said the final rule could have damaging effects on research and that the publication of some data could be misinterpreted.

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