Senators Kohl and Grassley Introduce Bill Targeting Industry Gifts to Physicians

Many pharmaceutical manufacturers are already struggling under the regulatory burden associated with the various requirements of state gift reporting statutes.  That burden may soon be made heavier.  Earlier this month, Senators Herb Kohl (D-WI) and Charles Grassley (R-IA) introduced legislation that would require drug, biologic, medical device, and other medical supply manufacturers to whom payments are made under Medicare, Medicaid, or the State Children’s Health Insurance Program (“SCHIP”) to disclose to the Secretary of Health and Human Services, on a quarterly basis (and in annual summaries), the amount of money they give to physicians through payments, gifts, honoraria, travel, and other means.  The bill, titled the “Physician Payments Sunshine Act of 2007” (S. 2029), is modeled on similar state legislation in Minnesota, Vermont, Maine, and West Virginia, and was introduced following a hearing earlier this summer before the Senate Special Committee on Aging on the same topic.  If enacted, S. 2029 will add to manufacturers’ regulatory burdens, and unless the legislation is amended to preempt current state “physician payment sunshine” laws, companies will need to coordinate reporting obligations because of a tapestry of varying state and federal requirements.   

S. 2029 would amend the Social Security Act (42 U.S.C. § 1301 et seq.) to create new § 1128G (“Quarterly Transparency Reports From Manufacturers of Covered Drugs, Devices, or Medical Supplies Under Medicare, Medicaid, or SCHIP”) to require companies with $100 million or more in annual gross revenues to report the name and address of the physician, any facility with which the physician is affiliated, the value and the date of the payment or gift, its purpose, and what, if anything, was received in exchange. If a payment or other “transfer of value” is provided to an entity that employs the physician (or with whom the physician has tenure or has an ownership interest in), the company must report the entity and its primary place of business or headquarters.  Companies that fail to report the required information would be subject to penalties ranging from $10,000 to $100,000 for each violation.  Such penalties would be imposed and collected in the same manner as civil monetary penalties under the Social Security Act.

S. 2029 would also require the Secretary of Health and Human Services to: (1) establish procedures (no later than June 1, 2008) to ensure that the information and summary reports submitted pursuant to new § 1128G are readily accessible to the public through an internet website “that is easily searchable, downloadable, and understandable;” and (2) provide annual reports to Congress (beginning in 2009) detailing the information submitted by companies and any enforcement actions taken under the new law.    

In a press release announcing the introduction of S. 2029, Sen. Grassley commented:

As the editorial board of the Des Moines Register wrote recently, and I quote, “Your doctor’s hands may be in the till of a drug company. So how can you know whether the prescription he or she writes is in your best interest, or the best interest of a drug company?”  That is an excellent question.  Currently, the public has no way of knowing whether their doctor has taken payments from the drug and device industries, and I intend to change that–not just for Iowans but for all Americans. . . .

The Physician Payments Sunshine Act sheds light on these hidden payments and obscured interests through the best disinfectant of all: sunshine.

Senators Claire McCaskill (D-MO), Charles Schumer (D-NY), Amy Klobuchar (D-MN), and Ted Kennedy (D-MA) are original cosponsors of S. 2029.  The bill has been referred to the Senate Finance Committee.  If enacted, the information made available pursuant to S. 2029 would certainly be used by some organizations as fodder to further attack drug and device marketing practices.