Yesterday, CMS started to make up for lost time when it issued the draft regulations on the Sunshine law in the Affordable Care Act. This new law requires manufacturers of drugs, medical devices (e.g. stents, replacement knees etc), and biologics to report all payments they make to doctors and teaching hospitals to HHS, which must disclose these payments in a publicly available, on-line searchable database.

In response, Senators Grassley and Kohl cancelled a hearing to explore why CMS had missed an earlier deadline and thus delayed the start of the new transparency program. This was of concern to both consumer advocates eager that these payments become public, and to industry representatives who are concerned about how to comply with the transparency law starting next year.

The delayed release of the new draft rules does mean that industry will not have to record or report payments that are made before the final version of the rule enters into effect, likely no earlier than April or May of next year. CMS is accepting public comment on the draft rules until Feb. 17, 2012. But CMS is standing by the law’s required September, 2013 deadline for disclosing to the public any 2012 payments that are made after the rule is final.

While we are disappointed that the first public transparency reports may not have a full year’s data, we think it is more important to allow CMS adequate time to ensure that the final regulations are as strong and effective as possible. From our point of view, good regulations will help ensure that industry reports payments fully and precisely, so that patients, the public and CMS itself can best understand what these payments are for, and evaluate whether a payment is appropriate.

One highlight of the draft rule was how CMS captured the purpose of the law’s new public transparency program. CMS states that, while industry collaboration can be beneficial, “payments to physicians and teaching hospitals can also introduce conflicts of interest that may influence research, education and clinical decision making in ways that compromise clinical integrity and patient care, and may lead to increased health care costs.”

The on-line database of industry payments, to be made publicly available by Sept. 30, 2013, will include the name and identifying information for the manufacturer making the payment, the doctor or teaching hospital receiving it, the amount of each payment, the drug or device associated with the payment or “transfer of value”, and the form and “nature” of the payment. We were pleased that CMS proposed broadly inclusive definitions of manufacturers, their subsidiaries, and third parties who may make payments on their behalf, although CMS has asked for comment on this definition.

The draft rule also proposed that the categories of payments should be distinct from one another to ensure the utility of the information to patients, to researchers and the public. However, we do have concerns that the final rule will not honor that intent if it does not provide clear definitions on how the categories (such as education, gifts, consulting, etc.) differ from one another. The draft rule as it stands now leaves out clear and specific definitions, which would open the door to varying interpretations by each company, a problem we have already seen in the public disclosures required under court settlements. This results in data that is inconsistent, confusing, and not useful to the public.

Overall the CMS framework is solid and reflects the spirit and intent of the Sunshine law, which was supported not only by consumers but by leaders in the medical profession, the Institute of Medicine, MedPac, and many in industry.

The draft regulations include many thoughtful discussions of reporting issues and invite further comment on many of them— a clear opportunity for consumer advocates concerned about the drug industry’s abuse of financial incentives to doctors or teaching hospitals. We will be submitting our recommendations to address this issue and hope others will as well.

— Marcia Hams, Director of Prescription Access and Quality & Wells Wilkinson, Staff Attorney