Now that the Centers for Medicare and Medicaid Services (CMS) has published its long-awaited final rule implementing the Physician Payments Sunshine Act (Federal Register, February 8, 2013), medical device manufacturers can move forward to carry out a familiar task: complying with regulations.
Under the new rules, formalized as the National Physician Payment Transparency Program, device manufacturers must begin collecting data about their payments to physicians and teaching hospitals on August 1, 2013, and submit required reports by March 31, 2014. CMS will make the intended reporting results available to the public in September 2014.
But there may also be unintended consequences. Device entrepreneurs have long voiced concern that public reporting of physician-industry relationships could have a chilling effect on medical product innovation, especially if the reports do not offer sufficient context for understanding those relationships. “Such a lack of context is most concerning to physicians and teaching hospitals, and could unintentionally bring about the severing of existing relationships or material restrictions on future relationships,” says David Hoffmeister, JD, a partner in the law firm of Wilson Sonsini Goodrich & Rosati, Palo Alto, CA.
“Key opinion leaders are potentially the physicians most affected, since they are often engaged in multiple capacities,” says Jonathon Kellerman, a principal in the pharmaceuticals and life sciences industry group of PricewaterhouseCoopers. “It’s possible they could become more selective about the number of companies or types of projects they are willing to engage.”
Reputations in the Balance
According to a recent survey of physicians conducted by MMIS, Portsmouth, NH (http://www.mmis-inc.com), a maker of secure business collaboration solutions, more than half of the respondents admitted they didn’t know that the law requires medical device companies to report on expenditures annually, without physician review of the data prior to submission to the government, and 63% were “deeply concerned” that a record of payments from industry in excess of $10 will be available in a publicly searchable database. In addition, 21% of physicians said they would sever their relationship with a manufacturer who reported inaccurate information about payments if disclosed to the public.
“Physicians feel that these trends are out of their control, and it’s their reputations that hang in the balance,” says Michaeline Daboul, MMIS president and CEO. “There is a lot of good that comes out of the relationships between physicians and industry, but for now many physicians may be choosing to wait and see how implementation of the new rules will affect their practice and them personally.”
“If public disclosure of payments creates significant political issues for physicians, universities, or teaching hospitals, then you can bet there will be an effect on innovation,” says Hoffmeister. Universities and academic medical centers might impose more stringent policies for preventing conflicts of interest. Fewer physicians might agree to work on product development activities, or they might demand premium pricing for becoming involved with device companies. And some clinicians may decline to participate in clinical trials, driving even more clinical research offshore.
Between the Baselines
But how will we know if any of these trends are taking place? CMS says that it will “evaluate over time—and encourage others to evaluate—the effects of this rule on Medicaid enrollment; on Federal, State, and enrollee costs; and on health outcomes.” Somewhat less directly, the agency also plans to “continue considering methods” for identifying changes in relationships brought about by public reporting, presumably including the effects of the rule on the industries and practitioners whose relationships will be exposed to public scrutiny.
In the meantime, there is no public baseline for knowing how physicians are involved with medical device companies. Moreover, says PwC’s Kellerman. “There are some obstacles—such as the confidentiality of intellectual property agreements— that prevent the public from having a complete picture of how physicians engage with companies to conduct research and support development.”
“Consumers don’t really understand these relationships or the need for these relationships,” says Hoffmeister. “I don’t have a lot of confidence that CMS will devote much attention to informing the public about the positive relationships and success stories of physician-industry collaboration, or putting the relationships in an appropriate context.”
Keep the Public in Mind
For now, industry action may be limited to offering suggestions for the newly launched OpenPayments website, which is scheduled to become the public portal for reported information about financial relationships between physicians and industry, and the templates for transparency reporting, which CMS has released for public review. Comments about the templates can be submitted via
But perhaps in the future industry will find a need to address consumers more directly. “The industry and trade organizations have not focused on educating consumers about this area,” says Hoffmeister. “Maybe that should change.”
Steve Halasey is vice president for programs at the Institute for Health Technology Studies (InHealth), a 501(c)3 research and educational foundation measuring the value of medical technology innovation, Washington, DC. He has more than 20 years of communications and editorial experience with publications informing industry executives, researchers, and investors in the medical device industry.
