Sunshine Act/Open Payments Reporting: An Overview

Physician payment transparency requirements in the United States, Europe and Pacific Rim

The Physician Payments Sunshine Act in the United States and similar regulations in other parts of the world address a growing demand for greater transparency regarding financial relationships between life sciences companies and healthcare providers. This space provides background and content for these regulations. For current insights on life sciences compliance information, visit our Legislative Watch.

Federal Sunshine Act

In the United States, the Physician Payments Sunshine Act (PPSA) was enacted in 2010 through section 6002 of the Patient Protection and Affordable Care Act (ACA). The intent of PPSA was to increase transparency of financial relationships between life sciences companies and healthcare providers, including physicians and teaching hospitals.

The Centers for Medicare and Medicaid Services (CMS) fulfills the mandate set forth in ACA through its Open Payments program. The original Sunshine Act was not clear about applicability or implementation. To clarify, CMS proposed an OpenPayments rule in 2011, which was finalized in February 2013. The final rule established Aug. 1, 2013, as the start date for data capture and Mar. 31, 2014 as the first reporting deadline for data through the end of 2013. March 31 continues to be the deadline for filing complete annual reports on the CMS Open Payments website.

The Sunshine Act requires open payment reports from all drug, biologic and medical device manufacturers who have any products covered under Medicare, Medicaid or the Children’s Health Insurance Program (CHIP) and which require a prescription or premarket approval by or premarket notification to the FDA. Group purchasing organizations (GPOs) and physician-owned distributors of medical devices must also report. Payments, or transfers of value, to all licensed physicians, dentists, podiatrists, optometrists and chiropractors, as well as to teaching hospitals must be reported.

The rule requires reporting on three broad categories:

• General payments: including meals, travel reimbursement and service fees
• Ownership or investment interests in manufacturers held by healthcare professionals or their family members
• Research payments for product-development activities such as clinical trials

For 2019, Payments of less than US$10.79 are exempt, unless they total US$107.91 or more in a year. The minimum threshold is adjusted annually based on the consumer price index.  Exemptions include product samples and patient education materials. The law imposes penalties for noncompliance—up to $10,000 for each payment that the company does not report, with more severe penalties for deliberately failing to report.

>> Learn more about federal open payments reporting requirements  

Individual state transparency requirements

In addition to federal-level efforts, some individual U.S. states have also enacted transparency laws, which additional requirements. Vermont’s Prescribed Products Gift Ban and Disclosure Law predates the federal Sunshine Act and is broader in scope. Minnesota, Massachusetts, West Virginia and Washington, D.C., and Nevada all have transparency reporting laws in place and may require reporting of payment and recipient categories that are not required under the federal law. California, Connecticut and Nevada all require that pharmaceutical companies adopt a compliance program in alignment with the PhRMA Code on Interactions with Health Care Professionals; Nevada requires a certified audit annually. In Louisiana, where the state owns most hospitals, the law places a $50 limit on meals and education provided to state employees.

>> Learn more about individual state reporting requirements and deadlines

European disclosure laws and other regulations

Open payments reporting in Europe is a patchwork of self-regulation and national legislation — with a great degree of variation in the specifics from one jurisdiction to the next.

Variables include:

• Who must report
• Which recipients are covered
• Payment/transfer of value categories
• Payment thresholds
• Individual or aggregate totals
• Where reports must be posted/filed

National laws

Soon after the United States passed the PPSA, France passed French Law No. 2011-2012 on the Strengthening of Health Protection for Medicinal and Health Products. Known as the Bertrand Act, the French Sunshine Act is similar to the PPSA, but broader in scope. For example, in addition to the manufactured products covered under PPSA, the Bertrand law also covers cosmetics, tattoo products, tissues or cells and other categories. Similarly, the French law has a longer list of covered recipients. France also requires reporting every six months.

Several other countries — including Portugal, Latvia, Greece and Denmark — also have passed national laws similar to the US and French Sunshine Act. Australia had required reporting of industry-sponsored events since 2007.

Industry self-regulation

In 2013 the European Federation of Pharmaceutical Industries and Associations (EFPIA) unveiled its payment Disclosure Code for its member associations, representing 33 countries in Europe and elsewhere. Some member associations had previously introduced transparency provisions; in some cases, the EFPIA code expanded on the disclosure practices already in place.

Other industry associations followed suit. For example, the European Generic and Biosimilar Medicines Association (EGA — now Medicines for Europe) and MedTech Europe have put their own physician payment transparency guidelines in place.

In some countries that follow industry codes but don’t have national transparency reporting laws, individual healthcare providers can refuse financial disclosure; in these cases, companies report aggregate spend. In countries like France, Portugal and Latvia, adherence to the national law fulfills the EFPIA disclosure requirements, and individuals cannot refuse disclosure.

>> Learn more about international reporting requirements and deadlines   

Open payments reporting in Pacific Rim countries

Like Europe, the Asia-Pacific region is a mix of national laws and industry association codes. In 2011, the Japan Pharmaceutical Manufacturers Association (JPMA) published Transparency Guidelines for the Relation between Corporate Activities and Medical Institutions. These guidelines provide a framework for members companies to use to develop their own transparency policies and reporting strategies. More recently, the 2018 Clinical Research Act includes a transparency obligation, expanding reporting requirements in Japan.

In 2015 the Australian Competition Consumer Commission (ACCC) authorized Edition 18 of Medicines Australia’s Code of Conduct, with transparency provisions similar to the CMS Open Payments program. It requires individual reporting of transfers of value twice a year, and reports are published on the Medicines Australia website.

South Korea enacted reporting requirements for pharmaceutical and medical device manufacturers to generate expenditure reports beginning with the 2018 fiscal year. Although companies are not required to submit reports, they must gather the data and maintain documentation for review.

>> Learn more about international reporting requirements and deadlines

The future of transparency reporting requirements

The landscape for physician payment transparency continues to evolve, especially in Europe, where there is a push for greater consistency across reporting jurisdictions. Elsewhere, the list of jurisdictions that require some type of transparency reporting continues to grow. Ontario, Canada, passed the extensive Health Sector Payment Transparency Act in 2017. In the Middle East, the Saudi Food and Drug Authority launched its Pharmaceutical Company Payments Disclosure Initiative in 2018, and the Brazilian state of Minas Gerais now requires disclosure of any type of donation or benefit to health professionals.

Additionally, the process of gathering and reporting physician payment data is changing as more sophisticated tools improve accuracy and efficiency. For example, in the first Open Payments reporting period, CMS withheld 4.4 million records, representing $514 million, from publication due to incomplete or inaccurate data. Today, end-to-end software-as-a-service (SaaS) solutions enable companies to automate the entire process, from qualifying healthcare professionals (HCPs) and establishing fair market value to managing contracts and grants to generating activity reports and more. These systems generate data that empower life sciences companies to better understand their operations and to build more constructive partnerships with HCPs and healthcare organizations.

>> Legislative Watch: Online global compliance resource

>> Resources for CMS Open Payments, aggregate spend solutions and related issues