Last month, the Centers for Medicare & Medicaid Services (CMS) published proposed regulations for implementing the Physician Payment Sunshine Act (Sunshine Act) provisions under the Patient Protection and Affordable Care Act (PPACA Section 6002). The proposed regulations reaffirm that manufacturers of drugs, devices, biologicals, and medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program are required to report to CMS payments or other transfers of value they make to physicians and teaching hospitals. This includes indirect and direct research and development (R&D) payments.

CMS accepted comments on the proposed regulations until February 17, 2012. The date that manufacturers will be required to start collecting data for purposes of issuing the first report to CMS will be modified from the original date of January 1, 2012, but this new date has not yet been determined. CMS has indicated that data collection will not be required until 90 days after it publishes the final regulations. CMS has stated that manufacturers will still need to submit a March 2013 report covering some portion of the 2012 calendar year.

Within the proposed regulations, R&D payments are associated with bona fide research activities, defined as those with both a research protocol and a written agreement or contract between the manufacturer and the organization conducting the research. CMS further proposes a method for reporting research payments to physicians and teaching hospitals. The method specifies two separate classifications, Direct Research and Indirect Research. Payments for Direct Research are made directly to a physiciancovered recipient or teaching-hospital-covered recipient. Payments for Indirect Research are made by the manufacturer or CRO to a clinic, hospital (other than a teaching hospital), or institution, which, in turn, pays a physiciancovered recipient serving as the principal investigator.

Here are several other reporting requirements:
1. Report payments for Direct and Indirect Research under the name of the Principal Investigator(s), assuming these individuals can be identified.
2. Indirect Research payments would also include the name of the entity or individual who received the payment or transfer of value.
3. Payments to teaching hospitals would need to include both the teaching hospital-covered and physician-covered recipients. Payments to teaching hospitals are to be reported as Direct Research, and payments to the principal investigator are to be reported as Indirect Research.
4. The full payment amount for both Direct and Indirect Research would need to be reported, rather than the specific amount that was provided to a covered recipient.

Last, CMS proposes to disclose on a public website separate payment amounts—rather than aggregated totals—to physician-covered recipients when it is an indirect payment. But payments to teaching-hospital-covered recipients will be aggregated because they are considered direct payments.

These proposed reporting requirements for R&D payments present a challenge to the life sciences industry: many manufacturers outsource much of their clinical-trial-management work (including site payments) to CROs. Furthermore, clinical transparency poses additional challenges (over and above those presented by existing commercial transparency initiatives) because the name of the principal investigator quite often differs from that of the payee. Manufacturers need to implement processes that differentiate between Direct and Indirect Research payments, capturing sufficient information to navigate delayed-disclosure requirements and identify the trial and products studied.

To overcome this challenge, manufacturers should consider deploying a consolidated CRO data capture system to capture, standardize, and aggregate clinical-trial data from multiple CROs. The CRO data-capture system should also leverage high-quality customer master data to ensure that covered recipients are uniquely identified across all CROs, and to prevent inaccurate reporting due to duplicates or misreporting of the aggregation of payments. This type of forward thinking will allow standardization of the investigator, product, and trial information across all CROs. A single source of clinical trial data would then automatically feed into a manufacturer’s existing aggregate-spend system.

  • Bill Buzzeo

    Bill Buzzeo is an authority on regulatory requirements facing today's pharmaceutical industry, specifically those involving the Prescription Drug Marketing Act (PDMA); international, federal, and state transparency and reporting requirements; and the Controlled Substances Act (CSA).

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