Sunshine Act: Proposed Regulations Shed Some Light on Implementation

By Brian P. Dunphy, Karen S. Lovitch

Written by Brian Dunphy and Karen Lovitch

Pharmaceutical and medical device manufacturers, along with physicians and teaching hospitals, who have been grappling with how to implement the requirements of the federal Physician Payment Sunshine Act have finally received long-awaited guidance. Yesterday CMS published an overdue proposed rule required by the Sunshine Act that fills in some key details.  The delay in publishing the proposed rules was discussed in an earlier post.

Of immediate interest to manufacturers likely is the fact that CMS has postponed the January 1, 2012 start date for data collection.  Manufacturers do not have to begin collection until after issuance of the final regulations, which, according to CMS, will be in 2012.  Without the delay, manufacturers would have had to scramble to implement any guidance provided by the proposed regulations, and the obligations are not to be taken lightly because the failure to collect the required information could result in significant civil penalties.

Among other things, the proposed rule:

  • defines “applicable manufacturer;”
  • defines “covered drug, device, biological, and medical supply”;
  • defines “teaching hospital”;
  • establishes the contents of the report that must be provided to the HHS Secretary;
  • establishes a process for “covered recipients” (i.e., physicians and teaching hospitals) to review and correct the information submitted to HHS before it is made publicly available; and
  • discusses preemption of state disclosure laws.

CMS is soliciting comments on the proposed rule until February 17, 2012.  Notably, CMS is seeking input on the amount of time manufacturers will need following publication of the final rule to comply with the data collection requirements.  Manufacturers covered by the Sunshine Act should carefully review the proposed regulations and consider commenting.

Mintz Levin is preparing further detailed analysis of the proposed rule.  So watch this site for more information.

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Brian P. Dunphy

Member / Co-Chair, Health Care Enforcement Defense Practice

Brian P. Dunphy is a member of the Health Care Enforcement & Investigations Group at Mintz. He defends clients facing government investigations and whistleblower complaints regarding alleged violations of the federal False Claims Act. Brian also handles commercial health care litigation.

Karen S. Lovitch

Chair, Health Law Practice & Co-Chair, Health Care Enforcement Defense Practice

Karen advises industry clients on regulatory, transactional, operational, and enforcement matters. She has deep experience handling FCA investigations and qui tam litigation for laboratories and diagnostics companies.