Late on February 1, the Centers for Medicare and Medicaid Services (CMS) released their long-delayed regulations implementing the Physician Payments Sunshine Act, which will launch a centralized federal registry of payments to physicians from pharmaceutical and medical device manufacturers. In satisfying conclusion to a lobbying campaign that began in summer 2007, the Marketing Research Association (MRA) reported that incentives for physician respondents in marketing research studies will not have to be reported under the new regulations, as long as the manufacturer clients are unaware of the identities of the respondents.

The Physician Payments Sunshine Act was part of the 2010 Patient Protection and Affordable Care Act (aka, "Obamacare") and MRA won an exclusion for marketing research incentives for doctors in the law. Unfortunately, some researchers have still been clashing with overly-conservative compliance departments within their pharmaceutical and medical device industry clients – compliance departments reluctant to approve research studies with doctors absent an even clearer explanation of this marketing research exclusion. These even-more-specific regulations and guidance from CMS should put those concerns to rest.

The details of the law and the regulations
The original language MRA convinced Congress to insert into the Sunshine Act excluded from reporting requirements any "payment or transfer of value" if "made indirectly" to a doctor participating in a marketing research study where the pharmaceutical or medical device manufacturer "is unaware of the identity" of the doctor receiving the payment.

In drafting the regulations, CMS clarified what it means for the manufacturer to be "unaware" and, on page 133, explained specifically that marketing research incentives are indeed supposed to be excluded from reporting, just as the House and Senate drafters intended:

"We believe that by clarifying that applicable manufacturers must only report indirect payments or other transfers of value that they direct or instruct third parties to pay to covered recipients, we will address some of the commenters' concerns about the broader knowledge standard. Therefore, if a payment meets the definition of an indirect payment or other transfer of value in §403.902, then the payment can only be excluded from the reporting requirements if the applicable manufacturer did not "know" the identity of the covered recipient, as defined in §403.902. However, we want to clarify that, for purposes of this rule only, we will not consider an applicable manufacturer to be acting in deliberate ignorance or reckless disregard of a covered recipient's identity in situations when the reason a payment or other transfer of value is being made through a third party is that the identity of the covered recipient remains anonymous. For example, an applicable manufacturer may hire a market research firm to conduct a double-blinded market research study, which includes paying physicians $50 for responding to a set of questions. The applicable manufacturer clearly intends a portion of the payment to be provided to physicians, but given that the reason for the third party's involvement is specifically to maintain the anonymity of the respondents and sponsor, we do not intend this to be considered a reportable indirect payment or other transfer of value."

The exclusion for marketing research incentives for physician respondents mirrors the clarifying regulations exempting marketing research that MRA helped to draft in Massachusetts in 2009 (and with CASRO and PMRG in Minnesota in 2010). The specific call-out for marketing research in CMS' commentary on the new Sunshine rules came courtesy of a CASRO filing during the regulatory process and MRA's asking hill staff we worked with to craft the Sunshine Act in Congress to impart to CMS that marketing research was the rationale for that carve-out in the first place (Congress' "legislative intent").

The long road to victory
We've travelled a long road to get here, starting with a summer 2007 meeting with staff for the original proponent of the Sunshine Act in Congress, Rep. Pete DeFazio (D-OR). MRA then engaged with staff for Senators Chuck Grassley (R-IA) and Herb Kohl (D-WI), who began pushing the Sunshine Act in 2008, and eventually led a lobbying campaign not only here in the nation's capital, but at the grassroots level across the country, targeted at many Senators and Members of Congress.

We helped to craft eventual language excluding marketing research incentives in both the House and Senate versions of the healthcare law, and the Senate version ultimately was signed into law in March 2010. We were aided by a contract lobbyist temporarily hired by PMRG and PMRG's outside legal counsel, Mike Slotznick.

Since then, the drafting of regulations by CMS had taken a long time and they were only submitted to the Office of Management and Budget (OMB) for approval at the end of November 2012, but with the U.S. Supreme Court upholding the constitutionality of much of the Affordable Care Act in summer 2012, CMS was under immense pressure to finalize the rules.

The new regulations will be published in the Federal Register on February 8.

How about MR incentive reporting at the state level?
Thanks to our efforts at the federal level, and our many state level campaigns, marketing research is in a good position almost everywhere in the U.S. now.

MRA has helped regulators clear the field for marketing research with physicians in Massachusetts, Minnesota, and the District of Columbia over the last few years, helped legislators in Maine to repeal their reporting requirements, and successfully worked to amend or defeat legislation in Colorado, Alaska, Rhode Island, Maryland, Hawaii, New York, Connecticut, New Mexico, Arizona, Mississippi, Massachusetts, Illinois, and Minnesota.

Most states had countenanced legislation on the grounds that there was no federal registry -- that excuse no longer exists. Moreover, the provisions in the Sunshine Act pre-empt almost all state laws that require reporting of payments to doctor. So while there will continue to be legislation to be battled over in various states every year, such as Assembly Member William Colton's A.B. 1474 in New York, the odds of passage for such bills have deteriorated precipitously.

West Virginia is a bit of a question mark. The state's vague reporting law has been up in the air for a while, especially since Governor Earl Ray Tomblin withdrew the implementing rules.

Unfortunately, the state of Vermont remains impervious to improvement for marketing research with doctors right now. In 2011, Vermont went from an implied ban on research incentives to an explicit ban, despite our best efforts. Because Vermont's law is a ban rather than a reporting requirement, the federal rules cannot pre-empt it.

Some MRA grassroots volunteers that helped win the Sunshine Act exclusion
Marisa Pope (Jackson Associates) and Stephenie Gordon (Schlesinger Associates); Rick Seale (Shugoll Research); Lisabeth Clawson-Couturier (Las Vegas Field & Focus); Aaron Nichols (Nichols Research); Scott Baker (Adept), Allen Hellman and Debby Schlesinger-Hellman (Schlesinger Associates); and Sharon Chamberlain and Tyler Walker (Chamberlain Research).

Questions or concerns?
If you are interested in MRA's government affairs advocacy activities, please contact MRA Director of Government Affairs Howard Fienberg.

The Sunshine Act law and MR:
Section 6002 of the Affordable Care Act

SEC. 1128G (e)(10)(A): The term ‘payment or other transfer of value’ means a transfer of anything of value. Such term does not include a transfer of anything of value that is made indirectly to a covered recipient through a third party in connection with an activity or service in the case where the applicable manufacturer is unaware of the identity of the covered recipient.

The Sunshine Act regulations and MR:
42 CFR § 403.904 (i) Exclusions from reporting...:
(1) Indirect payments or other transfers of value (as defined in §403.902), where the applicable manufacturer is unaware of the identity of the covered recipient. An applicable manufacturer is unaware of the identity of a covered recipient if the applicable manufacturer does not know (as defined in §403.902) the identity of the covered recipient during the reporting year or by the end of the second quarter of the following reporting year.

42 CFR § 403.902 Definitions.
Indirect payments or other transfers of value refer to payments or other transfers of value made by an applicable manufacturer (or an applicable group purchasing organization) to a covered recipient (or a physician owner or investor) through a third party, where the applicable manufacturer (or applicable group purchasing organization) requires, instructs, directs, or otherwise causes the third party to provide the payment or transfer of value, in whole or in part, to a covered recipient(s) (or a physician owner or investor).
Know, knowing, or knowingly--(1) Means that a person, with respect to information--
(i) Has actual knowledge of the information;
(ii) Acts in deliberate ignorance of the truth or falsity of the information; or
(iii) Acts in reckless disregard of the truth or falsity of the information; and
(2) Requires no proof of a specific intent to defraud.

The information provided in this document is not intended and should not be construed as or substituted for legal advice. It is provided for informational purposes only. It is advisable to consult with private counsel on the precise scope and interpretation of any given laws/legislation and their impact on your particular business.