Hours before a scheduled Senate hearing that would have raked the agency over hot coals, the Centers for Medicare and Medicaid Services (CMS) released proposed regulations implementing the Physician Payments Sunshine Act. The Sunshine Act, Section 6002 of the Patient Protection and Affordable Care Act of 2010, requires the public reporting of payments to physicians and other healthcare professionals from pharmaceutical and medical device manufacturers.

However, thanks to extensive lobbying by MRA and assistance from our grassroots volunteers, the Sunshine Act excluded marketing research incentives from its reporting requirements for payments to physicians from pharmaceutical and medical device manufacturers. Specifically, the Act excluded, "Transfers of value made indirectly to a covered recipient through a third party in cases when the applicable manufacturer is unaware of the identity of the covered recipient."

A hearing in the Senate Special Committee on Aging, set for today, had been arranged to find out why CMS had missed their legal deadline to issue rules implementing the Sunshine Act. MRA had been in contact with the Committee in support of the hearing.

Despite MRA's concerns about the uncertainties of the regulatory process, we are pleased to report that the proposed rules from CMS retain the wording and intent of the Sunshine Act as it was written by Congress:

42 CFR chapter IV

§ 403.902 Definitions.

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.

§ 403.904 Reports of payments or other transfers of value.

(f) Exclusions from reporting. The following types of payments or other transfers of value are excluded from the reporting requirements specified in this section:

(1) Transfers of value made indirectly to a covered recipient through a third party in cases when 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.

The proper implementation of the Sunshine Act is essential also for its impact on similar laws at the state level. The passage of the Sunshine Act, which preempts most similar laws requiring reporting of physician payments has discouraged the passage of new such laws. And, with MRA's success in excluding marketing research from regulations in Minnesota and Massachusetts, helping to exclude it from the rules in the District of Columbia, and supporting the successful repeal of the reporting law in Maine, West Virginia and Vermont remain the only states still restricting marketing research with physicians. (Moreover, West Virginia's law is up in the air right now, following Governor Earl Ray Tomblin's withdrawal of implementing rules and an ongoing vacancy at the head of the relevant regulatory agency).

Comments to CMS on the proposed Sunshine Act rules are due by February 12, 2012.