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Industry groups want to be heard on the impact of sunshine law before new regulations are finalized

Monday, May 16, 2011

The so-called sunshine law, which requires drug sponsors to publicly disclose payments to physicians and teaching hospitals, will present significant operational challenges to biopharmaceutical companies and contract research organizations (CROs) when data collection requirements go into effect in January 2012. However, industry groups worry their concerns about how the law could affect clinical research won’t adequately be taken into account as the rule and its regulations are finalized during the next four months.

Congress has directed that the procedures necessary for public reporting of payments made to physicians and teaching hospitals, which include clinical trial grants, be established by Oct. 1. However, the Centers for Medicare and Medicaid Services (CMS), which was designated as the federal agency responsible for implementing the physician-payment disclosure requirements in the healthcare reform legislation, isn’t expected to issue proposed rulemaking until late summer.

“That is a very ambitious schedule in terms of federal regulation-making,” said Douglas Peddicord, Ph.D., executive director of the Association of Clinical Research Organizations (ACRO). “With regard to the research world, we are concerned that there will not be a sufficient level of consultation that will allow the industry to operationalize what the law requires. There are many research payment scenarios where regulatory guidance is needed and, without serious deliberation and consultation with industry, we could see a negative impact on clinical research operations.”

ACRO and other industry organizations, including the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Industry Organization (BIO), have submitted written comments to CMS saying they want the chance to discuss the operational challenges the law will present. “Given the complexity of information to be collected and aggregated, significant volume of data and the difficulty of presenting this data to the public in an understandable and user-friendly manner, CMS’s challenges going forward are great,” Marjorie Powell, senior assistant general counsel for PhRMA, said in comments to CMS. “For instance, one mid-sized pharmaceutical company expects to report approximately a million interactions involving approximately 300,000 physicians in the first year alone.”

ACRO has expressed disappointment that CMS failed to publish a formal Request for Information (RFI), which asks stakeholders to submit information about the issue, in the Federal Register before beginning the rulemaking process. Instead, it held a teleconference with stakeholders in March to discuss physician-payment transparency provisions and said it would accept “additional thoughts or feedback” in writing. “We do remain concerned that this single teleconference was an insufficient mechanism to receive comprehensive consultation and feedback from the industry,” said Peddicord.

Sandra Dennis, BIO’s deputy general counsel for healthcare, said the teleconference and the opportunity to submit written comments were “important first steps” in the process. “However, BIO believes that additional opportunities are necessary to enhance CMS’ understanding of the complicated nature of developing internal company systems for tracking this information and identifying questions that must be answered to enable consistent and accurate manufacturer reporting,” Dennis wrote to CMS.

After the teleconference, CMS said it would hold meetings with various industry groups over the next few weeks to discuss issues important to stakeholders before it proposes regulations. CMS said implementing the rule will go through formal notice and comment rule-making procedures.

Industry groups remain concerned, however, about whether the short timeframe will allow adequate consideration of their concerns once the proposed rule has been published. “With a lot of provisions of the Affordable Care Act, we’ve seen an accelerated process to the final rules,” said John Lewis, vice president of public affairs at ACRO. “We are looking at very complex new rules and regulations being implemented very quickly without ample time for industry to comment.”

BIO and PhRMA both have expressed concern about the tight timelines and whether the industry will have enough time to prepare for implementing the regulations. “The challenge is particularly difficult because the statute requires that CMS must establish procedures for the submission of manufacturer reports by Oct. 1, 2011. BIO hopes CMS appreciates that manufacturers also face significant challenges in developing and implementing policies, procedures and information systems to facilitate the mandatory collection of data that begins Jan. 1, 2012,” said BIO’s Dennis.

While ACRO is concerned about the law’s impact on operations at sponsors and CROs, a bigger concern is its potential to discourage physicians from taking part in clinical research. In a recent ACRO survey of 200 active investigators, 24% said they either were less likely to or wouldn’t participate in research if their income was disclosed.

“Sometimes there are regulations that don’t make a lot of sense, but ultimately we figure out how to comply with them,” said Peddicord. “More to the point for us is the issue of the impact on physician availability. There has been a decline in physicians conducting clinical research worldwide. If we introduce one more disincentive for physicians to take part, we think that is a problem.”

–Karyn Korieth

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