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Mixed experience with the Sunshine Act

Monday, August 1, 2016

Pharmaceutical companies have finished submitting the third batch of data detailing their financial relationships with physicians and teaching hospitals under the Open Payments program, also referred to as the Physician Payment Sunshine Act. Investigators now face the prospect of implementing sophisticated new processes and systems that can track and verify clinical research grant payment information.

The increasing burden associated with Open Payments regulatory requirements already has resulted in some investigators, particularly private practice physicians who conduct clinical research part-time, leaving the clinical research enterprise or cutting back on their participation.

“Research has become much harder than it was 10 or 15 years ago. It’s gotten more complex. We are struggling just to stay above water. It’s hard, when you are struggling, to add more layers,” said Ana T. Marquez, founder and CEO of Marquez Clinical Site Partners and a site owner and chief financial officer for a number of research sites in Florida.

For pharmaceutical companies, the recent reporting cycle has been fairly straightforward and lacking in controversy, compared to previous years, and many of the initial problems related to data submission have been resolved. Companies applied lessons learned from prior reporting periods to their processes, and communications have improved between sponsors and the Centers for Medicare & Medicaid Services (CMS), which manages the program, concerning reporting and technical requirements. Both sponsor companies and investigative sites also have become more familiar with the CMS Open Payments reporting template.

“Companies experienced far fewer challenges submitting their data to the system than they had in prior years,” said Lauren Roth, assistant general counsel for the Pharmaceutical Research and Manufacturers of America (PhRMA), a trade group that represents research-based pharmaceutical companies in the U.S. “Interacting with the Open Payments system has, in general, improved.”

Yet the impact of Open Payments on investigative site operations is less understood, and the full effect of its implementation will not be clear for several years. Sponsors and CROs have added contractual requirements for sites to track and report third-party payments, which have the potential to add cost and time burdens, yet many investigative sites don’t fully understand the obligations or fail to comply. Some sponsors have begun asking investigators to validate payment information prior to publication. An overly complex registration process and inadequate review period, however, has prevented many investigators from participating in the CMS data validation process and has raised questions about the accuracy of the information posted.

Investigators have criticized the method used to report research payments, arguing that it misrepresents the amount of money principal investigators (PIs) receive in support of clinical trials, and expressed concerns about the implications of reporting monies paid through a research grant in the same database as lunches provided by industry to physicians. In addition, many clinical research professionals fear that publicly reporting industry payments to individual physicians could wrongly imply that the payments are inappropriate and result in a chilling effect on the enterprise.

Third-party reporting requirements

The Open Payments program, a provision of the Affordable Care Act, requires pharmaceutical and medical device companies to report payments to physicians and teaching hospitals, including clinical research grants, for publication on a searchable public database. The submission process has become more routine since the database was launched in 2014, yet the large amount of information that must be reported and the complexity of collection processes has required massive investments in systems and manpower; as of June, a total of 28.2 million records have been published on the Open Payments website. PhRMA members, who spent tens of millions of dollars establishing new processes and systems to comply with the law, have reported that annual ongoing costs can range from $2 million annually for a mid-sized pharmaceutical company to more than $5 million each year for large companies, amounts that far exceed the original CMS estimates.

Penalties for noncompliance and inaccurate or late reports range from $1,000 to $100,000 per transaction, with a maximum annual penalty of $1,150,000 per company. In its 2016 report to Congress, the CMS said it has used targeted education and outreach efforts to increase compliance during the first few years of the program, yet the agency has indicated it will begin enforcing the Open Payments program by auditing data submissions and imposing civil monetary penalties where appropriate.

Many sponsors have implemented process changes that include contractually requiring CROs and other service providers to document and submit payments made to investigators on their behalf, which adds to the overall financial burden created by the Open Payments requirements. Vendor contracts also increasingly include potential penalties for third parties who fail to report these payments in an accurate or timely way.

“We have had to implement a number of additional processes to ensure that we can provide our sponsor clients with all the information they feel is required for them to properly comply with the Open Payments reporting. Some of these costs we have absorbed ourselves, and others we have passed onto our sponsor clients. There is no doubt that this requirement has added cost to the overall clinical trial process,” said Stuart Thiede, president of payments at DrugDev.

Similarly, although physicians themselves are not required to file reports under Open Payments rules, research contracts increasingly include language that references Open Payments processes and requires investigators to track and report research payments made to other physicians involved in the study. If research funds were used to compensate another doctor for reading an X-ray, for example, or if part of the study was outsourced, the investigator would need to report those payments back to the sponsor. Site management organizations (SMOs) that receive clinical research payments and distribute them to investigators in their network would face similar reporting requirements.

Some investigators have taken steps to avoid the additional administrative burdens imposed by the third-party reporting requirements. Michael J. Koren, M.D., CEO of the Florida-based Jacksonville Center for Clinical Research and one of its PIs, said contracts are written in a way that allows sponsors to fulfill their own reporting requirements without requiring investigators to submit additional data. Christine Pierre, founder and president of the Society for Clinical Research Sites (SCRS), said other investigators negotiate to have the CRO or sponsor company contract directly with third-party investigators or vendors needed for the study rather than involving the investigative site in those transactions.

“That puts the burden back on the sponsor or CRO,” said Pierre. “Studies are obviously very complex today and many times it requires investigators to go outside of the actual clinical research site to successfully execute them. We need third-party vendors. When those situations occur, it requires recording methods that have to be sent to the sponsor. It’s an added burden.”

To date, however, the vast majority of investigators contacted by CenterWatch for this story report that while research contracts include language about additional data tracking and reporting responsibilities required as a result of Open Payments, the cost and administrative implications so far have been minimal.

“The overall impact of the Sunshine Act has been essentially nil as of now,” said Mark Lacy, president and CEO of Benchmark Research, a clinical research firm with six U.S. locations. “Whether that changes, who knows. But for now, the [impact] has been an industry exaggeration, from my view.”

Marquez said that when she speaks to investigators about Open Payments requirements, most are unaware of contractual third-party reporting requirements and have not set up internal processes to review payment information. Since many investigators don’t handle administrative matters and instead have finance directors or other staff members manage contracts and other paperwork, she said, they often don’t fully understand the Open Payments program or its impact on site operations.

“Many investigators still don’t know about the law and are surprised to learn that the research payment information is posted on a public website,” she said. “I don’t think sites truly understand their obligations. There is also a lot of ambiguity.”

Verifying accuracy of data

For PIs, processes required to monitor the grant payment information attributed to them on the CMS website and correcting inaccurate reports are time-consuming and complicated. Investigators are advised to routinely maintain records of research payments received and amounts paid to third-party vendors in order to verify and challenge information, if needed. Some sponsor companies also ask investigators to verify payment information before it’s published. But many investigators, particularly physicians who conduct research part-time, lack the mechanisms for good payment tracking and reporting systems.

“Sites really don’t have the infrastructure to double-check figures, so that is not happening at the site level,” said Marquez. “We are already bogged down in paperwork and have trouble keeping up because, unfortunately, we are having to take on more work in other areas. The last thing we have time for is verifying what is going to be reported.”

Once sponsor companies submit payment data to the CMS, physicians and teaching hospitals have 45 days to review the payments attributed to them and 15 days after that to dispute and correct the data. If the dispute has not been resolved within 15 days, CMS will publish the data with a note that the payment is under dispute. The American Medical Association, in a statement issued in June when the CMS released 2015 Open Payments data, said the resolution process was too short and complex for physicians to review and correct any inaccurate data within the 60-day timeframe.

“The sites have a very tight window to review and dispute all of the payment information reported by sponsors,” said DrugDev’s Thiede. “This can be a very difficult and labor-intensive exercise for the clinical trial site because their internal systems typically are not robust enough to efficiently carry out such an exercise.”

Although the Open Payments process has been in place for more than two years, registration challenges and continued data errors have prevented many physicians from participating in the review and validation process. The AMA has called the registration process “time consuming, non-user friendly and complicated.” Investigators interviewed by CenterWatch confirmed the difficulties in accessing the CMS database.

“I have not been able to sign in to view what is listed under my name as a PI before it became public,” said a Florida-based investigator, who has conducted clinical research for more than three decades. The investigator asked not to be named. When trying to log onto the site during the review period this year, the investigator repeatedly got the message: No results found. Please refine your search criteria and try again. “According to the site, I don’t exist,” he said.

The AMA and other groups have said the inability of physicians to review their individual data calls into question the accuracy of the information published. In a peer-reviewed article published earlier this year in The American Journal of Medicine, the authors found a “concerning level of disagreement” between disclosures reported by cardiologists and pharmaceutical companies about past payments made. Other clinical research professionals have experienced similar findings.

Most investigators, however, don’t think it’s worth the time and effort to review and challenge inaccurate payment information published about them. According to public CMS data, in program year 2014, less than 5% of physicians registered to review and dispute their data. When the Open Payments submissions process began, leadership in the physicians group of Association of Clinical Research Professionals (ACRP) distributed an internal memo to its members recommending that they consider ignoring the Open Payments dispute process, even if they disagreed with the payment amount, since it would be difficult to find the time or have access to an auditable paper trail that would allow them to win a dispute with a sponsor company over payment amounts.

“There is no easy mechanism for me to review the information. Information is reported about me without my involvement or consent, and the dispute process is unattainable. The companies don’t have to listen to you. If you disagree with the amount, they will still publish it. Physicians are actually powerless,” said Koren. 

Sponsor companies have set up internal dispute resolutions processes during the past few years, yet organizations also report challenges when investigating individual transactions and resolving disputes within a sponsor’s 15-day timeframe. In a letter to CMS, PhRMA said resolving disputed transactions “is likely to be a complicated process” and settling most individual disputes would take several weeks.

Robyn S. Shapiro, attorney and founder of the Health Sciences Law Group, recommends that companies share payment information with investigators in advance, before the 45-day review period begins, to give both sides more time to work out any discrepancies before the information is published.

“There is a maximum of 60 days under the rule to try and work out disagreements. It’s not that much time,” said Shapiro. “If it’s not worked out, the government is just going to report the initial amount. That can not only be wrong, but that can adversely affect the relationship between the industry sponsor and the recipient or site.”

Discouraging physicians from research

The Open Payments program was meant to address concerns that industry payments to doctors could directly or indirectly affect their scientific independence and clinical judgement; the information is intended to allow consumers to make better healthcare decisions. Yet many fear that public misperceptions about the clinical research payments could have the unintended consequence of causing physicians to exit research and discouraging others from becoming involved in the first place.

According to 2015 financial data, which was posted in June, almost $4 billion of the $7.5 billion in reported payments to physicians and teaching hospitals was for research.

Funding for research projects or studies are reported separately from other general “transfers of value” to physicians, such as lunches or consulting fees, on the publicly accessible website. Yet many have criticized the research-payment reporting as misleading since the amount includes the entire research grant and attributes it to the PI. The payment amount includes study costs such as expenses for overhead, clinical support staff salaries, participant stipends, ethics board fees, advertising costs and subcontracted services required by the research, such as diagnostic imaging, lab work and supplies; PIs receive only a fraction, if any, of the money. For physicians who work in a medical school or hospital and receive industry grants, the funds reported under their names are typically turned over to the organization and are not a part of their salary.

“There are real concerns about how much the public understands that payment. In parallel fashion, there are concerns by the doctors that people are going to associate all of that as money they put in their pockets,” said Shapiro.

Shapiro said some sponsor companies and PIs publish information on their websites explaining the Open Payments Act, why the information is published and how the research grant funds are spent in order to put the research payment in context. Yet many clinical research professionals are concerned that the way Open Payments reports clinical research grants will negatively impact the willingness of physicians to conduct clinical trials.

“There are doctors who don’t want the hassle. It’s another problem that dissuades people from participating in research. We need more doctors participating in research, so why would you want to make it more difficult for doctors to participate?” asked Koren.

Clinical research professionals have mixed views on the degree to which the Open Payments legislation has negatively impacted the clinical research enterprise since the public database became available two years ago.

DrugDev’s Thiede agreed that the overall impact of Open Payments on investigative sites, while clearly an increased burden, has not been as onerous as many originally anticipated, especially regarding the potential for misunderstanding the clinical research grant amounts received by the PIs.

“The feared reaction does not appear to be happening, as there has not been a public outcry regarding what has been made available through the Open Payments reporting,” he said. “Thus, I believe physicians who have shied away from clinical trials will re-engage as they gain confidence that this reporting will not be misinterpreted and put an unfair light on them.”

Yet in a 2014 survey of 173 U.S.-based physicians about the impact of Open Payments on physician behavior, Industry Standard Research (ISR) found that since the enactment of the law, 37% of respondents said their participation level in clinical research dropped. Similarly, in a previous survey, ISR found that one in eight (13%) of investigators would stop participating in some studies if their site started to make “too much” money from clinical trials.

Looking ahead

Over the course of the next three years, more focus on educational and awareness programs about the implications of Open Payments are expected to help improve investigative site compliance with contractual requirements and reduce associated burdens. Sites also will increasingly look for technology solutions that integrate compliance-oriented processes into their clinical operations.

The impact of the legislation on physician willingness to participate in clinical research will depend, in part, on the level of public attention the Open Payments processes receive. While the prospect of additional regulatory requirements already has resulted in some investigators leaving the enterprise or reducing their participation levels, the long-term impact on physician participation in research remains uncertain. 

Karyn Korieth has been covering the clinical trials industry for CenterWatch since 2003. Her 30-year journalism career includes work in local news, the healthcare industry and national magazines. Karyn holds a Master’s of Science degree from the Columbia University Graduate School of Journalism. Email karyn.korieth@centerwatch.com.

This article was reprinted from Volume 23, Issue 08, of The CenterWatch Monthly, an industry leading publication providing hard-hitting, authoritative business and financial coverage of the clinical research space. Subscribe >>

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