Industry groups have expressed concern about the Centers for Medicare and Medicaid Services (CMS) missing its deadline for drafting regulations to implement the so-called sunshine law, which requires sponsors to publicly disclose payments to physicians and teaching hospitals. Pharmaceutical and biotechnology companies must begin collecting data to comply with the law in less than 11 weeks.

In addition, the CMS, which was designated as the federal agency responsible for implementing the physician-payment disclosure requirements in the healthcare reform legislation, has yet to initiate a formal rulemaking process, which would allow sponsors and others affected by the law a chance to express their concerns and questions regarding the regulations.

Senators Charles Grassley (R-Iowa) and Herb Kohl (D-Wis.), who co-sponsored the bill, have pressed CMS for information about when preliminary regulations will be released and how long the regulations will be open for comment. “The deadline for establishing procedures has passed and there has not been, to our knowledge, adequate consultation with either industry representatives or consumer advocates,” Grassley and Kohl wrote in a letter to the CMS. “We are concerned that CMS’ failure to implement the statutory provisions on time with clear guidance, standards and definitions will create confusion among both manufacturers and consumers, potentially placing taxpayer dollars at risk.”

Groups representing the industry, including the Association for Clinical Research Organizations (ACRO) and the Pharmaceutical Research and Manufacturers of America (PhRMA) also have expressed concerns about the lack of stakeholder input into the process.

Doug Peddicord, Ph.D., executive director of ACRO, said his organization wants a chance to comment on the proposed regulations and have CMS incorporate industry concerns in the final rule. “From our perspective, this is potentially a complicated rule implementing a difficult-to-implement provision. Our biggest concern has been that to this point, the Centers for Medicare and Medicaid Services has done inadequate consultation with the affected industry and with the consumers who might have some interest in this,” he said.

PhRMA senior vice president Matthew Bennett said it’s essential for biopharmaceutical companies to be able to prepare for implementation according to clear, transparent guidelines from CMS. “We encourage CMS to move forward in providing regulations on implementation of this important provision and allowing for stakeholder comments about its proposed rule,” he said.

CMS spokesperson Ellen Griffith said the agency has received correspondence from members of Congress about this issue and is preparing a response. “Until we have responded to Congress, we will not be discussing this in the press,” she said.

Meanwhile, there is no indication that the law’s requirements will be postponed by this delay. R. Jeffrey Layne, a partner with Fulbright & Jaworski, said the fact that final regulations haven’t yet been issued probably won’t affect the March 31, 2013 deadline for reporting information to the government.

“But we may see, depending on how substantive the regulations are and whether they offer any significant revisions or supplements to the statute, a delay in the collection start date of Jan. 1, 2012,” Layne said. “In any case, we are advising our clients to prepare as best they can to satisfy the statutory data collection elements starting Jan. 1, 2012. Where there is any ambiguity, we review any and all relevant analogues to the federal statue provisions (e.g., in state data collection laws) and help our clients prepare to collect the data CMS is most likely to require.”

In the meantime, many pharmaceutical and biotechnology companies have begun to establish policies and systems to disclose physician payments without guidance from the agency, which industry leaders fear could result in a meaningless data collection system.  “If the goal of this reporting is for Health and Human Services (HHS) to construct a publicly searchable database of payments made to physicians and teaching hospitals, our concern is that in the absence of guidance, a thousand manufacturers are going to come up with a thousand different definitions of even the basic data elements,” said Peddicord.

“Absent a regulation that defines what the data elements are and provides a standardized reporting template, HHS is going to get data in a thousand different ways and is not going to be able to construct a database that is comprehensive and accurate,” he added.

In addition, with the Jan. 1 start date for data collection looming, many in the industry are concerned that an interim rule will be issued without allowing the industry to comment on a draft proposal. “There were hundreds of regulations with different parts of the government that came from the Affordable Care Act,” said John Lewis, vice president of public affairs for ACRO. “A lot of them went to CMS and others went to HHS. A number of these have been implemented as essentially interim final rules, which lack the normal rulemaking process.”

“Once you call something an interim final, the ability to change it, or the pain of changing it when you’ve adopted it, is much increased,” he added. “We are frustrated with the lack of a rulemaking process and no understanding of what this rule is going to say.”

Karyn Korieth