The Sunshine Provision, Fair Market Value and Compensating KOLs

Published by Pharmaceutical Compliance Monitor

Starting January 1, 2012, manufacturers of drug, device, biological or medical supplies must track virtually any transfer of value or payment to physicians and/or teaching hospitals. These payments are to be available on a public, searchable website and will be reported to the Secretary of Health and Human Services on an annual basis. This new requirement is due to the Physician Payment Sunshine Provision in Section 6002 of the Patient Protection and Affordable Health Care Act (“Sunshine Provision”).

Unfortunately, industry is currently awaiting additional guidelines related to how to comply with the Sunshine Provision. These guidelines were planned to be released October 1, 2011 but no information has been provided. This postponement has left pharmaceutical executives wondering how best to prepare for the Sunshine Provision considering the short time period companies will have to implement systems, compliance programs and training.

Although no one can predict what the specific guidance will be related to the Sunshine Provision, I can assure you a company’s compliance policies as it relates to payments to Key Opinion Leaders (KOL) will be critical. There has been a considerable amount of public attention associated with payments from industry to prescribing physicians. An additional challenge is that one must consider the anti-kickback statute which mandates that payments to physicians must be set at Fair Market Value (“FMV”). As a result, it will be imperative that pharmaceutical companies understand the FMV requirement and appropriate methodologies for determining payments to physicians. This article will address important points for establishing FMV as well as essential considerations when assessing compliance programs.

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