Drug and device manufacturers breathing a sigh of relief after completing their 2013 data submissions under the Physician Payment Sunshine Act (the “Sunshine Act’) must now contend with four proposed changes to the Sunshine Act regulations.  On July 3, 2014 the Centers for Medicare & Medicaid Services (“CMS”) released its proposed rule on the 2015 Medicare Physician Fee Schedule(the “Proposed Rule”).  The Proposed Rule includes four proposed changes to the Sunshine Act’s reporting requirements based on feedback and experience from the first annual reporting period (covering August 1, 2013 to December 31, 2013).  If finalized, these four proposed changes would become effective on January 1, 2015 and would not apply to 2014 reports.

First, the Proposed Rule would eliminate the current exclusion for reporting payments or transfers of value made as compensation for speaking at accredited CME programs. 42 C.F.R. § 403.904(g).  Currently, these speaking fees do not have to be reported, so long as the CME program is accredited by one of an enumerated list of accrediting bodies, the manufacturer does not pay the speaker directly, and the manufacturer neither selects the speaker nor provides the event sponsor with a distinct set of speakers from which to choose.  Notably, CMS states in the Proposed Rule that it believes that the current regulation exempting CME speaker fees from reporting duplicates the general reporting exclusion for payments or transfers of value where the manufacturer is unaware of the identity of the covered recipient.

In its commentary to the Proposed Rule, CMS states that if the manufacturer provides funding to a CME provider but does not directly select or pay the speaker and does not provide a distinct list of speakers to the CME provider, these indirect payments would be excluded under the general exclusion for payments where the manufacturer is unaware of the recipient’s identity.  Interestingly, CMS does not limit this interpretation to accredited CME events.  In addition to its proposal to eliminate 42 C.F.R. § 403.904(g) entirely, CMS is seeking comment on two additional proposals to modify 42 C.F.R. § 403.904(g): (1) expanding the list of accredited CME providers and (2) setting accreditation standards that a CME provider must meet in order for speaker fees to be excluded from reporting.

Second, the Proposed Rule would require manufacturers of devices and medical supplies to report the marketed name for devices or medical supplies related to a particular payment or transfer of value.  Currently, the regulations permit a device or medical supply manufacturer to report either the marketed name of the product, the product category, or the therapeutic area, while requiring manufacturers of drugs and biologics to report marketed names.

Third, the Proposed Rule suggests a change to the four “forms of payment” categories under 42 C.F.R. § 403.904(d).  Currently, the four categories are (1) cash or cash equivalent, (2) in-kind items or services, (3) stock, stock option, or any other ownership interest, and (4) dividend, profit or other return on investment.  The Proposed Rule would divide the third category into three distinct categories: stock, stock option, or any other ownership interest.

Finally, the Proposed Rule would eliminate the definition of “covered device” from 42 C.F.R. § 403.902 as duplicative of the broader definition of “covered drug, device, biological, or medical supply.”

The Proposed Rule is scheduled to be published in the Federal Register on Friday, July 11, 2014, and comments on the Proposed Rule are due by September 2, 2014.