This week, new "sunshine" rules that detail how much transparency is required about industry's financial relationships with health-care professionals are coming into effect in Belgium and the Netherlands.
The new rules in Belgium are mandated by law, while those in the Netherlands are part of self-regulation. In Belgium, the reporting deadline was May 31, 2018, so companies must have details of their relationships with health-care professionals filed by today, June 1.
The events this week reflect the piecemeal approach in the EU to declaration of financial relationships with health-care professionals.
"The national differences make it difficult for companies to prepare a single one-size-fits-all response to sunshine rules around the EU," attorney Hein van den Bos says.
In the US, meanwhile, there is a single federal law (Open Payments) that requires device and drug companies to report details on a range of financial transactions and relationships with physicians and teaching hospitals, which companies find burdensome. (Also see "CMS Says 'Open Payments' Data Easier To Use, But Some See Reporting Inefficiencies" - Medtech Insight, 30 Jun, 2016.)
With the ongoing developments in Europe, it is a good juncture to interview legal experts, Hein van den Bos, partner in Hogan Lovells’ European Life Sciences and Health Care Regulatory Group based in Amsterdam, and Ron Wisor, partner in Hogan Lovells’ US Health Group based in Washington, DC. Both have both been focusing lately on the impact of sunshine requirements both in the EU and US and on what the EU can learn from the US.
Europe
Van den Bos speculated that perhaps 50% of countries in the EU have some sort of sunshine reporting requirements for medtech companies – either mandatory or through self-regulation, while other countries may have nothing at all.
This is on top of the transparency initiatives introduced by the EU medtech industry association, MedTech Europe, within the context of its code of ethical business practice.
The general trend in Europe in terms of sunshine requirements is for medtech to follow the lead set by pharma, Van den Bos said. Indeed, sunshine rules for pharma are far more developed than those for medtech in the EU. What is more, many countries are closely monitoring the developments in France, which has well-established sunshine rules for medtech introduced into the country's statute at the end of 2011, and now in Belgium and the Netherlands.
Van den Bos explains more about the situation in Europe in response to our questions below:
Which other countries in the EU have sunshine rules and in what form?
Van den Bos: France stands out for having a well-established legal framework of sunshine rules, and Belgium is following suit in that it will also have a legal framework for its rules. But other countries in the EU have generally opted for self-regulation. To reiterate, many EU countries have nothing in medtech to match the well-established frameworks of mainly self-regulatory sunshine rules for the pharma and medtech sectors, introduced through the trade associations' codes of conduct and binding on companies that wish to remain members. In the Netherlands, there is a well-established sunshine practice with pharmaceuticals, and several years' experience of reporting by medtech companies from pilot projects. But at the end of this week (June 1, 2018), the Netherlands is introducing self-regulation on a much larger scale, and it will apply to reporting all financial relationships related to sponsoring and fees for services with physicians (but not general practitioners).
How do the rules and their impact in the EU differ from one another?
Van den Bos: The approach is very much a national one. There are procedural differences, with one country having a central database to which all reports need to be made and which is accessible to the general public, while another approach requires companies to disclose on their own websites. There are also significant differences in terms of the content that needs to be reported. For example, when it comes to financial thresholds above which reporting of expenditure toward health-care professionals is necessary, these can differ significantly. In France, for example, it is €10 ($11.20) per item of expenditure, while in the Netherlands, it is €500 total toward any single general practitioner on an annual basis. What is more, in France companies have to report payments to a lot of different health-care professional in many different health-care settings, including hospitals, pharmacists, nurses, while in the Netherlands, the only payments that need to be declared are those to physicians and their organizations.
Are there any plans to have EU-wide sunshine rules mandated in law?
Van den Bos: There is certainly no mention of sunshine requirements in the EU's new Medical Device and IVD Regulations, which came into force on May 26, 2017, and I am not aware of any initiatives from the EU institutions to draft any proposals on this topic. Indeed, I question whether the EU institutions have the power to regulate in this area. There are also no EU-wide pharma requirements.
Would you advise companies to try to create a single response to the EU's multiple sunshine requirements?
Van den Bos: The national differences make it difficult for companies to prepare a single one-size-fits-all response to sunshine rules around the EU. This means that manufacturers are better off adapting their approach country by country. The first year can be especially challenging as companies learn how to adjust to the requirements as they differ from country to country, but after some time of meeting the requirements, companies benefit from efficiency gains.
How US Compares
Wisor also responded to questions about the US Open Payment system:
Can you explain what the regulatory situation is in the US when it comes to sunshine? When did it come into being and what was the catalyst?
Wisor: The statutory basis for the US sunshine regulations is in the Affordable Care Act (which has come to be known as Obamacare). The catalyst was a series of high-profile government enforcement cases involving payments from industry to health-care professionals in which it was felt that industry was buying influence from health-care professionals. There were multiple settlements over the course of a decade that finally led Congress to conclude measures were needed to shine more light on such relationships. These rules are nationwide and they require all pharma and medtech manufacturers of products that are reimbursed by the Medicare and Medicaid programs to report payments made to physicians and teaching hospitals on an annual basis. The sunshine regulations were drafted and are administered by Centers for Medicare and Medicaid Services (CMS), part of the US Department of Health and Human Services. They are known formally as the Open Payments Program. Data collection started on August 1, 2013. The first full year of reports nationwide was calendar year 2014. (Also see "
CMS Lets Context Stand In Open Payments Database" - Medtech Insight, 30 Sep, 2014.) These requirements are really burdensome in the US with larger companies needing to hire entire staffs to meet their obligations.
Are there penalties for breach of the rules in the US? And what about the EU? On what scale are they?
Wisor: In the US, there are civil monetary policies that can be imposed for violations –up to $10,000 per violation for failure to report, with a cap of $150,000. Knowingly failing to report can attract a fines of up to $100,000 dollars, with a cap of $1m.
Van den Bos: There are also penalties in the EU, but they are generally much lower than in the US. In the EU, the size of the penalties depends on the country and the seriousness of the inducements – a penalty can reach hundreds of thousands of Euros. I think the key penalty risk is not so much in failing to comply with the sunshine rules. It is rather the reporting of transactions leading to competent authorities having a closer look at the payments themselves and imposing fines or other penalties for the violation of rules on financial relationships or excessive payments, for example. For violation of the sunshine rules in France, for example, where the rules are mandatory, there is definitely a penalty, whereas there is no legal financial penalty in the Netherlands because it is self-regulatory. There could be some form of reprimand in the Netherlands, however. For instance, being thrown out of an industry association would be one such extreme measure.
How big an issue is media and government focus on companies that fail to comply with the rules?
Wisor: In the US, there is a searchable CMS database. When this was first set up, and for the first couple of years, there was a good deal of interest in it and the sector found that this focused some unwanted attention on some companies and on some doctors that had particularly lucrative deals. Indeed, the extent of disclosure has persuaded some doctors to stop any financial relationships with companies, although some have continued to provide consultancy on a voluntary basis. Stories are still run every year when summaries of the findings are released, but these tend to draw less interest than they once did. I don't believe the US Department of Justice monitors the Sunshine Act. But in the US, and this is somewhat unique, much of the health-care fraud abuse enforcement, and much of the government investigations into whether people are improperly getting paid by the Medicare and Medicaid programs, is done under the False Claims Act. This is a federal statute that gives whistle-blowers, or anyone that has inside information, the ability to file a complaint, to receive a percentage of whatever the recovery is by the government. There is a whole bar of lawyers that do those cases and they certainly look to public information to fill in their case. However, it is not enough to say that someone got paid a large amount of money by industry to assert a violation of the law. But it can help to have this database of reports on financial relationships to pad out legal arguments and to make allegations based on what is publicly available.
(Also see "CMS Still Focusing On Open Payments Education Rather Than Compliance" - Medtech Insight, 15 Mar, 2016.)
Given how burdensome these regulations are for industry in the US, alongside the trend toward deregulation in the US, are there any proposals to have these US sunshine requirements dropped or modified?
Wisor: That is a good question. To me, when you first hear about these rules, it seems like a good idea to have more transparency. But when you think about how burdensome it is to actually track individual payments – the threshold for reporting in the US is $10 – that is an incredible undertaking for companies who need to dedicate significant resources to this task. I would have thought that industry would have been a lot more vocal about getting the Sunshine Act repealed in the current deregulation environment associated with Trump policy, because it seems like a huge regulatory burden, without a whole lot of return in terms of public policy. But I have not seen a lot around industry drawing up its battle lines. The reason for this may be linked the huge focus on drug pricing under the new administration. The life sciences industry may be reticent to ask for other things that would be a distraction. In short, there has not been a big clamor for the repeal of the Sunshine Act, although I think it would be a good idea.
From the editors of Clinica
