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Be Wary Of Medical Companies Bearing Gifts

Connecticut Law Tribune

May 16, 2011

Authors: Joan W. Feldman, William J. Roberts

For many years, both Congress and numerous states have debated adopting laws which would either prohibit or restrict physicians from receiving gifts and other transfers of value from pharmaceutical, medical device and medical supply companies. Advocates for such laws have argued that when a physician receives gifts or other items of value, his or her judgment becomes clouded and could potentially result in the physician having a conflict of interest.

While many of the legislative efforts, including a 2009 proposal, in Connecticut, languished due to various concerns and opposition from physicians and pharmaceutical, medical device and medical supply companies, the federal health care reform enacted in March of 2010 (the “Affordable Care Act”) includes comprehensive disclosure and reporting rules applicable to many participants in the health care and bioscience sectors.

Under the Affordable Care Act, if a drug, device, biological or medical supply is one that is covered under Medicare, Medicaid or the Children’s Health Insurance Program, Congress requires that the manufacturer track and disclose payments and other “transfers of value” to “teaching hospitals” and physicians. The first disclosures are due to the U.S. Department of Health and Human Services (HHS) on March 31, 2013 for the preceding calendar year. Therefore, manufacturers will need to begin tracking the necessary information on Jan. 1, 2012 and should take time now to either curtail their practices or develop and implement an appropriate tracking system.

The definition of “anything of value” is broad and includes consulting fees or other compensation, honoraria, gifts, entertainment, travel, food, education, research, charitable contributions, royalties and licenses, ownership interests and grants. Notwithstanding, certain transfers are excluded, such as: transfers of anything of value less than $10 (or $100 in the aggregate per calendar year – to be increased after 2012); product samples intended for patient use and not to be sold; educational materials for patient use; short-term equipment loans (up to 90 days); items or services provided under contractual warranty, discounts and in-kind items used for charity care. Many physicians will be pleased with this exemption because it allows them to continue to give patients free samples.

To properly disclose these transfers to the Department of Health and Human Services, the manufacturer must track the name and address of the recipient, the recipient’s National Provider Identifier number and specialty (if applicable), the amount of the transfer, the form and nature of the transfer, the date of the transfer and whether the transfer was related to marketing, education or research specific to a drug, device, biological or medical supply.

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