Impact of the Physician Payment Sunshine Act on State Regulations: Where Federal Overrules State

Posted in Physician Payment Sunshine Act on May 30, 2013

The Physician Payment Sunshine Act (PPSA) was not established to replace state laws, but to build on them and remove redundancies. The PPSA requires “applicable manufacturers,” defined as “a manufacturer of a covered drug, device, biological, or medical supply,” to disclose payments and additional transfers of value to physicians or teaching hospitals. The Act defines “physician” as a doctor of medicine, a podiatrist, a dentist, a chiropractor or an optometrist.

In addition to disclosing all payments and transfers of value to physicians, the PPSA also requires that manufacturers report aggregate marketing expenses by state. Since several states and the District of Columbia have established their own laws related to disclosure of payments/gifts to physicians, the PPSA includes a preemption clause that overrules state laws that require disclosure of the same types of payments, or transfers of value. Aside from this, nearly all existing state regulations are kept intact. As a result, however, manufacturers may be required to report payments to the U.S. Department of Health and Human Services as well as state health care authorities.

The practical effects of the PPSA have yet to be fully observed, but one consequence that presents some concern involves the narrow definition of “covered recipients,” which includes doctors of medicine and osteopathy, chiropractors, dentists, and podiatrists. Since the PPSA does not include nurses, physician assistants or other clinicians within its definition, it is possible that manufacturers will shift payments to these practitioners.

At Robinson Calcagnie, Inc. our legal team lauds the federal effort to regulate disclosure of certain marketing efforts by pharmaceutical and medical device companies, though we predict that some amendments to the Act may be necessary in the future should these companies find other ways to push favor of their products onto physicians. Healthcare professionals influenced by the “generosity” of drug and medical device companies may not have the best interests of their patients in mind.