Impact of the Physician Payment Sunshine Act on State Regulations: Disclosure Laws

Posted in Physician Payment Sunshine Act on May 20, 2013

The Patient Protection and Affordable Care Act of 2010 includes, among its provisions, the Physician Payment Sunshine Act (PPSA), which generally requires that pharmaceutical companies disclose payments to physicians for the marketing of their products. It is the first Congressional effort in the regulation of disclosure-related pharmaceutical marketing. The PPSA took effect in January 2012, but, as a federal law, does have an effect on any existing state regulations of drug marketing practices.

In this five-part blog series, we will identify particular state regulations in place before the Sunshine Act and then discuss the ultimate effect the federal law has on these state regulations.

Between 1993 and 2011, several states and the District of Columbia passed laws to regulate pharmaceutical marketing by:

• requiring drug manufacturers to disclose gifts and payments to physicians;
• prohibiting certain gifts;
• requiring adoption of a compliance code; and
• prohibiting data mining of prescribing patterns.

Up until the implementation of the Sunshine Act, five states (West Virginia, Vermont, Minnesota, Massachusetts, Maine) and D.C. required drug manufacturers to disclose spending on marketing to practitioners. Each state disclosure law enumerates the marketing expenses that must be disclosed, those that must be disclosed publically and penalties for non-compliance. The PPSA also addresses these components.

While regulations differ by jurisdiction, most disclosure laws require the disclosure of travel reimbursement, food and entertainment, honoraria and high-cost gifts. Those items that are generally exempt include low-cost gifts, reimbursements of participation in particular educational events, compensation for conducting clinical trials and free sample drugs meant for patient-use.

In regard to gifts, several states not only designated certain gift types as requiring disclosure or being exempt, but enacted laws to ban certain gifts altogether.

To learn more about gift ban laws under state drug marketing regulation, visit our blog for the next article in our Physician Payment Sunshine Act Blog Series.