ObamaCare remains on the March: what may be a ray of sunshine for patients likely will burden a number of small companies with additional compliance rules and paperwork to the point of bankruptcy.

• Author: Klebanow, Diana
• Position: Physician Payments Sunshine Act - Political Landscape

AMID ALL OF THE talk about health care reform, an interesting law that goes into effect in 2013 largely has gone unnoticed. It is called the Physician Payments Sunshine Act (PPSA), and was passed in March 2010 as part of the Patient Protection and Affordable Care Act, frequently referred to as ObamaCare. PPSA was designed to bring transparency to the financial relationships existing in the medical profession, and was introduced by Sens. Herbert H. Kohl (D.-Wis.) and Charles E. Grassley (R-Iowa). PPSA requires all manufacturers of drugs, biologicals, and medical devices to disclose on an online database payments to physicians and teaching hospitals amounting to more than $100 per year.

Companies also must disclose payments of cash and cash equivalents, stock, stock options, dividends, profits, or other returns on investments. They do not have to report educational materials for patient use and benefits, or product samples intended to be free for patients.

Physicians are to be listed on the database by name, business address, specialty, and their National Provider Identifier Number. PPSA provides for penalties for the companies for noncompliance: a minimum payment of $1,000 per violation, with the total capped at $125,000 per year, and a minimum penalty of $10,000 per violation for the willful failure to submit this information, with the total capped at $1,000,000 per year. As of Oct. 1, 2011, the Secretary of Health and Human Services has been required to establish procedures for the submission of the required information. This information is to be released to the public on March 31, 2013.

PPSA refrains from banning these payments, but requires that they be disclosed. It reflects the belief that, as the late Supreme Court Justice Louis D. Brandeis stated, "Sunshine is the best disinfectant." A random study of this physician-industry relationship was published in The Archives of Internal Medicine in 2010, and it indicated that 83.8% of all respondent physicians had some type of relationship with industry. The study involved primary care physicians (internal medicine, family practice, and pediatrics) and specialists (cardiology, general psychiatry, and anesthesiology). The types of payments and gifts most physicians routinely receive include the following: consulting and research fees, informing other doctors about the company's products; serving as the company spokesperson for these products; sitting on physician advisory boards; money for continuing medical education courses; and lunches, dinners, trips, entertainment tickets, office trinkets with company logos, and limousine service to and from various events.

Although these gifts or payments are not inherently dishonest, they raise questions about potential conflicts of interest. Numerous studies have pointed out that researchers taking in funding from medical companies are far more likely to report favorable results than researchers who get no such funding, and that physicians often have a financial reason (as opposed to a medical one) for recommending one product over a less expensive alternative. In compelling companies to disclose these payments and gifts to physicians, PPSA seeks to subject the medical profession to public scrutiny.

This physician-industry relationship is a relatively new development. Until the 1980s, the American Medical Association adhered to the view that...