United States: Here Comes The Sun: Final Rules Implementing The Federal Sunshine Law 21 February 2013 Article by Ropes & Gray LLP's Health Care Practice

On February 1, 2013, the Centers for Medicare & Medicaid Services (CMS) released the long-awaited final rule implementing the Federal Sunshine Law (42 U.S.C. 1320a-7h). (The rule was subsequently published in the Federal Register on February 8, 2013.)

The Federal Sunshine Law requires manufacturers of drugs, biologics, devices and medical supplies covered under Medicare, Medicaid and the Children's Health Insurance Program to report payments and other transfers of value made to physicians and teaching hospitals to CMS for subsequent public disclosure. Collection of information was to begin January 1, 2011, but CMS had delayed collection pending promulgation of the final rule. The final rule requires collection of information beginning August 1, 2013 with information collected for 2013 to be reported to CMS on March 31, 2014.

CMS, in the final rule, responds to feedback from stakeholders as well as the HHS Office of Inspector General and implements regulations that depart from the proposed rule in significant ways. These departures reflect a better understanding of interactions between manufacturers and covered recipients and the agency's intent to ensure that the transparency created by the law discourages inappropriate relationships without harming beneficial relationships. CMS further seeks to allow reporting flexibility while providing the detail, clarity and standardized processes necessary to ensure accurate information.

Our detailed summary analysis of the final rule and CMS commentary is available here.

Key provisions in the final rule and clarifying commentary include:

• Limiting application of the law to manufacturers that have a physical presence or conduct activities in the United States (which includes selling a product in the United States);
• Finalizing the proposal to restrict application of the law to manufacturers of prescribed drugs and biologics (effectively excluding manufacturers of over-the-counter drugs) and to manufacturers of medical devices for which premarket approval by or premarket notification to the U.S. Food and Drug Administration is required (effectively excluding manufacturers of many Class I devices and some Class II devices);
• Clarifying that an entity under common ownership or control with a manufacturer (with common ownership requiring a minimum 5% ownership interest) is also a manufacturer only if the entity provides assistance or support that is "necessary or integral" to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale or distribution of a covered product.

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