The Gig is Up: The Sunshine Act Will Include CME Payments to Doctors

Those of us who have followed the progress of the implementation of the Physician Payment Sunshine Act have been acutely aware of one potential loophole: drug companies might try to hide payments to doctors for industry-supported CME activities. That’s because these payments are not "direct" payments to doctors, but rather indirect payments.

In a 2007 op/ed piece for the New York Times, I referred to this arrangement as a money laundering scheme: “Essentially, this is a new twist on that well-known instrument of corruption, money laundering. Drug companies don’t directly pay doctors to teach courses. Instead, they pay someone else to cut the checks. Similarly, the drug companies don’t explicitly tell doctors to say good things about their products. Instead, they hire a company to write good things about their products and to pay doctors to deliver the messages.” 

Nothing substantial has changed about this cloak and dagger payment process since 2007—other than the fact that the total amount of commercial support for CME has dropped substantially, from a high water mark of $1.2 billion in 2007 to $830 million in 2010—a decrease of  37%. But $830 million is still a chunk of change, and some unknown portion of that sum is paid directly to physicians by the CME provider.

Therefore, those of us in favor of transparency were able to breathe a sigh of relief when CMS recently unveiled its proposed regulations. Drug companies will, in fact, be required to report payments that flow through third party entities and end up in doctors’ pockets, as long as the company is aware of the identity of the doctor. And how could they not be aware? ACCME requires all CME programs to publically disclose the identities of both the industry supporter and the faculty—meaning that companies will eventually always know which doctors end up partaking of their “educational grants.”

In closing this loophole, CMS officials were hardly acting on their own—they were simply implementing the Sunshine Act as it was approved by Congress. In fact, if you look at the text of the Act, it is hard to imagine any reasonable interpretation other than CMS's. Here’s the crucial opening paragraph of the law, which sets the context for the entire Act:

“On March 31, 2013, and on the 90th day of each calendar year beginning thereafter, any applicable manufacturer that provides a payment or other transfer of value to a covered recipient (or to an entity or individual at the request of or designated on behalf of a covered recipient), shall submit to the Secretary, in such electronic form as the Secretary shall require, the following information with respect to the preceding calendar year….” (my italics).

The language is technical, so let's unpack it a bit. “Applicable manufacturer” means a drug or device company. “Transfer of value” means giving a doctor anything of value, including cash, meals, and gifts.  “Covered recipient” means a physician, dentist, podiatrist, optometrist, or chiropractor—all of which are professionals covered by the law. So far, the law is saying, in common parlance, “Any drug company that gives money or something else of value to a doctor…will have to report this to the government.”

But the framers of the Act went out of their way to acknowledge that sometimes these payments are indirect, and that such indirect payments should be reported as well. How else could you interpret all the language in parentheses: “ …Or to an entity or individual at the request of or designated on behalf of a covered recipient.”  To translate again: the Act is saying here that drug companies must report payments to any “entity” (eg., a MECC, a medical society, a non-profit organization) that takes payments from drug companies when those payments are actually “designated” for a “covered recipient”, ie., a doctor.

It seems quite clear, but of course both drug companies and those MECCs dependent on drug company grants are viewing this issue differently--see, for example, Tom Sullivan's take in this article on his blog Policy and Medicine. So stay tuned. Hopefully CMS will stick to its guns and issue final regulations that will not allow drug companies to cast a shadow on a major source of physician payments. Let the sun shine in!