The Sunshine Act: Who Pays for It Anyway?

Industry Insights from Paul Meade, M.Sc., MPH

By now, just about everyone involved in healthcare has heard about the Sunshine Provision (also known as the Sunshine Act). Starting January 1, 2012, any U.S. drug or device manufacturer that provides compensation to a physician or medical institution for any kind of services rendered will have to report it to the government.
The reporting benchmark is any amount over $10 for any single event. This means that if a sales representative for a pharmaceutical company buys a sandwich for a physician’s lunch and it costs $9.95, it doesn’t have to be reported, but if the physician adds a bottle of water to the sandwich, bringing the total to $11.95, it will need to be reported. Is it really to report sandwiches? Of course not, but it will! It’s really for some of the “big ticket” items, like compensation for conducting clinical studies, consulting on the development of new products, speaking at small meetings to colleagues that are sponsored by a company, etc.
So who pays for collecting, capturing, analyzing, and reporting all this information, and what will all of this monitoring activity cost? Let’s start by determining the number of active physicians in the United States. Well, there’s a problem right off the bat! According to the World Health Organization (WHO), there are currently 1.5 million physicians in America. According to other sources, this WHO number appears to be an overstatement. The American Medical Association reports there are 918,000 doctors in the U.S., and according to the American Association of Family Physicians there are 936,000. But the 2010 U.S. Census Bureau states there are 661,000 physicians in America, of which some 633,000 are actively employed. But wait, according to a study published in the Journal of the American Medical Association (JAMA), the number of physicians in the U.S. was overstated and there are, in fact, 788,000 MDs (whose overstatement, I ask?). Wouldn’t it be nice to know the actual number of physicians in the United States before we begin tracking their remuneration from companies? It would be difficult to track trends over time if you don’t even know the baseline number or starting point.
For argument’s sake, let’s choose the number of 750,000 physicians actively employed in healthcare in the United States. How many healthcare manufacturers are there in the U.S.? Well, that number is even more difficult to determine than the number of physicians, but after painstaking research and a serious vetting process, I have come up with 200 pharmaceutical, 50 biotechnology, and 30 medical device companies actively doing meaningful business in America. So, we have approximately 280 companies all working with approximately 750,000 physicians in various activities where there could be some form of remuneration over the $10 limit (say that out loud five times for even greater effect!).
I realize that not every one of the 750,000 physicians works with manufacturers, but we must also recognize that several companies work with the same physicians over a variety of activities where compensation is in order. Now, let’s be conservative and say that only 10% of active physicians have any interaction with manufacturers (75,000 MDs), and that all 280 companies have at least some reimbursable interaction with these 75,000 doctors, and that on average, each company interacts 5 times a year with each of these physicians (a very conservative estimate). We would have 75,000 MDs X 280 companies X 5 activities for a total of 105 million transactions a year (again, a very conservative estimate).
So, 280 companies are going to report 105 million transactions to a central government database, and from this, a report will be generated for Congress to review, and then, a few months later, this database will be made available to the general public. And here comes the big question: who pays for all this? Does the government take tax dollars to build and manage such an enormous database? How many people will be required to monitor and ensure the quality of the reporting? Does this money come from limited healthcare dollars at the expense of providing healthcare for the citizens of this country? Do the manufactures build tracking and reporting databases for free?
All of this capturing and reporting millions and millions of transactions between manufacturers and physicians at the expense of spending healthcare dollars on delivering better health to the nation smacks of squandering limited resources at a time when the economy is squeezing access to healthcare for most people. And in the end, what will we have to show for it? That a few physicians earn a bit too much money consulting to the manufacturing industry? That some companies spend a little too much money having physicians consult for them on product development issues? Is this a wise move at this time?

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