Pharmaceutical and Medical Device Manufacturers Need to Know: Sunshine Law / Open Payments Enforcement on the Rise
Pharmaceutical and medical device manufacturers should be aware that the government is using its enforcement authority under the Open Payments program (also known as the Sunshine Act) in conjunction with the Anti-Kickback Act (AKS) against manufacturers for alleged bribes paid to treating physicians. On May 19, 2021, the Department of Justice (DOJ) announced its second publicly available rulebook for alleged violations of the Open Payments Program, following the first DOJ’s publicly available Open Payments Program rule in October 2020. .
The claims for the two colonies are very similar; manufacturers have reportedly paid attending physicians in the form of meals, travel and entertainment to entice them to use manufacturers’ medical devices. Working in partnership with the Centers for Medicare & Medicaid Services (CMS), the DOJ not only claimed that the entertainment fees were bribes in violation of the AKS, but also that the manufacturers had failed to report. to CMS the entertainment costs as payments to physicians. in violation of the Open Payments program.
Context of open payments
The Open Payments program requires manufacturers of drugs, biologics, devices or medical supplies covered by Medicare, Medicaid, or CHIP to track and report to CMS on an annual basis certain payments or transfers of value made to physicians, teaching hospitals, and other organizations. other advanced practice clinicians. CMS publishes this data in a searchable online database accessible to the general public. The open payments program authorizes the imposition of civil monetary penalties (CMPs) of up to $ 176,000 for unintentional violations and up to $ 1,176,000 for knowing violations (both adjusted for inflation) per year.
Factors taken into account in determining the amount of CMP include, but are not limited to:
- The length of time the manufacturer failed to report, including the length of time the manufacturer became aware of the payment;
- The amount of payment the manufacturer failed to report;
- The level of guilt;
- The nature and amount of information reported in error; and
- The degree of diligence exercised to correct information reported in error.
Application of open payments
Although open payment reporting has been in effect for over seven years (the first reporting period was August 2013 to December 2013), enforcement activity has been very minimal. But in March 2019, the Senate Finance Committee requested that the Department of Health and Human Services (HHS) begin investigating and enforcing open payment non-compliance, and HHS appears to be responding to that request.
In October 2020, the DOJ announced its first settlement regarding alleged open payment violations. While the allegations are another example of the DOJ’s many enforcement actions against manufacturers for alleged bribes paid to doctors in the form of meals and entertainment, the settlement was the first time the DOJ has linked the violations. of the AKS to violations of open payments. Not only did the manufacturer allegedly pay bribes to attending physicians in the form of meals and entertainment, it also failed to accurately report payments for physician meals and entertainment to CMS, such as the requires the Open Payments program. In the DOJ press release, Brenna E. Jenny, Acting HHS Deputy General Counsel and CMS General Counsel, hinted that further open payment enforcement actions may be expected in the near future, stating that “CMS hopes to continue its partnership with the Department of Justice. The Justice Department must resolve allegations that manufacturers are bypassing their open payment obligations. “
The May 17 settlement involved similar conduct. The medical device maker allegedly paid for meals, alcoholic beverages, entertainment and travel expenses for doctors at a research event held in September 2013. qui tam complaint, which alleged violations of the AKS and the False Claims Act. The government stepped in and added alleged violations of the open payments program. It should be noted that the payments in question were made in September 2013, that is, during the initial reporting period of the open payments program. While there has been speculation that CMS would not exercise enforcement authority for reports made when the Open Payments program was initially started, this does not appear to be the case when allegations of fraud are also at play. .
Open future payment enforcement actions
Given the Senate Finance Committee’s call for HHS and CMS to enforce the open payments program and these two factually similar regulations, manufacturers of medical devices and drugs should be advised that the government likely intends to continue. enforce open payment violations in conjunction with ongoing AKS violations. before. Manufacturers should take steps to ensure that they submit timely and accurate reports and do not underreport applicable payments. We will continue to monitor and report enforcement activity under the open payments program.