By David Pyott
One of the realities of federal laws in the United States is that the passage of legislation is not an end point, but merely a step in what can be a lengthy process as the law is translated into enabling regulations. No law more clearly illustrates this point than the Patient Protection and Affordable Care Act (PPACA) of 2010, a 2,700 page piece of legislation that will likely generate many times that number of pages of regulations. One significant problem is that the writing and finalization of these regulations often take more time than anticipated, and frequently with missed deadlines. Meanwhile, companies that will be impacted by these regulations remain in a state of limbo, not wanting to put in place any new processes and procedures until they see the final regulations.
One case in point is the release in February of the final Sunshine Act rules, a part of the PPACA which will require drug, device and biologic manufacturers to annually report to the Center for Medicare and Medicaid Service (CMS) the payments they make to physicians and teaching hospitals. CMS, in turn, will create an online database that makes the disclosures easily accessible to the public. The rule was devised in response to concerns that medical practice and research may be unduly influenced by financial relationships. One problem – the final rules missed the deadline set out in the PPACA by more than a year.
In fairness, much of the delay in finalizing the Sunshine Act rules was due to the gathering of additional input from stakeholders as those in industry, physicians and other interested parties were given many opportunities to provide their points of view on what the rules should look like. The opportunity to provide comment was important as this is a system that CMS estimates will create compliance costs for companies and providers of more than $220 million during the first year and more than $160 million each year afterward. It is a system that carries penalties up to $1 million for failure to report, including for expenses as small as $10. With these costs and potential penalties, one can imagine the concern companies have in clearly understanding what processes and regulations will be put in place.
For my part, I believe transparency in financial relationships between industry and physicians and teaching hospitals is a valuable piece of information to assure the public of the integrity regarding the drug and medical device development process. At the same time, I am concerned about the potential implication that missing unrealistic deadlines for passing regulations under PPACA may be a symptom of other unrealistic assumptions in the law, including the overall cost, which will make 2013 an interesting year as we continue to see the roll out and impact of these and other regulations.
David Pyott is the CEO and chairman of the board of Allergan. This post has been re-printed with permission from his blog Allergan Views. Please send any feedback via firstname.lastname@example.org