[Senate Hearing 112-664]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-664

 
 LET THE SUNSHINE IN: IMPLEMENTING THE PHYSICIAN PAYMENTS SUNSHINE ACT

=======================================================================

                               ROUNDTABLE

                               BEFORE THE

                       SPECIAL COMMITTEE ON AGING

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS


                             SECOND SESSION

                               __________

                             WASHINGTON, DC

                               __________

                           SEPTEMBER 12, 2012

                               __________

                           Serial No. 112-22

         Printed for the use of the Special Committee on Aging



         Available via the World Wide Web: http://www.fdsys.gov



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                       SPECIAL COMMITTEE ON AGING

                     HERB KOHL, Wisconsin, Chairman

RON WYDEN, Oregon                    BOB CORKER, Tennessee
BILL NELSON, Florida                 SUSAN COLLINS, Maine
BOB CASEY, Pennsylvania              ORRIN HATCH, Utah
CLAIRE McCASKILL, Missouri           MARK KIRK III, Illinois
SHELDON WHITEHOUSE, Rhode Island     DEAN HELLER, Nevada
MARK UDALL, Colorado                 JERRY MORAN, Kansas
MICHAEL BENNET, Colorado             RONALD H. JOHNSON, Wisconsin
KIRSTEN GILLIBRAND, New York         RICHARD SHELBY, Alabama
JOE MANCHIN III, West Virginia       LINDSEY GRAHAM, South Carolina
RICHARD BLUMENTHAL, Connecticut      SAXBY CHAMBLISS, Georgia
                              ----------                              
                 Chad Metzler, Majority Staff Director
             Michael Bassett, Ranking Member Staff Director


                                CONTENTS

                              ----------                              

                                                                   Page

Opening Statement of Senator Herb Kohl...........................     1
Statement of Senator Senator Chuck Grassley......................     2
Statement of Senator Richard Blumenthal..........................     7

                           PANEL OF WITNESSES

Diane Biagianti, Vice President, Chief Responsibility Officer, 
  Edwards Lifesciences, Irvine, CA...............................     6
Daniel Carlat, MD, Project Director, Pew Charitable Trusts, 
  Washington, DC.................................................     7
Jeremy Lazarus, MD, President, American Medical Association, 
  Washington, DC.................................................     8
Elizabeth O'Farrell, Senior Vice President, Policy and Finance, 
  Eli Lilly & Company, Indianapolis, IN..........................     8
Douglas Peddicord, Ph.D., Executive Director, Association of 
  Clinical Research Organizations (ACRO), Washington, DC.........     9
Statement of Charles Rosen, MD, Clinical Professor of Orthopedic 
  Surgery, University of California, Irvine, School of Medicine, 
  Orange, CA.....................................................    10
James Scully, Jr., MD, Medical Director and CEO, American 
  Psychiatric Association, Arlington, VA.........................    11
Niall Brennan, Director, Policy and Data Analysis Group, CMS, 
  Washington, DC.................................................    12

                                APPENDIX
                   Witness Statements for the Record

Diane Biagianti, Vice President, Chief Responsibility Officer, 
  Edwards Lifesciences, Irvine, CA...............................    38
Daniel Carlat, MD, Project Director, Pew Charitable Trusts, 
  Washington, DC.................................................    43
Jeremy Lazarus, MD, President, American Medical Association, 
  Washington, DC.................................................    46
Elizabeth O'Farrell, Senior Vice President, Policy and Finance, 
  Eli Lilly & Co., Indianapolis, IN..............................    99
Douglas Peddicord, Ph.D., Executive Director, Association of 
  Clinical Research Organizations (ACRO), Washington, DC.........   104

             Additional Statements Submitted for the Record

Advanced Medical Technology Association, Washington, DC..........   114
CME Coalition, Washington, DC....................................   121
MMIS, Inc., Portsmouth, NH.......................................   138
National Dialogue for Healthcare Innovation, Washington, DC......   140
U.S. Department of Health and Human Services, Office of Inspector 
  General, Washington, DC........................................   143


 LET THE SUNSHINE IN: IMPLEMENTING THE PHYSICIAN PAYMENTS SUNSHINE ACT

                              ----------                              


                     WEDNESDAY, SEPTEMBER 12, 2012

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:31 p.m. in Room 
SD-562, Dirksen Senate Office Building, Hon. Herb Kohl, 
chairman of the committee, presiding.
    Present: Senators Kohl [presiding], Blumenthal, and 
Grassley.

        OPENING STATEMENT OF SENATOR HERB KOHL, CHAIRMAN

    The Chairman. Good afternoon. We thank you all for coming 
here, especially Senator Grassley.
    Today we will discuss the Physician Payments Sunshine Act, 
a law that Senator Grassley and I worked on together. 
Unfortunately, the Sunshine Act's implementation is a year 
late, which is both troublesome as well as not acceptable.
    In November 2010, Senator Grassley and I asked Secretary 
Sebelius about implementing the Sunshine Act according to the 
timeframe in the law. Almost two years later, I'm disappointed 
to say, we're still asking these same questions. Industry, 
doctors, and consumers deserve better. I have repeatedly 
requested that CMS provide a timeline for implementation. 
Secretary Sebelius and CMS tell us that the rule will be 
finalized by the end of the year, so we expect CMS to honor 
that commitment, and hopefully CMS can get this done even 
sooner.
    The Sunshine Act ensures the openness and transparency of 
the financial ties between doctors and the drug and medical 
device industries. These financial relationships are valuable 
and lead to new therapies and technologies, but the public has 
a right to know about these financial ties.
    As many stakeholders who worked with Senator Grassley and 
me to develop the law know, the Act was never meant to be 
burdensome. In fact, many medical device and drug companies are 
already releasing information about payments to doctors 
voluntarily or as required by state law.
    The Federal law set reasonable timelines requiring rules on 
how to operate the Sunshine Act by October 1st of last year, 
and to date CMS has not finalized the rules, leaving consumers 
and manufacturers in the dark. We urge CMS to finish the rules 
and ensure that the definitions and guidelines are clear and 
workable for industry and patients alike.
    Most importantly, the information must be made available to 
the public, must be easily understood and provide enough 
context for patients to understand why their doctors' names 
appear on the website.
    All the stakeholders, consumer and industry groups 
together, want a fair rule and want it issued now. That is why 
we're here today, to give CMS and all the players a chance to 
discuss how best to make the Sunshine law a reality and to 
ensure that CMS is listening to the questions and concerns 
these companies and groups bring to the table.
    With that, I invite Senator Grassley to provide his opening 
statement before we turn this roundtable over to Dr. McClellan.

              STATEMENT OF SENATOR CHUCK GRASSLEY

    Senator Grassley. Thank you, Mr. Chairman. I thank you for 
your leadership, and particularly I thank you for your 
bipartisanship on this effort and how you conduct the work of 
your committee.
    I thank everybody in the room for coming, particularly 
those at the table here who have to do the hard work and 
prepare for it, and particularly for Dr. McClellan leading the 
discussion.
    In 2007, I began conducting extensive oversight and seeking 
disclosure of industry financial ties with groups, including 
taxpayer-funded research, physicians, medical schools, medical 
journals, continuing medical education companies, and patient 
advocacy non-profit organizations. We exposed numerous cases 
where there were vast disparities between drug company payments 
received and reported by leading medical researchers.
    Just two examples. At Stanford University, the Chairman of 
Psychiatry received an NIH grant to study a drug while 
partially owning as much as $6 million in stock in a company 
that was seeking FDA approval of that drug. After exposure, the 
NIH removed the individual from the grant. At Harvard 
University, three professors failed to report almost a million 
dollars each in outside income while heading up several NIH 
grants. In response to my oversight, Harvard revised the 
conflict of interest policies and conducted an internal 
investigation of these professors.
    These problems led to the Physician Payment Sunshine Act. 
The Sunshine Act establishes a nationwide standard requiring 
drug, device, and biologic makers to report payments to doctors 
to the Department of Health and Human Services. It requires 
information about those payments to be posted online in a user-
friendly way for public consumption. It also establishes a 
penalty as high as $1 million for knowingly failing to report 
the information.
    Now, as we all know, the legislation was ultimately 
included in Section 6002 of the Patient Protection and 
Affordability Act. CMS was eventually tasked with carrying out 
the Sunshine Act. The agency had until October 1st, 2011 to 
issue regulations. When CMS failed to meet the deadline, 
Senator Kohl and I wrote to CMS about why it failed to meet the 
deadline. We asked for a timetable for issuing the preliminary 
regulations and implementing the Act.
    CMS' response was incomplete and very uninformative. There 
was no explanation for the delay and no indication of the 
expected completion date. At the time of the response, the U.S. 
Government had just settled with a medical device maker for 
$2.4 million over allegations of kickbacks to doctors to use 
the company's product. The payments to doctors are the kind 
that might be prevented through disclosure as soon as the 
Sunshine Act is in place.
    Senator Kohl and I then scheduled a hearing to force the 
agency to publicly explain why the rule was taking so long. Not 
surprisingly, because it happens so often around this town, not 
only with CMS but with so many other bureaucracies, on the eve 
of the hearing CMS finally issued the proposed rule. For the 
most part, I was very pleased with CMS' proposed rule. CMS 
stuck to the goals and the integrity of the Sunshine Act, 
providing clarification where it was needed.
    However, many questions remain on the technical aspects of 
the rule and how the data will be presented. I have said from 
the very beginning, if the information provided to the public 
is not concise, easily readable and understandable, then we 
have all failed the American taxpayer.
    It has now been nearly nine months since the proposed rule 
was issued, and CMS cannot tell us when they plan to issue the 
final rule. The longer we wait, the more the taxpayers miss out 
on the benefits of public disclosure.
    CMS is simply dragging its feet on implementing the 
Sunshine Act. But why? Because it doesn't make sense, the 
dragging of the feet. Rarely do you find all stakeholders, 
including consumer groups, industry, professional medical 
organizations and provider organizations, MedPAC, the Institute 
of Medicine, and Congress all on the same side of the issue. In 
fact, industry and consumer groups sent a letter to CMS October 
the 25th last year urging full implementation of the Sunshine 
Act. Yet, still, there is delay.
    Our efforts to engage with CMS on the implementation of the 
Sunshine Act have met with resistance and silence, just like 
Congress passing a law doesn't make any difference around this 
town. Why is CMS so unwilling to being open and transparent 
with the implementation of the process? It seems to me that the 
public's business ought to be public. That's what democracy is 
all about. That's what our government is all about.
    I am never one to put a lot of stock into rumors. But one 
that keeps popping up is that CMS has completed the final rule 
and sent it over to OMB, but OMB will not issue the final 
regulation until after the election.
    Now, that doesn't make sense, but that is what people are 
saying. CMS needs to clarify if there is any truth to this 
rumor. Is the rule at OMB or not? Is it being held up until 
after the election? If so, why?
    We need to find out what the hold-up is, deal with it, and 
get the job done. After all, how long have we been on this? 
It's five or six years since the investigation started, three 
years since the law was passed. The American people deserve the 
full disclosure and transparency that this law promises; and 
more importantly, the people we expect to comply with it, 
meaning the industry, needs certainty about what the specifics 
of the rule will be so that compliance can begin. The time for 
delay is over.
    Today's roundtable is geared towards gaining a better 
understanding from CMS officials on why they have failed to 
implement the Sunshine Act, their anticipated release of the 
regulations, and the consequences facing industry due to the 
lack of guidance from CMS. You kind of get back to something 
very basic. You know, a lot of people in this country may not 
like what government tells them, but they ought to tell them so 
they know what the situation is.
    Due to the structure of the law, companies must establish 
an internal data collection system and educate all employees on 
the new requirements. However, companies do not have the luxury 
of going to Best Buy and purchasing the latest data collection 
system off the shelf. Companies build the systems. They must 
train and educate their employees on the proper use of the 
system in order to properly capture the necessary data. Many 
companies have already begun piloting these systems to ensure 
that they are capturing all the relevant information, and I 
thank them who are doing that for doing that. However, with the 
lack of recognized practices from CMS on how to move forward, 
companies cannot prepare to fully meet the letter of the law.
    Lastly, as I did at the beginning, I want to thank our 
participants in today's roundtable. Collectively, these 
participants represent the government agency in charge of 
carrying out the intent of the law, the industry the law is 
intended to regulate, the consumer groups representing the 
patients the law is intended to help and protect, and various 
experts in the field, all of you folks at the table.
    It is my sincere hope that CMS is prepared to be open and 
honest about where it is in the process and why it has failed 
to implement the law in a timely manner. Letting the sunshine 
in and making information public is basic to accountability. 
The sooner we can properly implement this law, the sooner we 
can establish greater accountability for patients and 
consumers, especially in medical research.
    Thank you, Mr. Chairman. Thank you.
    The Chairman. Thank you very much, Senator Grassley.
    We now turn the roundtable over to Dr. Mark McClellan, and 
we thank you for moderating this roundtable.
    Dr. McClellan previously served as Administrator for the 
Centers for Medicare and Medicaid Services, as well as the 
Commissioner of the Food and Drug Administration.
    I know this conversation will be productive, and we thank 
the panelists, each and every one of you, for joining this 
discussion.
    Dr. McClellan, the roundtable is now in your hands.
    Dr. McClellan. Chairman Kohl, thank you very much for that 
introduction. I would like to especially thank you and Senator 
Grassley for all your work over the years on the Physician 
Payment Sunshine Act and working to have it implemented 
effectively. It has been a real privilege for me personally to 
have the opportunity to work with you not only on this issue 
but on many other issues of importance to older Americans and 
the financing of health care, and the quality of health care in 
this country. It's a real pleasure to be part of this effort to 
try to bring everyone along together on moving forward on 
implementing the Sunshine Act as effectively as possible.
    I think everybody here--and I had a chance to read the 
statements and hear through my staff from many of you--
everybody here agrees with the goal of the Sunshine Act, bring 
transparency to the health care system through accurate 
disclosure of payments and other transfers of value between 
different participants in it, physicians, teaching hospitals, 
GPOs, manufacturers and others.
    As CMS said in its proposed rule on the Act, 
``collaboration among physicians, teaching hospitals and 
industry manufacturers may contribute to the design and 
delivery of life-saving drugs and devices. However, while some 
collaboration has been official, payments from manufacturers to 
physicians and teaching hospitals can also introduce conflicts 
of interest that may influence research, education and clinical 
decision-making in ways that compromise clinical integrity and 
patient care, and may lead to increased health care costs. 
Financial ties alone do not signify inappropriate 
relationships. However, transparency can shed light on the 
nature and extent of relationships and may dissuade 
inappropriate conflicts of interest from developing.''
    So that's the purpose behind the rule, and this development 
of the rule has been, and I think will be a challenging task 
for CMS, and striking the right balance and involving all 
stakeholders in what has been an iterative process, and I 
expect from the engagement of everyone here will continue to be 
an iterative and constructive process, and hopefully the 
dialogue that we have today can contribute in a constructive 
way to helping all of this effort move forward.
    I'm here to moderate. There are a lot of people around the 
table. I know many of you in this room who have been deeply 
involved in the issues related to the Sunshine Act for some 
time. So we're going to try to make this as informative and 
fast-moving a process as possible.
    I want to start out by discussing some of the key issues 
involved in the Sunshine Act and respond to some of the 
questions and key points that the senators raised at the 
outset. All of this, again, is to highlight why it's so 
important for CMS to get it right. And then we'll hopefully 
have some time to discuss ways to present the information 
involved, ways to address the effort and the burden involved in 
reporting, ways to make as much of an impact at as low of a 
cost as possible from the implementation of the Sunshine Act.
    So to do that, I'm going to need the help of everyone 
around this table, and I'd like to start by asking each of you 
to introduce yourself.
    Elizabeth, maybe we can start down at your end, just a 
brief introduction, and then we'll come back to the statements.
    Please do press the button, right.
    Ms. O'Farrell. Hi. I'm Liz O'Farrell, and I'm with Eli 
Lilly and Company, where I'm Senior Vice President of Finance 
and Policy.
    Dr. Lazarus. Dr. Jeremy Lazarus. I'm President of the 
American Medical Association.
    Dr. Carlat. Dr. Daniel Carlat. I am the Director of the Pew 
Prescription Project with the Pew Charitable Trusts.
    Ms. Biagianti. Diane Biagianti, Vice President of Edwards 
Lifesciences, Chief Responsibility Officer.
    Mr. Brennan. Niall Brennan, CMS.
    Mr. Peddicord. Doug Peddicord. I serve as Executive 
Director of ACRO, the Association of Clinical Research 
Organizations.
    Dr. Rosen. I'm Charles Rosen. I'm a clinical professor of 
orthopedic surgery at UC-Irvine and President and Co-Founder of 
the Association for Medical Ethics.
    Dr. Scully. Good afternoon. I'm Jay Scully. I'm the Medical 
Director and Chief Executive Officer of the American 
Psychiatric Association.
    Dr. McClellan. Again, thanks to all of you for being here. 
Now I would like to get to those 1-minute opening statements, 
and I'd like to thank everyone for preparing the statements 
they did for the record and encourage everybody here, if you 
haven't had a chance to look at them already, very informative 
on the topics involved today.
    So I'd like to go alphabetically on these, starting, Diane, 
with you.

DIANE BIAGIANTI, VICE PRESIDENT, CHIEF RESPONSIBILITY OFFICER, 
                EDWARDS LIFESCIENCES, IRVINE, CA

    Ms. Biagianti. Chairman Kohl, Senator Grassley, and Dr. 
McClellan, thank you very much for the opportunity to 
participate in this roundtable. We commend you for your 
continued efforts to ensure that the Physician Payment Sunshine 
Act is promptly and effectively implemented as part of the 
Affordable Care Act.
    Edwards Lifesciences is a California-based medical 
technology company that has maintained global leadership in the 
science of heart valves and hemodynamic monitoring for several 
decades. We support transparency because strong collaboration 
between scientists, engineers, entrepreneurs, and the clinical 
community is key to innovation. It was the close collaboration 
between a cardiothoracic surgeon and an engineer that created 
the first commercially available artificial heart valve more 
than 50 years ago. That was the beginning of our company and 
almost all the products we have made since then were created as 
a result of this kind of collaboration.
    Based on our belief that the greater transparency will help 
the public better appreciate what we do with clinicians, 
Edwards Lifesciences decided four years ago to become the first 
medical device company to initiate a voluntary payment 
disclosure program. We appreciate the opportunity to 
participate here today and hope our experience with 
transparency will help answer your questions and inform the 
dialogue.
    Most importantly, we hope our answers underscore three key 
points: first, that the process of medical device innovation is 
unique. Device companies are extremely dependent on the input 
and guidance from clinicians as we invent and improve upon the 
products we make.
    Number two, we support transparency and the need for a 
final rule to issue as soon as possible. We are confident that 
CMS will take into consideration the extensive comments 
provided by the various stakeholders and will provide clear 
guidance for companies to comply with the law.
    And third, patients and the public need to be provided with 
the opportunity to understand what these payments are for, an 
opportunity to provide meaningful context surrounding a 
transfer of value that's critical to avoid further confusion 
and possible misrepresentation of what can be very important 
collaboration.
    Thank you.
    Dr. McClellan. Great. Thanks very much, Diane.
    I thought I was going to go in alphabetical order. But now, 
if you don't mind, I'll let CMS be saved for last. So that 
means next up is Dan.

  DANIEL CARLAT, MD, PROJECT DIRECTOR, PEW CHARITABLE TRUSTS, 
                         WASHINGTON, DC

    Dr. Carlat. Thank you. Thank you, Dr. McClellan, Senator 
Kohl and Senator Grassley.
    The prescription project has focused on issues related to 
physician-industry relationships and transparency for quite a 
while now. Before I became the director of the prescription 
project, I was a practicing psychiatrist and a publisher of CME 
material and journals, and before that I worked with the 
pharmaceutical industry in different contexts, both speaking 
and research.
    The Pew Health Group has been a strong proponent of the 
Physician Payment Sunshine Act since 2007, and has worked in a 
bipartisan fashion with pharmaceutical and device companies, 
medical associations, and consumer groups to support its 
passage and its implementation.
    We support the Sunshine Act so strongly because of an 
essential principle really of medical ethics, which is that we 
must treat our patients based on the best medical evidence, and 
that our treatment decisions should not be inappropriately 
influenced by financial considerations.
    So I look forward to today's discussion, and I'm quite 
optimistic that we can move forward with the final regulations 
quite rapidly, as Senator Kohl and Senator Grassley had hoped. 
Thank you.
    Dr. McClellan. Dan, thanks very much, and thanks for all 
the work that Pew is doing on this important set of issues.
    I'm going to go a little bit out of order again and turn 
now to Senator Blumenthal. Thank you for joining us for this 
roundtable today and, please, if you'd like to make a statement 
to help us start out, that would be great.

            STATEMENT OF SENATOR RICHARD BLUMENTHAL

    Senator Blumenthal. Well, I actually relish those occasions 
when I don't have to say anything and I can just listen, and I 
want to listen. Rachel Pryor is my staff person with me today.
    I want to thank Senators Kohl and Grassley for their 
leadership on this issue. For all of us who have been involved 
in consumer protection and advocating consumer causes, as well 
as anyone who is interested in lowering the cost of health 
care, this issue is so critical, and I think this kind of 
conversation is very important to achieving the important ends 
of the legislation.
    I will be very interested in knowing more about what can be 
done not only to improve the law but, most important, improve 
its enforcement. I'm very interested in enforcement, in 
implementation, administration, which often makes the law real 
in people's lives. And I think that disclosure, sunshine, full 
transparency, the more the better, and really just want to 
thank all the participants today for your contributions, and 
everyone else who is here today, for the work that you're doing 
on this common cause. I very much hope it is a common cause, 
and I believe it is. Thank you.
    Dr. McClellan. Senator, thanks very much for your comments, 
and especially for your leadership on this important set of 
issues.
    I'd now like to turn to Jeremy.

 JEREMY LAZARUS, MD, PRESIDENT, AMERICAN MEDICAL ASSOCIATION, 
                         WASHINGTON, DC

    Dr. Lazarus. Thank you. I'm Dr. Jeremy Lazarus, a board-
certified psychiatrist in private practice in Denver, Colorado, 
and President of the AMA.
    We appreciate the opportunity to provide our views and to 
discuss with other stakeholders the AMA's concerns and 
recommendations concerning implementation of the Sunshine Act. 
We support efforts to increase transparency. We provided 
ongoing input and supported the final version of the Sunshine 
Act after important modifications were made to the legislation 
designed to ensure that the reporting did not impose a 
regulatory and paperwork burden on physicians, protected 
physician due process rights, and provided a meaningful picture 
of physician-industry interactions.
    Our goal is to work with all of you to streamline the 
regulatory burden, ensure accurate and fair reporting, and 
ensure adequate time to conduct outreach and education on the 
final rule to physicians. We're very hopeful that today's 
discussion will advance resolution of key questions and areas 
of concern that we have with the proposed rule. Thank you.
    Dr. McClellan. Thanks very much, Jeremy.
    And next up, Liz.

ELIZABETH O'FARRELL, SENIOR VICE PRESIDENT, POLICY AND FINANCE, 
             ELI LILLY & COMPANY, INDIANAPOLIS, IN

    Ms. O'Farrell. Good afternoon. At Lilly, we believe that 
physician payment transparency, when done accurately and with 
relevant context, is good for all stakeholders. Through 
developing our current payment registry, where we disclose all 
financial relationships, payments and transfers of value to 
physicians, we learned how operationally complex this is. I'm 
concerned that the draft regulations, along with an overly-
aggressive implementation timeline, will result in confusing, 
inconsistent and inaccurate interpretations of the data.
    This is why we're recommending a phased approach which we 
believe will enable a high percentage of payments to be 
accurately captured in the proposed timeline.
    In addition to timing, there are four areas where the 
current draft regulations are both operationally unmanageable 
for manufacturers and will create confusion for the public.
    First, indirect payments should be reportable only when the 
manufacturer controls or implements the selection of the 
physicians engaged by the third party.
    Second, meal allocations must be factual and workable. We 
should not attribute value to someone who does not actually 
receive a meal.
    Third, the exclusion for patient materials should 
explicitly encompass all educational items and services 
provided to covered recipients for the direct benefit of the 
patient.
    Lastly, we ask for the definition of ``applicable 
manufacturer'' to align with the statutory definition and only 
include our subsidiaries who are operating in the United 
States.
    In 2011, we disclosed $216.5 million on our registry. This 
encompassed 1.1 million transactions with 102,000 physicians. 
It took us 23 months to design, implement and validate our 
registry. To broaden our registry to meet the requirements of 
the draft regulations, we estimate it would take a minimum of 
180 days, and we're starting from a position of strength and 
experience. Many companies are starting disclosure for the 
first time.
    I really appreciate the opportunity to be here this 
afternoon and look forward to the discussion. At Lilly, we 
firmly believe that transparency, when done in the right way, 
is good for all of us.
    Dr. McClellan. Liz, thanks, and I appreciate you summing up 
some of your experience as well. We are going to, obviously, 
come back to a lot of the issues that you and the other 
presenters have brought up in these opening comments.
    Right now, though, let me go on to Doug.

 DOUGLAS PEDDICORD, PH.D., EXECUTIVE DIRECTOR, ASSOCIATION OF 
     CLINICAL RESEARCH ORGANIZATIONS (ACRO), WASHINGTON, DC

    Mr. Peddicord. Dr. McClellan, thanks very much.
    Again, my name is Doug Peddicord, and I serve as Executive 
Director of the Association of Clinical Research Organizations, 
or ACRO, which represents the world's leading clinical research 
organizations, CROs. Our member companies provide a range of 
services across the entire spectrum of development for new 
drugs, biologics and medical devices, from pre-clinical, proof-
of-concept and first-demand studies, through post-approval and 
pharmaco-vigilance research.
    With more than 75,000 employees engaged in research 
activities around the world, ACRO member companies conduct more 
than 11,000 clinical trials involving nearly 2 million research 
participants every year. We are involved in half of all 
clinical trials that take place worldwide.
    Since passage of the Affordable Care Act, we have worked 
with industry, CMS and other stakeholders to try to ensure a 
regulation that will be fair to doctors and hospitals, useful 
to patients and consumers, and not discourage research 
participation.
    Let me begin by saying that ACRO argued, and we continue to 
believe, that fair market payments made for legitimate research 
activities should have been excluded from the provisions of 
6002. It's worth noting that several states Sunshine statutes 
exclude from reporting payments made for such bona fide 
research activities.
    Our concern is that failing to exempt those payments for 
research activities from the requirements will have deleterious 
effects on the research enterprise in the United States. A 2010 
survey of U.S. physicians who conduct clinical trials, 
investigators, showed that 24 percent would be less likely to 
participate in research or would not participate at all if the 
revenues, the gross revenues, not revenues in excess of 
expenses or profits but gross revenues, which is what the 
proposed rule will require, were disclosed by HHS.
    A major reason for this, we believe, is physician concern 
that the data will be highly susceptible to misinterpretation. 
Stated differently, the survey finding suggests that the U.S. 
is in danger of losing one-quarter of its clinical 
investigators, which will slow innovation and delay the 
delivery of needed treatments for patients.
    I very much look forward to the conversation today.
    Dr. McClellan. All right. Thanks very much, Doug.
    Chuck.

 CHARLES ROSEN, MD, CLINICAL PROFESSOR OF ORTHOPEDIC SURGERY, 
UNIVERSITY OF CALIFORNIA, IRVINE SCHOOL OF MEDICINE, ORANGE, CA

    Dr. Rosen. Thank you. I'm President and Co-Founder of the 
Association for Medical Ethics, and we believe in and supported 
the Sunshine Act from the beginning. We believe in the 
transparency of people, doctors, reading research papers, 
knowing whether the authors had $10,000 for research support or 
$1 million in stock options, and believe that patients should 
have the right to know about their physicians.
    There is no restriction in the Sunshine Act that I know of, 
nor in our policy, of how much anybody gets from anybody for 
anything, whether it's $10 a day or $1 million a day. This is 
purely transparency and openness.
    The concerns that I have thus far are about the continuing 
medical education exemption, that the idea somehow of industry-
sponsored continuing medical education payments to physicians 
via a third party should somehow be exempt I think will gut the 
Sunshine Act. To say that this will discourage somehow medical 
education in this country having these marketing seminars--and 
as Marcia Angell, the previous editor of the New England 
Journal of Medicine said, these are for marketing, not 
education--will somehow collapse the education system in this 
country I think is a little bit silly.
    Also, I'm concerned about the pre-FDA research that's done 
that exempts any of the authors from having transparency of 
their payments under the guise of somehow trade secret, or 
somehow it's competitive getting researchers. I think that will 
gut a lot of the Sunshine Act if that's allowed.
    And just the last point, I have noticed being here that a 
lot of questions are being made about how difficult it is to 
set up this database and so forth. I can tell you, for the last 
five months at AME, with personal funds between me and my co-
founder of AME, Gemma Cunningham, we put in $600,000, hired 18 
programmers over the last five months, have downloaded a 
searchable database of every transaction between pharmaceutical 
and medical device companies to physicians for the past seven 
years, including the DPA of the ortho companies from five years 
ago, and it's searchable and it's free on our website. It's the 
largest in existence.
    So I would dispute that this is such a difficult thing to 
download and do at CMS, and we certainly don't have the 
capabilities that CMS does, and we've done it.
    Dr. McClellan. Just for the people who may be going to 
their laptops now, the web address for your organization?
    Dr. Rosen. Ethicaldoctor.org.
    Dr. McClellan. Okay. Thanks very much.
    And next up is Jay.

 JAMES H. SCULLY, JR., MD, MEDICAL DIRECTOR AND CEO, AMERICAN 
             PSYCHIATRIC ASSOCIATION, ARLINGTON, VA

    Dr. Scully. And last. Thank you, Mark.
    As I said, I'm Jay Scully with American Psychiatric. When I 
came into my current position, we were already concerned about 
these issues and were hearing from our members, particularly 
our younger members, that there was a problem in our 
relationship and how we primarily dealt with the funding of 
education. I expect one of the reasons you invited me here is 
that we don't have a disclosure problem because we don't do it 
anymore.
    So, I'll tell you what happened: we were getting 
commendations from the accrediting CME body for the way we 
managed the industry-supported programs--highly valued by a lot 
of our members. But concerns were raised by the public and by 
our members, and the public trust was just too important to us.
    So, in 2008, we decided we would phase out any industry 
funding for our CME programs, which we did at some cost. Four 
years later, it's working pretty well. We have a problem that 
we still are working on, which is we want access to the best 
experts. Sometimes those best experts are in the pharma labs. 
So, we still are working on that. We're working with them, and 
we're making progress in that area--particularly with the 
university-based folks who get pharma money. I'll talk about 
research in a second maybe in more detail.
    So, we did the separation. Again, we love marketing. We 
love advertising from pharma. We just want to make clear that 
it's not education. We live in a market-based economy. That's 
how we get the new products and the great advances we've made, 
and we need that from our colleagues in the pharmaceutical 
industry. We just want to be clear about when it's marketing 
and when it's education.
    So, it works for us. With the Sunshine Act, though, one of 
the things we've done is our own disclosures, which have been 
quite extensive--particularly in our guidelines groups who 
produce the clinical guidelines. And one of the things we've 
learned is that the research dollars and how they're managed in 
various institutions is very complicated. Some money may go 
directly to the researcher and into their personal funds. 
Others go to the university or the organization and are never 
seen by the researcher. So how does that get dealt with?
    Furthermore, a lot of money is spent on free medicines that 
are to be researched and studied. Is that going to be reported 
as the doctor's income, the money for those things? This is a 
problem we have had with our own disclosure system.
    We also, as everybody else does, want to make sure there's 
a fair, formal dispute resolution that goes into the rules for 
the Sunshine Act so that everybody is clear that these things 
are not reported until discrepancies have been dealt with, so 
bad data doesn't go up. It gets confusing sometimes, so it 
needs to be done, especially around the research dollars.
    I'll stop there. We can talk later.
    Dr. McClellan. Thanks. And I want to thank everyone for the 
conciseness of their opening statements. Again, we are going to 
come back to discuss all these issues in more detail.
    First, though, let me turn to Niall for some opening 
comments from the CMS perspective.

   NIALL BRENNAN, DIRECTOR, POLICY AND DATA ANALYSIS GROUP, 
   CENTERS FOR MEDICARE AND MEDICAID SERVICES, WASHINGTON, DC

    Mr. Brennan. Thank you, Mark. I'd like to thank the 
senators and their staff for convening this roundtable. CMS is 
certainly looking forward to the input of folks here at the 
roundtable.
    As you know, we published an NPRM for the Sunshine Act on 
December 19th, 2011, with a 60-day comment period, which ended 
on February 17th, 2012. At the conclusion of the comment 
period, we had received over 300 highly substantive and 
technical comments from a wide range of stakeholders covering 
almost every section of the proposed rule.
    We continue to meet extensively with stakeholders. We met 
with them both prior to the NPRM and subsequent to the NPRM to 
give them an opportunity to amplify their comments to us, and 
we like to think that we have been as open and transparent as 
possible in that regard.
    While there were a lot of comments, some certainly were 
commented on more than others: continuing medical education, 
the treatment of indirect research payments, the process for 
resolving disputes between physicians and manufacturers.
    In May of this year we announced that in light of the 
extensive comments, and again to try and be as transparent as 
possible to folks affected by this provision, that we would not 
require data collection by applicable manufacturers or group 
purchasing organizations before January 1st of 2013, which 
would give us additional time to address the operational and 
implementation issues in a thoughtful manner.
    We continue to assess the requirements for the program to 
ensure that we can accurately and effectively collect and 
publish the data, as intended by statute. I think many of the 
participants already have alluded to the complexity of a lot of 
the underlying issues and the need to get it right before it 
becomes a real and tangible program, and that's what we're 
focused on.
    We're working very hard on finalizing the regulations and 
rulemaking around this particular provision. We're in parallel 
starting to gear up on implementation and considering the 
various systems and programmatic decisions that have to be 
taken into account in order to operate this program effectively 
and efficiently.
    We remain committed to the goals of the statute and look 
forward to talking to you all today.
    Dr. McClellan. Great. Thanks, Niall, and I think we're all 
looking forward to that discussion.
    I do want to get into some more of the specifics around the 
issues that all the panelists have raised, but maybe I could 
start with just, Niall, a follow-up for you. We heard that 
everyone here is very interested in moving forward with clarity 
about the final rule as soon as possible. It sounds like, from 
what you said, you're in the midst of a lot of work based on 
the extensive comments that you received. You said there's a 
parallel process with both getting the final rule and getting 
to some of the systems work that needs to be done.
    Anything else you can add at this point, even though you're 
in this rulemaking process, on plans and on how those parallel 
processes are likely to move forward?
    Mr. Brennan. Well, I am relatively limited in what I can 
say, Mark, because we are in a rulemaking process. We're 
working very hard. We are discussing things extensively with 
both our lawyers and OIG as required by the statute, and my 
colleague, Shantanu Agrawal, who is the Chief Medical Officer 
at the Center for Program Integrity, is also in the audience, 
and CPI are starting to gear up on many aspects relating to 
implementation.
    Dr. McClellan. Okay. Thanks for that. And with that process 
coming, I think one of the useful ways to spend some of our 
time together today is to make sure we're all up to speed as 
much as possible on what some of those key issues are and what 
kinds of preparations different stakeholders can do for that 
final rule and the systems to implement it that, as you say, 
are coming in the not-too-distant future.
    There has been, as you heard from a number of the 
participants around the table, a good deal of experience with 
some kinds of reporting and transparency around payments. There 
also were a lot of views and I think informed perspectives on 
some of the challenges in both producing these reports and in 
their use and interpretation, and I'd like to go through all of 
those issues as best we can in the time that we have together 
today.
    So let me start with the what, what should be reported and 
what some of the key issues are there, and I'd like to 
particularly focus on the areas that you all emphasized in your 
written statements, in your opening comments around reporting 
research payments, around reporting CME, and around reporting 
meals. Those are not the only things that are covered here, but 
they seem to have been a big part of the comment process and 
some of the tougher issues in getting to effective 
implementation.
    So maybe we can start with research and, Doug, let me turn 
to you. I appreciate your point in the statement that research 
perhaps should be included--research should be excluded. 
Research is not going to be excluded under the law. So given 
that, any further comments you'd like to elaborate on about how 
to get research reporting as effective as possible?
    Mr. Peddicord. Sure, Mark, and I think we're obviously 
recognizing that research is not likely to be excluded. In our 
written statement, one of the things we provided was a chart of 
the flow of research payments and data collection related to 
those payments, which in some ways very much underlies this 
question of direct versus indirect payments and how do we 
capture what it is that is being paid for what.
    I think one of the things that it is relatively uncommon 
for applicable Manufacturer A to write a big check to Doctor B 
to perform research services. In fact, it is more often the 
case that payments, like NIH grants that flow through research 
institutions, are likely to flow through other intermediaries, 
including CROs, in the commercial side of the world also. As a 
matter of fact, our companies work with something over 500 
manufacturers each per year, and so we have a very broad range 
of experience with what those payments are going for.
    What those payments go for is everything from what I would 
call goods, laboratory tests and the like, to services, 
physical examinations, to essentially professional and 
administrative services like record-keeping and data collection 
and data reporting. I think one of the things that the rule 
needs to do better than it does in the proposed version is to, 
in fact, separate out those categories.
    That's what I think the direct and indirect payments idea 
is trying for, but I think as written within the proposed rule, 
we were left very much concerned with the issue of the 
potential for double and triple counting. If what we end up 
doing is we count a direct payment made to a physician and an 
associated, what would be called indirect, payment made to the 
institution, are those amounts the same? Are they different? Do 
we get--are we asking for greater levels of granularity than 
we, in fact, now have?
    So, for instance, lots of times now, a payment gets made to 
a physician practice. Two of those physicians might be 
investigators in a research project. The other eight of the 
physicians in the practice are not. We don't necessarily know 
how they divide up their money, and it's not something that we 
are likely to need to capture, except if the rule requires us 
to capture it.
    So I'll stop at the major question of I think direct/
indirect needs to be much clearer, and I will make one 
particular plea, which is probably as much to the industry as 
to CMS, which is that this is an area that cries out for a 
great deal of standardization. The notion that every 
manufacturer is developing a different system for capturing a 
relatively small number of data elements is really problematic, 
and I think it will be really problematic for CMS as well 
because if it can't get standard data elements in, it's unclear 
to me how it will create a database that really will be useful 
and informative for patients and consumers.
    Dr. McClellan. I want to pick up on that point about 
informative for the public. That is, obviously, the bottom-line 
goal of the legislation. And while, as you pointed out, many of 
the financial flows here are complex, there are not that many 
categories, and standards could be helpful in making it 
interpretable to the public.
    Standards development is something that happens in a lot of 
areas. You don't necessarily have to wait for the government to 
do it for you. Industry, other stakeholders working together, 
can often make progress on this.
    Jay, you all have a lot of experience with thinking about 
these research issues, and I know you commented extensively on 
it in your written comments. In terms of making this 
information as useful as possible to the public, any thoughts 
about what standardization might involve and how to get there? 
Do we really need entirely to wait on CMS to get the rule out?
    Dr. Scully. No. I think it would be great if industry--and 
here primarily it's universities and some institutes that are 
not university-based, but primarily universities-reports, but 
in what categories? If I get a $9 million grant from Acme 
Pharmaceuticals to do a study, do I buy a condo in the 
Caribbean, or is this for research associates? Is this for the 
medications that we're studying, and I don't get anything into 
my personal accounts?
    Still, the public may need to know I'm doing research for 
Acme Pharmaceuticals. That's fine. But it needs to be done in a 
way that's useable information for people.
    What we've discovered, because in addition to the CME 
business, in our guidelines world--and I think a lot of 
professional societies are doing this--we have divestiture. You 
can't be running our guidelines on the treatment of depression 
if you're getting a lot of money from a drug company, even 
though you may be the world expert. So we struggled with that.
    Clearly, disclosure is important, but we're saying there 
are some limits, you know, and you really can't have any money. 
If our guidelines are used--Acme Drugs, for the treatment of 
this--are used with this particular drug, that needs to be 
pretty clearly pristine. We're very clear about that.
    So if you're a researcher, can you do it? We think so, as 
long as you're not individually--as long as we can disclose 
that, that you have been doing research for this in your 
university and it's dealt with in a particular way and you're 
not getting personal money.
    But if you are, so what is personal money and how is that 
dealt with? Is your salary dependent upon it? If you're 
bringing in so many dollars to the university, they'll raise 
your salary? Lots of complicated things need to be worked out 
before somebody is tagged with ``Dr. Scully gets a million 
dollars from Acme Drugs.''
    Dr. McClellan. Let me ask Dan, since you all have thought 
about this a lot as well. Any further thoughts given the 
comments you've heard about reporting on research, how to make 
that as useful as possible to the public without being unduly 
burdensome or have the kind of adverse effects on the conduct 
of research that Doug and others have articulated?
    Dr. Carlat. So we have to realize, of course, that there 
are two great truths as far as these research payments go. One 
is that research is really the life blood of medical progress 
and nurtures medical care. So all these research payments are 
good and we need to maintain them, and we certainly need to 
develop a system in which we're not going to over-inflate the 
payments that physicians are receiving, as you said.
    On the other hand, and this speaks to the heart of the 
Sunshine Act, when a physician does take payments from a drug 
company, that does set up a potential conflict of interest.
    My own personal experience, having run clinical trials--and 
this is a situation somewhat different from what you were 
saying, Jay--working for a CRO. A CRO got a grant. A CRO hired 
me, and probably other doctors, within a private practice 
setting. So I would recruit patients for an anti-depressant 
trial as part of my private practice. I would receive an 
enrollment fee of $5,000 per patient that I enrolled in the 
trial.
    So here you have a potential conflict of interest where, on 
the one hand, as a physician, I'm there for my patient to 
provide the best possible care. On the other hand, I'm getting 
paid a fair amount of money to enroll them in the trial. So 
from the perspective of the consumer, from the perspective of 
the patient, deciding to be in a clinical trial is complicated 
enough because there are risks involved, right? And certainly 
one of the things that we want to disclose to them is that, in 
cases where there are financial incentives, that those 
financial incentives are in place so they can have that 
information. They do deserve that information, in addition to 
all the other information that they get about the research 
trial.
    Dr. Scully. You're trying to convince the patient to enroll 
in the trial, you need to let them know you're making money 
when they go in the trial. That's an ethical issue between you 
and the patient, as well as the public at large.
    Dr. McClellan. It sounds like some opportunities for really 
promoting transparency here, and I'm glad there's some common 
ground.
    I do want to move on, though, because we have so much to 
cover. So let me turn to continuing medical education, also 
very important for effective medical care. I know there has 
been some important discussion and maybe some differences of 
opinion around what and how should be reported on CME.
    Jeremy, you talked about this at some length and 
highlighted in your statement a range of ethical guidance that 
AMA and other professional organizations have in place to help 
assure appropriateness of CME. Given all of that, what should 
be exempt from reporting in terms of CME?
    Dr. Lazarus. Thanks, Mark. Well, I think what should be 
exempt is what's written in the statute and the ACA, and that 
is that certified CME--I think we need to clarify the 
difference between certified CME, in which there are already 
significant firewalls between the granting organization, 
whether it's pharma or the device manufacturer and whoever is 
providing the CME, and the recipients of that CME, as opposed 
to more promotional or marketing kinds of activities.
    And we already have very extensive ethical guidelines from 
the AMA, from the Council on Ethical and Judicial Affairs, on 
how physicians should take a look at their relationships with 
industry. But we think if you exempt the certified CME, that 
would be the best way to go. And again, that is what is written 
in the statute. So that's what we would propose.
    Dr. McClellan. And, Chuck, I know you care deeply about 
these issues as well. Your thoughts on the same topic of what 
should and shouldn't be reported in terms of CME?
    Dr. Rosen. I'm not sure of the reasons for exempting 
certified CMEs since they are industry-funded CMEs as well. The 
ACCME for some reason allows industry-funded CMEs to be 
certified, and there are non-certified CMEs that are industry 
funded. So just to say they're certified, I don't think that's 
reasonable either, because they are going to be industry 
funded. In fact, I think the ACCME should not be funding, 
should not be certifying industry-funded CMEs, because they are 
marketing.
    Dr. Lazarus. Mark, could I just respond a bit? I think it's 
important to recognize that the certified CME, the 
pharmaceutical or device manufacturers, have no impact in terms 
of who is chosen as speakers, they have no impact on the 
content of the presentations, they don't give PowerPoint 
slides. And indeed, it may be that the recipients of that 
education might not know who is doing the funding. So it is 
quite a different kind of continuing medical education than 
more promotional activities.
    Dr. McClellan. I appreciate the back and forth, but given 
how much we have to cover, I do want to move on. I'm going to 
turn over the questioning just for a moment to Senator 
Blumenthal.
    I understand you have a specific question that you'd like 
to ask.
    Senator Blumenthal. I really appreciate that, and I 
apologize if I'm repeating something that has already been 
discussed.
    But I'd like to ask Director Brennan whether you can state 
specifically or reaffirm what the timeline will be. There was a 
delay, obviously, from 2012 to 2013 for beginning data 
collection. But I wonder if you could just lay out for the 
record now so that we know with certainty what the timeline 
will be for each of the stages, 2013 January for data 
collection, 2014 for posting anything else that you think ought 
to be clarified here?
    Mr. Brennan. Thank you, Senator. That's a somewhat 
challenging question for me to answer because we're still in 
the clearance process, and even if you look at the comments 
from folks like Elizabeth today regarding the length of time 
that industry would like between publication of a final rule 
and actual collection of data, some folks feel that 180 days is 
appropriate, some folks feel that 90 days is appropriate, some 
folks feel that 120 days is appropriate.
    Certainly, we do hope to get the final rule out as soon as 
possible. We do hope to build in an appropriate period of time 
for manufacturers and covered recipients to get ready to 
collect the data and be reported on, and we certainly hope that 
some of that data collection would occur in 2013.
    Senator Blumenthal. You hope that some of it will occur in 
2013? Maybe you could just repeat that. You hope that it will 
occur in 2013?
    Mr. Brennan. I hope that some of the data collection will 
occur in 2013, yes.
    Senator Blumenthal. Okay. You know, I don't mean to be too 
preemptory about this issue because I'm not the author of the 
bill, and Senator Kohl I think has left. But Congress mandated 
some dates here, and we very much welcome hopes, but I think 
that some finality and certainty and commitment is to be 
expected. I don't want to put you on the spot now, but I'm 
going to ask for the record that you come back to us with a 
commitment to a date certain as soon as possible. That's just 
my request. I think it's a legitimate and understandable 
request.
    I know that there are complexities and difficulties, but 
there is more than just a hope on the part of Congress. There 
was a deadline that was set.
    Mr. Brennan. Thank you.
    Dr. McClellan. Thank you, Senator. And Chairman Kohl and 
Senator Grassley I think also made the same point very clearly.
    Senator Blumenthal. Well, again, I apologize if I came in 
late.
    Dr. McClellan. No. Look, it's a very important issue that 
everybody around the table agrees. The sooner this can be done 
and done right, the better. There are some days when I really 
miss being CMS administrator, and there are some times and some 
questions when I don't.
    [Laughter.]
    Senator Blumenthal. And a lot of days when you don't miss 
it, right?
    [Laughter.]
    Dr. McClellan. But I appreciate Niall committing to get 
back to you with as much clarity as he can as soon as possible 
on this set of issues.
    Senator Blumenthal. Thank you.
    Dr. McClellan. Thank you.
    In the meantime, I do want to try to make sure that we're 
getting up to speed as much as possible on what these key 
issues that you're working through are. One other key area of 
reporting that has generated an awful lot of comments and some 
of the favorite anecdotes about who gets charged for the bagels 
and so forth is the reporting on meals and the methods 
included.
    Liz, you've got some experience with this from the work 
that you all have been doing in your reporting already. Any 
thoughts that you can give on how to do this right? It is a 
significant--maybe it's not the biggest part, but it is a 
significant part of financial arrangements.
    Ms. O'Farrell. And I'll talk a little bit about how we've 
done it and what some of my concerns are with the proposed 
methodology now.
    We currently attribute the value of a meal consumed by a 
physician on our registry. So, for example, if we bring in $100 
worth of food and 10 people are eating, and 2 of those are 
physicians, we will allocate $10 to each of them.
    Now, just that from a technology and systems perspective, 
and communication and training, to get to that point with our 
registry took changes to our expense reporting system, training 
to our sales reps, and also training--we made sure that every 
physician understood for our data collection date that we were 
going to be attributing value to anything that was received 
after that point. Also for speaker programs, if they attend a 
meal, we obviously allocate that.
    Where we get very concerned with the draft regulations is 
to think about allocating that--go back to that $100 again--not 
the whole $100 to the physicians who have an ownership interest 
in that practice, or to try to attribute that at speaker 
programs.
    Why is that so complicated? Well, first of all, when we go 
into an office, we don't necessarily know who all of the 
physician owners are, and even if the sales rep knows that, our 
systems and technology don't know that. So we're concerned 
about being able to accurately do that.
    Second of all, if you are a physician who has said I'd like 
to listen to what you have to say but I'm not going to take any 
food from you, we have lost the opportunity to even have a 
discussion if we're bringing food for anyone because we no 
longer can have a physician actually opt out of receiving 
anything of value from us.
    And I think thirdly, one of our biggest concerns is that in 
some bigger practices, there may actually be a physician that 
we don't call on because we don't have a product or an 
indication for that physician, and the last thing we want to do 
is attribute value to that physician on our registry when not 
only did they not eat the meal but they are actually somebody 
we shouldn't call on.
    I think within this--and as I said, we've been doing this 
for a while--we have a dispute process.
    I think the other thing you have to look at is the 
downstream implications of adding complexity. If you are 
attributing to a physician a meal that that physician ate, and 
they understand in advance that that's attributable, you really 
don't have much of a dispute if you do that correctly. When you 
broaden that to attributing a much larger amount than what they 
know they actually consumed, you're going to increase the 
disputes.
    And when you go to the extreme of attributing expense to 
someone who didn't even see you and didn't take the food, we're 
going to see so many more disputes that are going to be very 
hard to reconcile.
    So those are the major issues. We continue to look at the 
simpler you can have it, the better your accuracy is going to 
be, the more understandable it's going to be.
    Dr. McClellan. I did hear or see some head-nodding around 
the table with that. Dan, you all have thought about these 
issues as well, and there are some issues here, questions of 
balance about getting accuracy and completeness versus fairness 
and burden.
    Dr. Carlat. Speaking as someone who used to go into some of 
the offices giving talks--I would come with the reps who would 
provide the platters of sandwiches and what-not--it seemed to 
me that it was a relatively simple matter, and maybe there are 
elements in place that make it more difficult than common sense 
would dictate. But it seemed to me a relatively straightforward 
matter for the drug rep to see which physicians were actually 
eating a sandwich or a bagel, to put that in their information-
keeping system, and then to attribute that amount of expense.
    Similarly, when I go to meetings these days, everybody has 
a badge and a bar code, practically on their forehead these 
days, but they have it on the badge. So as they walk in to pick 
up their box lunch, they're being scanned. It seems that the 
technology is pretty straightforward to make sure, again, that 
the reporting of meals is accurate and not over-reported.
    Ms. O'Farrell. I would say I agree with you on what you 
said. It is--if we know who has eaten and we can attribute the 
meal to that, that's what we do today. We had to make changes 
to our system to enable us within the expense reporting system 
to ensure that we were picking up the right physicians, because 
from knowing who the physician is to actually knowing that you 
got the right one in the system, there's a lot of validation 
and work behind that. But you're right, that is more 
straightforward.
    Where it becomes less straightforward is in the 
interpretation in the draft regulations which would say it's 
not just about attributing it to the physicians that I see 
right now, but now I have to attribute it to whatever 
physicians happen to have an ownership interest in that 
practice whether I saw them or not, and even knowing who those 
ownership interests are is very problematic.
    Dr. McClellan. Jeremy, a quick comment on this, and Doug, 
and then I want to move on from what gets reported to some 
other issues.
    Dr. Lazarus. I'm basically in agreement with what's been 
said. I think physicians should be ``billed'' for what they eat 
and not for what they don't eat. So if they're not actually 
getting that meal or that bagel, it shouldn't be attributed to 
them. It should be the direct meal that they got, not more than 
that.
    Dr. McClellan. Okay. And Doug?
    Mr. Peddicord. So just a quick comment, since the notion of 
common sense came up before.
    [Laughter.]
    Dr. McClellan. We like common sense.
    [Laughter.]
    Mr. Peddicord. At the risk of saying the obvious--I'm not 
sure that the real point of Sunshine, actually, is to employ 
lawyers and consultants and financial managers so that we end 
up with this level of silliness around there should be a no-
bagel table and a bagel table. We actually think that, at least 
in the research sphere, if we bring together 10 physicians for 
a study initiation meeting, and we keep them in a room to train 
them on the study from 9:00 to 3:00 and we feed them, we think 
the meal is entirely incidental to the research and simply 
should be reported under research and should not be segregated 
out.
    I think this idea of segregating out, especially at the 
level of $5 and $10, is part of what then gets us to this 
notion of physicians disputing at the end of the year ``I 
really couldn't possibly have eaten that many meals from 
applicable Manufacturer A.''
    I think there is a need for some sort of common sense here. 
I know meals are a real issue, but I also don't want to make 
them the focus of the regulation. I think patients care about 
what financial relationships are and if there is a conflict, as 
opposed to if people are being incidentally fed during a time 
where they are providing a service.
    Dr. McClellan. All right. That's actually a good transition 
to what I want to talk about next. There have been some great 
comments on what gets reported, some very useful perspectives 
on that and how to move forward. Next is how it gets reported. 
So as Doug was just emphasizing in his comments, what really 
matters here is the public getting an accurate understanding of 
what's going on with these financial supports.
    A key part of that is presentation. The law and CMS' 
proposed regulation envisions a website that's easily 
searchable. Fortunately, as in some of the other issues we've 
discussed, this is not something where we need to start from 
zero. We've got some good experience and some examples already.
    So, Chuck, let me turn back to you to start off this 
discussion, since you've already been involved in trying to 
compile some of this information in a useable way for the 
public. What is most important in getting this right? What are 
the things that should be part of this website, and are there 
ways to get going on moving towards implementing that now, even 
as we're waiting for the final regulation?
    Dr. Rosen. I thoroughly agree that the reporting should be 
accurate, whatever system is worked out, and it accurately 
reflect whatever compensation the physician has gotten, 
whatever form or not. I encourage and believe in that. Nobody 
really cares about bagels, frankly. I mean, that's not the 
whole thing. It's often trivialized and jokes are made about it 
to sort of denigrate the Sunshine Act, it's all about bagels 
and cream cheese and eggs in the morning.
    Well, it's not. I guess that's gotten caught up in it, but 
nobody really cares if you ate $300 worth of bagels last year.
    Dr. McClellan. So when you're designing this website and 
presenting this information, what would you really want to----
    Dr. Rosen. Well, all we did was take the data as it's 
listed by the companies under their categories and did not 
change anything and put it in. That's all we did, and we 
developed programs to access it every two weeks to update it, 
automatic programs. So we didn't change it. As far as the 
details on how to break it out and how to list it out, I'll 
leave that up to the decision-makers, what's going to be listed 
and how you're going to be listed.
    I think accurately it should list just what the physician 
gets. I think that what the physician gets personally should be 
listed because we're talking about people writing papers and 
research that affect the entire country and all patients and a 
very public stance, and you have no right to say, well, that's 
public, but I can't tell you about the financial stuff, that's 
private. You can't have one side public on the other side, and 
I don't know why it's a problem reporting a big salary from a 
company. I'd be glad to report a large salary from any 
companies out there. I don't right now, but if----
    Dr. McClellan. Duly noted. But in all seriousness, I 
appreciate the emphasis that you're putting on getting the most 
important information out and making that clear. Again, a 
number of the companies here have some experience in doing 
that. Maybe, Diane, you talked before about how devices are 
different in some ways. Devices do involve a lot of back-and-
forth interaction in their development and further innovation 
with the practicing physicians, and there are a lot of 
financial arrangements tied up in that. Your thoughts on how to 
make this public reporting as clear and useful as possible?
    Ms. Biagianti. When you first asked that question, Dr. 
McClellan, my first thought was the challenges that we had 
faced in our voluntary disclosure program and some of the 
challenges I perceive that CMS will have as well in aggregating 
the data. I understand from Ms. O'Farrell that Lilly has had 
the same issues, and that is how do you identify, uniquely 
identify the health care practitioner or the physician, and 
that is something that we struggle with as an industry. There 
is no unique identifier for each physician. You can use the 
NPI. There's not necessarily one for all physicians. You can 
use their state licensing number, but they may have multiple 
state licensing numbers. So how do you aggregate the data so 
that you are accurately and completely reporting the data?
    From CMS' perspective, how are they going to aggregate data 
from multiple manufacturers who may be reporting a different 
identifier, NPI, state license number? How do we make sure that 
happens?
    So our suggestion has been it would be very helpful to have 
a unique identifier from CMS for industry to use to ensure that 
we are capturing accurately the data associated with an 
individual physician, as well as CMS can aggregate that data 
appropriately, and patients have access to that information. So 
that was one immediate reaction I had to your question.
    In terms of the data and what would be helpful to patients 
on the CMS website, definitely searchability is going to be 
very helpful. It doesn't help to show what Lilly has paid, what 
Edwards has paid. What they want to see is searchability by a 
doctor's name. So that's critical and, again, goes to 
aggregation.
    And also the ability to add context around those 
transactions. If our whole purpose is to provide clarity to the 
public and to patients around what those collaborations look 
like, it is not going to be helpful if we're just providing 
numbers. We have to explain the context around those 
collaborations so that there's an understanding of what that 
means.
    Dr. McClellan. And is there a straightforward way to do 
that based on your experience?
    Ms. Biagianti. Based on our experience, we have not gone 
transaction by transaction because our voluntary payment 
program is not transaction by transaction. So I don't have a 
clear answer, but context around an individual transaction is 
probably going to be helpful.
    Dr. McClellan. Okay. Liz, you all have a website that 
provides information on transfers of value and the specific 
dollar amounts and has some of this kind of categorization and 
context built in. Your thoughts about how to do this right?
    Ms. O'Farrell. I think for us the most important--and we 
spent, I'm not going to say as much time on the context on our 
website as we did on tracking the data, because we spent a lot 
of time getting the data reported. But we did put a lot of time 
and effort into the context of our website. We wanted to really 
make sure that a reader of the data would have the ability to 
really understand why we work with different health care 
professionals, the context of our work there.
    For example, for research, we do disclose all of our 
payments, including research, and we disclose both the entity 
paid and the principal investigator. That shows that, first of 
all, the check, the actual payment, for the most part went to 
an institution, not a person; and then we have a lot of words, 
context around what does it mean to be a principal 
investigator. What does that mean? What does this number mean 
relative to what that person may or may not have received? Even 
indicating that sometimes that person may have received 
nothing, the physician, because they're an employee of the 
institute. And that, I think, has been very well received by 
the research. We have that kind of context with everything. We 
actually have a video of our chief medical officer in the U.S. 
talking about the work that we do.
    We also have evolved with our current registry to being 
very downloadable and searchable. We feel like if our 
information is going to be out there, we want people to be able 
to get everything out of it that they can. So we offer multiple 
ways to search, to look up different transactions, or we 
aggregate. We don't have it at the transaction level, but in 
the different buckets.
    I think the last is we really do look at the categories. We 
spend a lot of time on what are the categories. So we agree, 
research is research, and if you're going to disclose--if 
you're going to be paying for meals while you have somebody who 
is in a start-up meeting or something, that that is all really 
research, and we have also a lot of context on our website 
about what that means and why.
    So I can't highlight enough how important it is to spend 
the time to put that context, because just looking at the 
numbers can be very misleading. I also think that it's 
important to understand that people need to be able to search 
and download and really look at this data. I think that this is 
also a key for CMS, then, to make sure that you are providing a 
lot of clear guidance on what a bucket is, what's in research, 
what's in meals, what's in speaker programs, because if you 
want it to be able to be aggregated across the different 
manufacturers, it's really important that we've got good 
definitions bucket by bucket, not dictionary definitions but 
real-life definitions, so we all know that we're submitting 
things the right way to you so you can aggregate.
    Dr. McClellan. And, Niall, again, I know you're limited in 
what you can say, but any thoughts from CMS about what should 
go into the website and what should go into providing context 
for people who are using it?
    Mr. Brennan. Well, we're very aware of the need to present 
context with these numbers. We certainly intend to conduct 
extensive outreach and education to make sure the information 
is presented in the appropriate way. Also, I think CMS has a 
fair amount of experience in this area of presenting complex 
information via web tools such as Hospital Compare, the Plan 
Finder tools, and obviously the upcoming exchange 
implementation. So CMS has invested a lot in translating 
complex issues to consumer and patient audiences over the 
years, and we'd certainly hope to leverage that going forward 
as we present the information on a website.
    Dr. McClellan. Thanks. Let me ask anybody else here--this 
is a very important topic, context and how the information is 
presented. So I just want to make sure I don't miss any 
important ideas, but please do keep it brief.
    Dr. Lazarus. Just a couple of comments, Mark. First, I 
think it's incredibly important from our point of view that for 
the individual physician, that there should be direct payments. 
Those are the things that we think the public wants to know 
about, the direct payments, and not to go beyond the statute.
    The context is important. I think the context for us is 
also that we would have an opportunity to also have a place on 
the website to comment on our view of what was reported.
    And in addition to that, we didn't get into the dispute 
resolution part of it, and hopefully if the issue of more 
direct payments is taken care of, there will be less disputes. 
But if there are disputes, there should be an opportunity for 
the physician to have an opportunity to say that on the 
website.
    The last part of it is that we talked a lot about research. 
We would suggest that you consider a separate section of the 
public website that only is about research, and that might 
separate out some of these issues, make it more clear.
    Dr. McClellan. So distinguishing that from CME?
    Dr. Lazarus. Yes, not a non-certified CME.
    Dr. McClellan. Right.
    Dr. Lazarus. So that it's clear that there are different 
buckets, and the public would be more clear about whether it's 
research, promotional marketing, and we hope certified CME 
doesn't make it into it.
    Dr. McClellan. You did make that clear.
    Jay, and then Chuck.
    Dr. Scully. I just wanted to follow along that we think 
that the dispute resolution business needs to be settled before 
the numbers are put on the website, rather than have that go on 
when misinformation is----
    Dr. McClellan. Although some disputes may take some time to 
settle.
    Chuck.
    Dr. Rosen. The spirit of the Sunshine Act, I believe, is 
that money for what physicians do that goes to them be 
reported. Because it stops at some intermediary and is sort of 
laundered a little bit doesn't mean it can't be reported. So I 
think if the CMEs are excluded, tens of millions of dollars are 
now going to go through CMEs to physicians and avoid the 
reporting requirements of the Sunshine Act.
    Also, certified CMEs--I mean, let's be realistic. This is 
where speakers that are paid by companies will talk about off-
label uses of products. No emails will be sent. There will be 
no documentation. That's kind of the part of it in a lot of 
these, and to say that they're all sort of pure and they're 
certified and there's a firewall, that really just is not 
realistically, in my opinion, what happens. It's kind of a 
wink-wink, nod-nod, we'll have a CME down in the Caribbean.
    Dr. McClellan. I appreciate the perspective on this. It 
seems like there are a number of areas where there is 
substantial agreement. This may be one, for handling certified 
CME, where there just isn't, and that's another reason why 
Niall's got a tough job.
    Dan.
    Dr. Carlat. Just a quick point of agreement. I had some 
time with Eli Lilly's website, which is an excellent site. Pew 
has commissioned surveys of consumers. Consumer Reports has 
published surveys. There have been some peer-reviewed surveys 
published in 2012 in a couple of peer-reviewed journals. 
Overwhelmingly, what we see in these surveys is that the main 
concern that consumers have with these payments is the 
marketing payments. So, for example, 72 percent of the Consumer 
Reports survey respondents said that they were very 
uncomfortable with doctors giving promotional talks, 
particularly when they were giving promotional talks for a 
company whose drug they were prescribing.
    So I would say that, again, I would agree with a lot of 
what's been said here, that the buckets need to be very clear.
    Dr. McClellan. And it is nice to know that there is at 
least some experience that can be drawn on to get at least the 
most important buckets off to a good start in this program.
    I do want to turn, in the time that we have left, to 
another set of issues, and that's implementation. So we talked 
some about what. We talked some about how. But carrying out the 
implementation of this website and this ability to obtain 
transparent information about financial arrangements has a 
whole set of issues in itself. We've talked about some of them 
already. There are issues related to standards, what gets 
reported how, given the complexities of some of these 
arrangements. We've talked about data systems. Niall even noted 
that this is a parallel effort, in addition to just working out 
the details of the final regulation.
    A third issue that some of you have already emphasized is 
education and outreach to the physicians involved, to the 
people who need to do the reporting, and to the public that's 
going to be using these tools.
    So I'd like to spend a lot of our remaining time on these 
very important implementation issues, and we can stipulate at 
the beginning that for the implementation questions that I know 
many of you are most interested in--what's the date of the 
final regulation and what's the date of data collection--I 
think we're not going to get those exact dates today. It sounds 
like it is going to be in the not-too-distant future.
    With that said, it seems like there's a lot that can be 
done now to help make sure that we're as prepared as possible 
to enable this to go smoothly. With that in mind, I would 
appreciate some comments from you all who have already made 
some investments in getting ready for Sunshine implementation 
to talk about what can be done now and what are still important 
unanswered questions given the proposed rule and the 
uncertainty that exists.
    I'm not sure who the best person is to start with on this. 
Maybe I'll go back to Liz and Diane since you all have some 
direct experience with these kinds of systems.
    Ms. O'Farrell. Thank you. As I said, and we actually 
brought a couple of visuals as well, we started our CIA 
implementation of our registry, which encompasses all payments 
and transfers of value, and it took about 23 months to get from 
the point of really starting, understanding what the 
requirements were going to be, understanding our business 
processes, making the appropriate changes both to business 
processes, communication, training, and to the approximately 30 
source systems that we have that feed all this.
    We also had the luxury of already having the Sunshine Act 
to look at. So as we went through that process, we tried very 
hard to mirror or to make sure we were accommodating what we 
thought the interpretation of the Sunshine Act would be, and 
really felt that after this work we would be pretty much ready 
for Sunshine, with a few exceptions that we knew. TOV from CROs 
we knew we didn't get that in and we'd have to work on that.
    So when the draft regulations came out, we were really 
surprised by the difference between where we were and a lot of 
those that I talked about in my opening statement.
    So a lot of the timelines from the implementation 
standpoint for companies will go back to how complex the rule 
is, how broad the transactions that we have to cover are. We 
believe that an implementation timeline similar to what we've 
gone under with our voluntary first disclosure and then CIA, 
which is really starting with payments that are much more 
direct, that we have control of internally in our system--we 
still may have to make some system modifications, but that you 
can actually control and get out there, that most companies 
should be able to do that within a maximum of 180 days, and in 
Lilly's case that would provide about 70 percent of the 
transactions. It's not going to get the bagels, but I agree 
with you. I'm sorry, I mean 70 percent of the value. On our 
registry, less than 5 percent of our $216 million is meals, but 
that's about half our transactions. So the cost/benefit there 
is pretty off balance.
    Then we believe that you could give people time, then, to 
start looking at some of the more difficult implementation 
challenges, including CROs. As Dr. Scully said, we have learned 
that it is very challenging to work with CROs and get the data. 
I do think we're going to have an opportunity as an industry to 
standardize some of that, versus companies under CIAs going one 
off. But we have some CROs that it took a year of renegotiating 
the contracts and getting that data in from them. Just as in 
any other industry, there are more sophisticated CROs and less 
sophisticated CROs.
    And then going to a third phase, if it's still necessary to 
capture the transfer of value of the meal, attributions, et 
cetera, putting that in the third phase. For us, that's only 
about 8 percent in total reimbursed expenses, plus the meals. 
So that can always be up for debate, but right now I think it 
is required.
    But we believe that if you can phase something like this 
in, you can get a lot of the value early on, allow CMS to get 
what would actually be fewer transactions with that value, to 
implement that into their website, and then see how the dispute 
resolution process works, et cetera, and then move to 
increasing types of transactions.
    Dr. McClellan. Thanks. And next, Diane, tell me about how 
this fits with your experience, this kind of phased approach.
    Ms. Biagianti. Yes. So I would echo some of Liz's comments 
in terms of implementation. You know, we started voluntary 
disclosure four years ago. So we got a little bit of a jump on 
the rest of the industry; in fact, quite a bit of a jump. And 
that's really worthwhile noting. For a company like Edwards 
that has done this voluntarily, we have learned from that 
experience. We have gone through iterations on our systems and 
processes. For someone who has been subject to a CIA, there has 
definitely been a lot of work done, a lot of time to develop 
those systems.
    For the medical device industry, we are very unique in our 
size. We are not pharma. We have very, very small medical 
device companies. Edwards is probably one of the bigger ones 
with respect to that. So it's going to take companies a 
different amount of time based on that diversity of the 
population in the device industry.
    Again, we started quite a while ago, so we learned from 
that.
    Dr. McClellan. Is that sort of phased by company size, as 
opposed to type of activity?
    Ms. Biagianti. Actually, what I'm suggesting is that 
companies are going to need time to get started. So for us, we 
have learned companies are going to have to go through this 
painful process of how to do it, and for smaller companies it's 
going to be very painful. So as the med device and pharma has 
suggested, at least 180 days is what we really think is 
appropriate for the industry in general.
    In terms of Edwards, even though we had gone through 
voluntary disclosure, once the proposed regs came out, we sat 
down and we looked at what those requirements would mean to 
Edwards, and it involved a significant amount of system 
processes development, training, and it took us at least six 
months to get there.
    Dr. McClellan. And you have some of those details in your 
written statement, which I appreciate.
    Ms. Biagianti. Yes.
    Dr. McClellan. Dan, you all have--in your statement you 
reviewed some of the published work in this area, some of the 
surveys that Deloitte and others have done about readiness for 
implementation. So we'd appreciate your comments about the 
implementation challenges.
    We ended up focusing a lot on timeline, and specifically on 
time to data submission, but I want to emphasize that while 
that's really critical, I do want this discussion to be broader 
than that. To the extent you can get to other issues like 
education and outreach about using the data, I'd like to make 
sure we talk about that, too; and I'm going to get to everybody 
else as well.
    Dr. Carlat. Thank you. As we've looked closely at the 
existing transparency regulations, I think we've learned three 
points that are important to this discussion.
    The first one is that consumers are not ignoring this 
information when it's out there. So, for example, ProPublica, 
which is a journalism website, aggregated data from 12 
companies and put it on a website. These are large companies, 
accounting for 40 percent of all drug sales in the U.S. And 
they started that site in 2010, and they've had 5 million hits 
on that site in over two years. Consumers want the data.
    The second thing is that we've learned that these programs, 
even though there's been concern, these programs really are not 
harming the industry, they're not harming research. For 
example, in Minnesota, which is the state that has the longest-
running transparency provision, 1993, Minnesota has developed a 
very thriving medical device industry, as you know. My own home 
state of Massachusetts passed a gift ban and a disclosure law 
in 2008, and again there were concerns that the biotech field 
would flee the state, alarmist editorials and what-not. And as 
it turned out, just the opposite has occurred. So we've had 
four or more companies--Novartis, AstraZeneca, Biogen, another 
that escapes my mind--that have made very large investments in 
the state after that happened.
    And then finally, I think it's important when we start 
talking about phasing things in, which worries us a lot about 
delaying this even further, these regulations are not carved in 
stone. So take the example of, say, Vermont. Vermont has had, 
since 2008 or 2009, a disclosure law and regulation in effect. 
After they released their regulations, the Attorney General's 
Office had conference calls and a lot of communication with 
stakeholders, and as they had that communication, they got 
feedback from stakeholders, and they altered their guidance 
accordingly in order to make sure that things weren't 
excessively burdensome or just that things were fine-tuned.
    So I think that we have to keep that in mind as well before 
we talk about delaying the release of these regulations 
further.
    Dr. McClellan. I think I'll just pick up on that, Niall, in 
a question for you. I'm not sure it's the usual way, but a very 
common way for CMS to proceed with regulations in complex areas 
like this one is you do the proposed rule, you get all the 
comments back, maybe even more than you expected, and it takes 
longer than you expected, you do the final rule, and then there 
are still a lot of things that need to be clarified that people 
may not fully understand, and that does usually respond well to 
some kind of process. CMS has done open-door forums. They have 
sometimes held mini-conferences or workshops around 
implementation. There might be some regulatory guidance written 
or other kinds of questions and answers.
    Is that in the cards in this case? Any planning at CMS for 
what happens after the final regulation is out to resolve what 
will probably be some further questions and need for 
clarification?
    Mr. Brennan. So again, I can't really get into specifics, 
but I don't see why we would approach sub-regulatory guidance 
around this particular provision differently than we've done it 
for many, many other activities. We recognize the complexity. 
We recognize the sizeable lift it will be for applicable 
manufacturers and covered recipients in the first year, and we 
do want to work to make it as painless a process as possible.
    Dr. McClellan. Let me go back now to get maybe some 
physician perspectives on this. Again, a big part of 
implementation success is going to be physicians being aware of 
what's coming, why, and why the choices that were made in this 
regulatory process were made.
    Jeremy, your thoughts about how to make that education 
outreach process work as well as possible? I know the way to 
make it work easiest is if CMS follows your recommendations. 
But beyond that, regardless of what happens, there is a lot, or 
at least some things, that physicians are going to need to know 
about what's coming, and where are we on informing them?
    Dr. Lazarus. Right. Well, we did have CMS come in and meet 
with a group of our states and specialties, which was very 
helpful. We still are waiting for the final rule, obviously. Of 
course, if CMS listens to us, that would make it a lot easier. 
If it's simpler, the better. Less complex is better. But once 
it's done, we think it will take us about six months to try to 
educate the physician population about what's going on. We'll 
put something up on the website. We'll put it out on our 
communications vehicles across the country. But I think it's 
going to take some time to get the information out.
    But rather than put it out in a half-baked way, which is 
going to make things very confusing for physicians, we want to 
see the final rule so we can tell them what they're up against, 
what they do need to keep track of, and what they don't.
    Dr. McClellan. And, Doug from the standpoint of individuals 
or health professionals participating in leading research 
efforts, education plans for them?
    Mr. Peddicord. Let me make just a comment or two, and then 
try to touch the education piece.
    Dr. McClellan. Okay.
    Mr. Peddicord. One is that I want to be strongly supportive 
of the notion of research as a clearly delineated bucket and in 
some ways separately reported with its own context.
    The other is just to comment that CROs are increasingly the 
project management infrastructure for the enterprise. So on the 
other side of Liz and Diane's companies are companies in the 
middle. So Diane talked about a year's worth of time to 
renegotiate contracts with CROs and looking at her 30 source 
systems for where she's going to get the data. So it will now 
be the company in the middle that's dealing with Lilly and 499 
other manufacturers, which is what gets me back to my issue 
around levels of standardization; because again, I think it's 
going to be impossible for CMS to construct a meaningful 
database if it has discordant data elements coming in.
    So with that said, I think what's happening at the level of 
physicians, I think one of the things that certainly a number 
of CROs, that are very much involved in physician recruitment, 
are doing is educating around reporting and the notion that 
dollars will be reported. I don't think people care--I don't 
think people really do worry about the notion that dollars are 
reported. What they worry about is dollars that they haven't 
seen being reported as attributed to them. That's a different 
issue.
    So I think we're in the process of educating new 
physicians, and what I think we're trying to deal with is those 
concerns that come up out of that survey. We shouldn't really 
lose--25 percent of current investigators should not say, gee, 
I would be less likely to be engaged in research if revenues 
are going to be reported. I mean, we really can't tolerate that 
because that's a lot of investigators to lose.
    So I think that leaves us and the manufacturers in need of 
educating physicians, along with physician societies and the 
like, because we really can't afford that.
    Dr. McClellan. And beyond CMS, I know following your 
comments and finalizing the rule, are there some steps, further 
steps that CMS can take, that you all can take, that others can 
take to handle these education issues which we know will be 
coming?
    Mr. Peddicord. Well, I think certainly within the rule 
itself, I think CMS needs to provide levels of guidance that 
are actually intended for the physician population. So 
physicians have certain questions around are these revenues 
going to be reported to the Internal Revenue Service? Does this 
begin to show up on my tax return? I mean, physicians ask lots 
of questions. So I think within the rule, the discussion 
section and the guidance around that, and the FAQs that CMS 
puts out, because ultimately those disputes are going to go to 
manufacturers and to CMS, both. So I think a really good FAQ 
section is going to be very much needed.
    Dr. McClellan. And as I think Dan emphasized, since this is 
probably going to be an iterative process even if CMS tries 
their best to get those FAQs done right in the regulation, it 
seems likely that some things are going to be missed, some 
further clarifications are needed, and it seems like everyone 
is willing to engage in a collaboration through further work on 
FAQs, through some regulatory guidance, or at least through 
giving some quick feedback to CMS to help with those education 
efforts. It seems like that's going to be very important.
    Any other comments about key implementation issues? I want 
to turn to one other implementation topic----
    Dr. Scully. Just a note, that in the education world there 
are a lot of other things being learned. You may have noticed 
there's a fair amount of ferment going on in health care and 
what physicians' roles will be, and our relationship with CMS 
in other areas. There's a lot going on. So this will be one, 
probably not the highest priority for our folks.
    Dr. McClellan. That's right, a lot else happening now.
    Ms. O'Farrell. Could I add one thing?
    Dr. McClellan. Yes. Go ahead, Liz.
    Ms. O'Farrell. I referred to this in my opening statements 
as well. Under our CIA, we have been very clear in reporting on 
physicians where we influence or control the selection of the 
physician. So what that doesn't broaden to is every vendor that 
we use who may or may not be using a licensed physician to do 
work for them on our behalf, a consulting firm, a law firm, a 
training development company that we go to get training and 
they need to use a physician to review some of the training, 
for example.
    If that doesn't change in the final regulations and the 
knowledge standard stays and there's an expectation that we 
would know and take reasonable efforts to know what every 
vendor that we engage is doing with any kind of health care 
professional or licensed physician, and then have an obligation 
to attribute some value for that work and publish it, the 
implementation timelines are--we don't believe that that's 
manageable operationally at all, and the implementation 
timelines are very short.
    Where I get concerned about the iterative process--and I 
appreciate that, and we've had that with the OIG, and we want a 
venue to be able to come forward and say is this the right 
interpretation, is this a different way. But some of these, you 
can't go back and change a business process retroactively. You 
just can't. Once you've done it, you've done it. And so some of 
these, we're going to have to have really good clarity before 
day one, because we can have a discussion for 90 days, 100 
days, and if it comes back that the answer is different than 
what we're hoping, we have no way to go back and change our 
business processes to start tracking that.
    So I think that's where we have to understand that an open 
discussion for all the implementation items is good, but you 
can never go back and recreate transactions or change your 
business processes retroactively.
    Dr. McClellan. Liz, you and Doug both particularly 
highlighted this concern around this. Doug said payments that 
you don't know are going to be attributed on your behalf.
    Dan, this is something that I think you all commented on as 
well. Any thoughts about how to resolve this implementation 
issue?
    Dr. Carlat. The overall comment that we made--and you've 
mentioned the Deloitte survey that we had looked up. Deloitte 
surveyed pharmaceutical executives recently and asked them how 
prepared are you for the Sunshine provisions. Eighty-eight 
percent of those respondents said they were at least 50 percent 
prepared, and a third said that they were 100 percent prepared.
    We realize that, of course, in that survey the respondents 
didn't know exactly what the Sunshine rules would end up being. 
So there may have been----
    Dr. McClellan. It may have been a test of optimism.
    [Laughter.]
    Dr. Carlat. I think the bottom line is that they were 
fairly optimistic, and given the fact that virtually all drug 
and device companies have had to report this data for certain 
states, we're fairly confident that they've developed reporting 
systems that have been able to work.
    Dr. McClellan. There is a good deal of experience out there 
to draw on.
    Just so you all know what's coming, I do want to make sure 
you get a chance to get out everything you think is important. 
So in a few minutes before we wrap up, I'm going to ask you 
all, give you all a minute or two to highlight any points that 
you want to make sure that people in general, or Niall, or 
others in particular take away from this discussion, and any 
other issues that we haven't brought up yet. So I'll be turning 
to you all for that in just a few minutes as we get closer to 
wrapping up.
    I did want to come back before then to one more 
implementation issue, and that's that many of you have stressed 
the importance of standards. As I mentioned at the outset, this 
is a challenge in lots of different areas of health care, where 
the information involved is complex and the responses are often 
a combination of actions by CMS and their coding decisions and 
things like that, but also a lot of leadership from industry 
and other stakeholders involved to try to get to consensus to 
solve these practical problems.
    So, Niall, first to you. You mentioned the work on data 
systems that you're thinking about in parallel to the final 
regulation, and CMS has to rely on a lot of information 
technology, information management vendors in this process. Is 
there anything you can say now about what's going on in this 
regard? I know that the final regulation isn't out, but if 
there's some technical work being done around data structure 
and things like that, maybe that's something that would benefit 
from even more collaboration.
    Mr. Brennan. Obviously, there are two types of 
implementation challenges. There are the implementation 
challenges that applicable manufacturers face, and there are 
the implementation challenges that CMS face, and those are 
overlapping. But realistically, the applicable manufacturers 
face their implementation challenges on a slightly more 
aggressive timeline than CMS does because when the data 
collection begins, as the law specifies, applicable 
manufacturers have to collect data for an entire calendar year 
and then submit it to CMS on March 31st of the following 
calendar year.
    So there are definitely great challenges for applicable 
manufacturers, not that CMS' challenges are any less, but 
they're different. We'll be receiving a standardized data 
template from hundreds of applicable manufacturers and GPOs 
containing potentially hundreds of millions of lines of data, 
and as some of the other panelists have alluded to, our big 
challenge will be accurately aggregating the data in a way that 
we're sure that all the right dollars are going to all the 
right physicians, accurately and efficiently establishing a 
review, a secure review, an appeal process for physicians to be 
able to review those results and let us know if they agree with 
them or not; and if not, work with applicable manufacturers to 
come to resolution; and then finally, presenting it in a 
consumer-friendly and accessible manner on a website.
    So that's how we're approaching our side of the 
implementation challenge. Obviously, Mark, as a former CMS 
administrator, you know our goal is to try and avoid 
duplication of systems and building other silos. So there's a 
lot of activity across the agency around building out or 
examining the build-out of provider portals and how does 
authentication work and security, different things like that. 
So those are the types of actions that we're taking right now 
to get our implementation ducks in a row.
    Dr. McClellan. So before we wrap up, I'll see if there are 
any further thoughts on this issue of system support and 
standards for effective implementation of these requirements as 
soon as possible.
    Chuck.
    Dr. Rosen. I think the work lies more with industry's 
template of how to work out what the accuracy of the payments 
are, and they should be very accurate, and there's no 
disagreement about that.
    I don't understand why it would be a problem for CMS to 
aggregate the data and collect it. We've done it, and we're 
nobody, and we've collected all the data for seven years, and 
we haven't even gotten cooperation of any of the companies to 
send it to us. We've had to query the systems, and all 75 or 80 
companies have different systems. Some are better than others.
    So I don't understand where there's an issue of, when CMS 
gets the data on some template, why it can't be put up the next 
day, frankly. We have security. We have all these things on our 
website.
    In the summary note, I also want to mention, talking about 
what you said, that doctors should know about this, there's no 
penalty to getting money, no matter how much it is. There's no 
part of the Sunshine Act that says you cannot get this amount 
of money for whatever thing you do. The companies don't like it 
because sometimes, most of the time it's with products that are 
a little iffy, that you don't want people to know are not 
necessarily independently validated. The vast majority of 
products are very good. In fact, they're very good that people 
name them after themselves. But I don't know what the 
defensible reason is for not accurately listing money that 
you've received from a company, which is the basis of the 
Sunshine Act.
    Dr. McClellan. I think that is the goal that we're headed 
for.
    Any other thoughts about things that could be done now to 
get to more standard, effective templates for this reporting so 
that the program can hit the ground running?
    Dan.
    Dr. Carlat. So there's been a whole cottage industry of IT 
businesses that are providing software solutions for companies. 
If you go to any of the meetings, you'll see whole exhibit 
halls now filled with these companies. That's good for the 
economy.
    One of them is for the dispute resolution process. There 
are a couple of companies that are creating physician portals 
so that you don't have to get into a position of that terrible 
45-day window before the information goes public. There will be 
software available to create portals for doctors to go in to 
look up exactly what they've been reported, how many hundreds 
of dollars have been reported, and then to communicate with the 
company if they disagree. So that's just one example of many 
different solutions out there.
    Dr. McClellan. Thanks. I appreciate all the comments on all 
the topics. We are coming close to the end of our time. I have 
a minute or two for you all to highlight any final issues. You 
don't need to restate everything that you've already stated or 
that's in your written statement, just any points that we 
haven't discussed as much as you'd like that you'd like for 
people here to take away.
    Liz, can I start with you?
    Ms. O'Farrell. I will restate that I think the 
implementation timeline is very aggressive for companies that 
do not already have any kind of reporting in place.
    One thing that we didn't talk about today is the definition 
of applicable manufacturer, and we really believe that it needs 
to be limited to the subsidiaries operating in the United 
States. We currently have processes in place to track and 
disclose U.S.-based physicians who are asked to go outside the 
U.S. and present or be on an advisory board with one of our 
outside-the-U.S. affiliates. We feel pretty good about those 
processes, and we believe that those are valid processes to 
require.
    But to try to extend that to any U.S.-licensed physician 
who happens to be asked by one of our foreign affiliates to 
come in and do work for them--so you have a French-based 
physician who also has a U.S. license, and to try to get that 
French affiliate to put a process in place to track those type 
of transactions we believe is meaningless to the public and 
would require such a level of infrastructure that 180 days, 
360, it would be unable to be done in that short a time.
    Dr. McClellan. Thank you.
    Jeremy.
    Dr. Lazarus. Thanks. I think the one thing that didn't come 
up is the potential impact on the individual physician if the 
data is not accurately reported, and that's why we are hopeful 
that we'll be able to follow the statute in terms of the direct 
reporting, some of the things I talked about before, and also 
so that there is an ongoing dispute resolution process between 
the physicians and the manufacturers. As Dan said, there is 
already the ability to do that so the physicians can be aware 
of what the reports are going to be, get those disputes ironed 
out before they get up on the public website.
    And also the thing I think we didn't talk about, and I was 
glad that Niall talked about it, is that there should be a 
dispute resolution process if there is a disagreement, and we 
think that it should either be CMS or an independent agency. 
But, hopefully that can get done and that 45-day window is more 
of a rolling window so that there can be an opportunity for 
physicians to dispute inaccurate reporting. Thank you.
    Dr. McClellan. Thanks, Jeremy.
    Dan.
    Dr. Carlat. Thank you. I think the only thing that I'd like 
to emphasize is from the consumer perspective. The information 
is going to be interpreted in very different ways depending on 
the doctor's relationship and depending on the consumer. For 
example, I have a colleague who I was meeting with at my last 
professional meeting who gives talks to companies. He's made up 
to a million dollars a year giving talks. He gives a printout 
to each of his patients detailing each one of his talks, all 
the companies that he works for, and he tells me that not a 
single patient has left his practice because they value the 
trust in the relationship.
    On the other hand, in the December 2011 issue of Health 
Affairs Journal, there's a story from Maran Wolston, a woman 
with multiple sclerosis, who worked with a neurologist who 
offered her to be in a clinical trial, pressured her to be on a 
couple of medications, one of which caused terrible side 
effects. She wasn't sure about the level of trust. She looked 
him up in the Minnesota database and found that he had made 
$300,000 from two companies that made drugs that she had taken, 
which made her seek a different physician.
    So I think the point is here that consumers are going to be 
interpreting the data in very different ways, but they deserve 
to get this data. It's important data for them to have.
    Dr. McClellan. Thanks very much, Dan.
    Diane.
    Ms. Biagianti. I would just add a couple of points, some 
that we've already talked about. Most of the things that 
concern Edwards with implementation are certainly the indirect 
payments which we've all discussed, and that is a big 
operational burden for device manufacturers, pharmaceutical 
manufacturers. So that is a big issue.
    Certainly the issues or the potential disputes that may 
come from physicians with respect to misrepresentation of the 
allocation, whether it be meals that they don't feel are 
appropriately allocated to them, or whether it's the clinical 
research that they don't feel is appropriately identified or 
allocated to them when they haven't been paid.
    So those are the biggest issues we see, and that leads to 
the dispute resolution process. We do think there does need to 
be an appropriate amount of time. We can't yet guess how many 
disputes will come in as a result of this process. It's very 
different than the voluntary disclosure program that we've 
implemented, so we can't yet guess what time is needed to give 
physicians significant time to dispute it, but then we need to 
add on a separate, segregated time period, a time for the 
manufacturers to do their research and to work before that gets 
publicized.
    Dr. McClellan. Great. Thank you.
    I'll save you for actually the next to last word. I get the 
last word.
    Doug.
    Mr. Peddicord. Well, let me just say, I think well 
implemented, Sunshine will illuminate the triangular relations 
between biopharma companies and doctors and patients. What that 
means is that it will illuminate interests, the vast majority 
of which are not conflicts of interest. They are interests. 
People have a right to understand the interests that each of 
the participants have. But again, that doesn't represent, 
necessarily represent a conflict of interest.
    We've been pleased to be part of a national dialogue on 
health care innovation which has very much been looking at 
these issues around conflict and potential conflict and how to 
manage that. I think the principles that came out of that 
dialogue, and it's a dialogue across industry and patient 
groups and the like, was that those relations should be built 
on four principles. They should benefit patients, first of all. 
They should preserve the autonomy of health care professionals. 
They should be transparent. And they should build 
accountability into the mix.
    And so with that in mind, what's important to note is that 
Sunshine doesn't replace ethics, that when a physician enrolls 
a patient in a clinical trial, for instance, the disclosure of 
interests is not a replacement for the physician behaving 
appropriately and ethically. I don't think we should suggest 
that informing the patient of financial interests somehow 
prevents people from doing bad things. That's not the point of 
Sunshine. Sunshine should be about transparency and interests. 
Again, without some interest, there won't be even the potential 
for a conflict of interest. So, with that said----
    Dr. McClellan. Thank you very much.
    Chuck.
    Dr. Rosen. Being the only orthopedist on this panel, I'm 
sure there will be a bunch of jokes about that.
    Maybe the dollar limit is too low. Maybe it uses up too 
much of the industry effort to ferret out $200 or less, and it 
should be somehow differentiated and more focused on money 
that's over $200 or $500 or $1,000.
    And just a final word, the Sunshine Act will not hurt but 
will improve legitimate research and physician education. It 
will not hurt physicians to be transparent for the reasons Dr. 
Carlat elucidated. I think there's a fear of this transparency 
that's unwarranted and exaggerated by some.
    Dr. McClellan. Thank you.
    Jay.
    Dr. Scully. Patients deserve to know this information. We 
all agree to that. The information needs to be accurate. That's 
some of the concerns about Murphy's Law that still exists. If 
things can go wrong, they will go wrong. And it hasn't come up, 
the estimate that for an office practice, the cost per year for 
reviewing this is $72 is a fantasy if there's a dispute.
    Dr. McClellan. Thank you.
    And with that, I'd like to turn to Niall for the next to 
the last word for the roundtable.
    Mr. Brennan. Well, I don't know if people know, but I used 
to work for Brookings a couple of years ago, so him having the 
last word is just like old times.
    We appreciate the opportunity to be a part of the 
roundtable. We think the feedback was excellent. I don't think 
it's an exaggeration to say there's probably nobody in this 
room who would like to see the final rule come out more than 
me.
    [Laughter.]
    So we hope that we can make that happen very soon.
    Dr. McClellan. Great. Thanks, Niall.
    Niall does get the award for the toughest question of the 
day, and it came from Chairman Kohl or Grassley and Senator 
Blumenthal. I know it was on everyone's mind. I appreciate your 
being here for this discussion.
    But I also appreciate all the rest of you taking time to 
answer a lot of challenging questions and to keep this moving. 
Everybody stayed within their time limits. That doesn't happen 
often in events that I moderate, especially on such a 
challenging topic as this.
    I think that's a testament to both how important and 
meaningful this issue is and how much everyone who is involved 
in it does want to see this move forward and succeed.
    This roundtable will definitely not be the last word, but I 
hope it's been helpful in advancing the discussion, and I, for 
one, look forward to what happens next, and I want to thank all 
of you, and the senators especially, for their continued 
involvement and their keeping their hearts behind effective 
implementation of the Sunshine law.
    Thank you all very much.
    [Applause.]
    [Whereupon, at 4:29 p.m., the hearing was adjourned.

                                APPENDIX

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