Manufacturers of drug and devices to healthcare providers must be cautious about new federal reporting requirements. Beginning March 31, 2013, the Patient Protection and Affordable Health Care Act (PPACA) require pharmaceutical, medical device, biological and medical supply manufactures that operate in the United States to report to the Secretary of the United States Department of Health and Human Services the payments or transfers of value that they made to covered recipients during the previous calendar year. Covered recipient defined as a teaching hospital or a physician. This requirement is annual (by the ninetieth calendar day of each year after 2013). Minnesota in particular will be affected by this change in law as Minnesota’s medical device manufacturing economy is one of the largest in the country.
The scope of the reporting is broad and includes consulting fees, compensation for non-consulting services, gifts, entertainment, food, travel, education, research, charitable contributions, royalties, investment interest to name a few.
The law does exclude some items, such as payments under $10, unless the aggregate amount is over $100 annually. The act also excludes product samples and educational materials. However, another section of the law actually requires submissions to the Secretary by April 1 of annual reports containing the identity and quantity of drug samples requested and distributed.
Minnesota’s laws are narrow as related to gifts. They focus almost entirely on gifts to the doctors themselves by drug suppliers. The federal requirements do not preempt the Minnesota laws associated with gifts to practitioners. Minnesota Statute § 151.461 makes it unlawful for any manufacturer, or any agent of the manufacturer, to offer or give any gift of value to a practitioner. A gift, under Minnesota law, does not include professional samples of a drug, items with a combined value of not more than $50 in a calendar year. Gifts do not include payments to sponsors of medical conferences and payments for consulting services. Manufacturers are more narrowly defined and limited to those companies that distribute drugs as a non-incidental part of their business, not medical devices.
Companies that focus on the manufacture of medical devices need to be aware of these changes and develop their internal processes for reporting accordingly. The nuisance of these increased reporting requirements can be minimized if you start planning for them now.