The Bertrand Law (colloquially known as the “French Sunshine Act”) and its implementing rules introduce obligations for a broad spectrum of companies that make or market healthcare and other types of products to disclose various types of financial arrangements with a wide scope of individuals and entities. The law, first signed on December 29, 2011, is intended to address the same policy objective as the U.S. Physician Payment Sunshine Act (“U.S. Sunshine Act”)—i.e., to provide transparency regarding the nature, value and frequency of financial relationships between companies that make or market healthcare products and healthcare professionals and institutions (“HCPs”). However, while the U.S. Sunshine Act is generally limited to pharmaceutical and medical device companies, the French Sunshine Act will affect companies in a variety of other industry segments—from insecticides to tattoos, and even certain types of software.
A review of the official implementing decree (“Decree”) and subsequent interpretive guideline (“Circular”), dated May 21, 2013, and May 29, 2013, respectively, highlight several substantial differences with the U.S. Sunshine Act. These differences pose significant hurdles for companies attempting to build uniform and consistent programs to comply with these laws. Further, the French Sunshine Act’s disclosure obligations (retroactive to transactions occurring in 2012!) will place a significant burden on companies trying to track and report legacy data, and to adopt policies and procedures for capturing and reporting data in mid-stream. Substantial penalties and other risks are associated with failure to properly and timely disclose requisite data.
This article will compare and contrast the substantive and procedural components of the U.S. and French Sunshine Acts in order to highlight the critical need for healthcare and life sciences companies—as well as companies that make, market, or sell the broader variety of products applicable under the French Sunshine Act—to ensure that they are adequately prepared to capture the appropriate data and comply with the disclosure requirements.
The U.S. Sunshine Act reporting obligations extend to companies that (i) are headquartered or have business operations in the United States; and (ii) manufacture, market, sell, or distribute prescription drugs or devices that are reimbursable by Federal healthcare programs, including distributors and suppliers that take title to “covered products.” Thus, the U.S. Sunshine Act will only apply to pharmaceutical, medical device, and other medical technology companies whose products are (i) registered with the FDA and (ii) available for payment under Medicare, Medicaid, and the Children’s Health Insurance Program (“CHIP”).
In contrast, the French Sunshine Act appears to be the most far-reaching transparency law to date. It will extend beyond pharmaceutical and medical device companies to industry segments that have never been subject to such government and public scrutiny. Indeed, the French Sunshine Act applies to any company that manufactures or markets products regulated by the Agence nationale de sécurité du médicament et des produits de santé (“ASNM”), such as insecticides, contraceptives, pharmaceuticals, medical devices, labile blood products, human or animal organ tissue, therapeutic cell products, breast milk, contact lenses, disinfecting products, cosmetic products, micro-organism and toxin products, tattoos, and software. Unlike the U.S. Sunshine Act, the French Sunshine Act does not limit reporting obligations to companies that manufacture sophisticated drugs or medical technology that are reimbursable by government healthcare programs. As such, the French Sunshine Act‘s obligations will be a completely novel and difficult concept for many, if not most, other such healthcare companies otherwise exempted by the U.S. Sunshine Act and similar laws. These companies will need to invest quickly and heavily to develop and implement internal policies and processes to adequately capture and disclose required information.
Importantly, the law, decree, and subsequent guidance have NOT confirmed whether the French Sunshine Act applies only to French companies, or to any company that manufactures the above products and sells them in France. This is a pivotal issue that many international companies are eager to have resolved.
Scope of Reportable Entities
Reportable entities under the U.S. Sunshine Act are limited to physicians licensed to practice in their respective states (i.e., medical doctors, osteopaths, dentists, dental surgeons, podiatrists, optometrists, and chiropractors), as well as a finite list of teaching hospitals published by the Center for Medicare and Medicaid Services (“CMS”), which is the agency administering the program. The French Sunshine Act expands the scope of reportable entities by including HCPs such as nurses, pharmacists, mid-wives, dieticians, and others. Further, the French Sunshine Act’s definition of reportable entities also includes professional and patient associations, healthcare students, publishing and other media companies, healthcare software companies, and institutions providing initial training of HCPs (e.g., universities or university hospitals).
The universe of reportable entities is extremely vague, and it is easy to foresee the inherent difficulty for a company in determining which business interactions involve reportable entities without further clarification from the French authorities—particularly when interacting with entities that are not traditionally considered part of the healthcare industry, such as media and software companies.
Transactional Information to be Reported
The French Sunshine Act requires disclosure of nearly all arrangements and transactions with reportable entities that are not directly related to the sale of product. It bifurcates reporting instruction based on whether the transaction is an “agreement” or a “benefit.” An agreement is generally defined as a contractual relationship to provide services for or on behalf of the company. A benefit is generally defined as any direct or indirect cash or in-kind payment or transfer of value.
The scope of disclosure varies for agreements and benefits with reportable entities. For agreements, companies must report the name and address of the reportable entities, the qualifications/specialties of the reportable entities, the date of the agreement, the subject matter of the agreement, and the program of the event, if applicable. For benefits granted to reportable entities, companies must report the name of the recipient, the amount of the benefit, the date of transfer, the nature of the benefit, and whether the benefit was given during the first or second half of the year.
Although the Decree and Circular provide guidance on the types of information to be reported, the French Ministry of Health has not yet provided standards coding instruction or reporting templates. It remains to be seen whether French authorities will revise the reporting format to require standard values for submitted forms in order to ensure consistency. For reporting under the U.S. Sunshine Act, CMS has provided standard values and reporting templates, including distinct forms for research- and non-research-related transfers of value.
Dates of Collecting/Reporting Required Information
The dates of data collection and reporting for both the U.S. and French Sunshine Acts are rapidly approaching. Companies must begin collecting data for the U.S. Sunshine Act by August 1, 2013, and disclose the required data by March 31, 2014. The French Sunshine Act’s reporting timetable is much more complex. It requires companies to submit by June 1, 2013, all required data that dates back to January 1, 2012. In other words, companies will be required to retroactively gather and report a year’s worth of relevant transactional data or risk being penalized.
As such, healthcare companies must review their current systems to ensure they have accurately captured or are accurately capturing required past information leading up to the initial disclosure date. Further, the French Sunshine Act requires companies to submit by August 1, 2013, all reportable transactions that occurred in the first half of 2013; and submit by February 1, 2014, all reportable transactions that occurred in the second half of 2013. Companies must configure their internal reporting systems and business requirements to account for the different timelines for disclosing payments and agreements.
Moreover, the requirements for the frequency of reporting differ greatly between the United States and France. The U.S. Sunshine Act requires that companies annually report their required financial data to CMS annually beginning on March 31, 2014. The French Sunshine Act provides for different reporting requirements depending on whether the transaction is an “agreement” or a “benefit.” For benefits provided to an HCP in the first half of the current year, reportable data must be transmitted no later August 1 of the current year. For benefits provided to an HCP in the second half of the current year, reportable data must be transmitted no later February 1 of the following year. For agreements, reportable data must be transmitted within 15 days following the signature of the agreement. These varied reporting requirements for specific transactions will add substantial complexity to the development and implementation of an adequate process to track and disclose transactions correctly.
Data Submission and Publication
Currently, the U.S. Sunshine Act provides a more formalized process for submitting and publishing required data. Reporting companies will submit the information through CMS’ OpenPayments portal. CMS will also use the OpenPayments website to publish and maintain the submitted information. The French Sunshine Act also requires reporting companies to submit their data through a unique public website; however, this mechanism has not been fully developed. Until then, companies must (i) submit required information to the French professional association regulating the recipient of the agreement or benefit (e.g., Conseil National de l’Ordre des Médecins (“CNOM”)), where it will ultimately be published; AND (ii) post required information on their website or on a common website shared by several companies.
Overall, the current state of published law, regulations, and guidance confirms a highly disparate reporting framework between the U.S. and French Sunshine Acts. Companies outside the pharmaceutical and medical device industries are particularly challenged, as many presumably have little or no experience with healthcare transparency and can only marginally be considered “healthcare” companies. Companies subject to this law are well advised to quickly take inventory of their interactions with HCPs so as to understand the impact of disclosing this information under the law. This will inform the manner in which these relationships will be handled in the future. Companies must also build systems for capturing and reporting required data or face significant monetary penalties for non-disclosure. Those companies that are prepared to address these important issues and critically review and analyze their financial arrangements subject to disclosure will enjoy a competitive advantage. Like it or not, Le Soleil Français is here to stay!
About the Authors
Vahan Minassian is a consultant in the Health Analytics practice of BRG. Vahan has assisted numerous pharmaceutical and medical device manufacturers, as well as health care providers, with a wide variety of Federal and State regulatory compliance concerns. An attorney by training, Vahan has advised life science companies on issues of fraud and abuse, global anti-corruption, privacy, and aggregate spend and transparency. He has significant experience assisting clients on compliance with the Sunshine Act, state aggregate spend regulations, and global transparency laws and industry initiatives. Specifically, Vahan has assisted pharmaceutical and medical device manufacturers as a subject matter expert in designing and implementing systems and processes to capture and report data pursuant to these laws, regulations and codes. To this end, he has successfully aligned business and regulatory requirements using both manual processes and internal or third-party software.
Cheray Lynch Sieminski (http://www.brg-expert.com/professionals-cheray-sieminski.html) is a principal in the Health Analytics practice of BRG and specializes in providing forensic and regulatory compliance advisory services to healthcare and life sciences companies, among others, and their legal counsel. Ms. Sieminski has more than 14 years of experience developing innovative and efficient solutions and analytical tools to help clients examine and quantify business and legal issues in the context of commercial litigation, government investigations, and other regulatory-driven initiatives. She has analyzed pharmaceutical and medical device manufacturer arrangements with healthcare professionals and other entities in the context of global anti-corruption compliance and investigations, transparency and aggregate spend reporting laws, prices reported under government programs, and various commercial contracting matters. She has developed corporate strategies to identify, assimilate, and categorize financial arrangements and other business transactions for government reporting and built analytical models to critically analyze the data. Ms. Sieminski also leverages her industry knowledge and technical expertise to advise corporate legal and compliance departments in the development of strategy and tactical implementation for enterprise-wide electronic information management, enterprise risk assessment evaluations and remediation, and analysis of potential exposure in litigation and investigations.
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About the Author Edward J. Buthusiem is a director in the Health Analytics practice of Berkeley Research Group, LLC. Mr. Buthusiem advises executive management and general counsels on a variety of strategic business and operational issues. He is an expert in food and drug law, mergers and acquisitions, technology licensing transactions, and innovation. Mr. Buthusiem leverages his experience as a former general counsel of two major divisions of two multi-billion dollar global life sciences companies, where he was responsible for all aspects of legal support. He has counseled and coordinated responses to foreign and domestic congressional and government investigations, including in the areas of FCPA, bribery and corruption, antitrust and competition, clinical trials, Food and Drug Administration promotional and manufacturing audits and investigations, and Office of Foreign Assets Control matters. He has also managed intellectual property and commercial litigation, legal, regulatory and trade compliance, and domestic and international arbitrations. Mr. Buthusiem has designed, developed, implemented, and monitored compliance programs and processes to comply with legal obligations (including FCPA and anti- kickback laws) as well as government-imposed consent decrees. He has also developed and implemented legal department operational efficiencies in contracting, resource allocation, and technology.