The Patient Protection and Affordable Healthcare Act (commonly known as the "healthcare reform" bill) includes significant new transparency and disclosure obligations that apply to physicians, hospitals, and medical device and pharmaceutical manufacturers.
Some of these transparency and disclosure obligations are based on legislation introduced by Sens. Chuck Grassley (R-Iowa) and Herb Kohl (D-Wis.), which was previously entitled ‘‘the Physician Payments Sunshine Act of 2009.’’ The transparency and disclosure obligations have been included in the Act in an effort to reign in costs of expanded health care availability. The premise behind the obligations is that ‘‘sunshine’’ on physicians’ financial relationships with industry will reduce conflicts of interest by deterring industry from spending excessive amounts of money on such relationships and consequently reduce the negative impact such relationships have on prescribing practices. The transparency initiatives impact physicians, pharmaceutical and medical device manufacturers and PBMs. For a full description of each new requirement, please read this article by Krist Werling and Holly Carnell published in BNA’s Health Care Fraud Report.
These new initiatives will impact healthcare investors in two ways. First, investors should be aware of added burdens on target investments. For example, for medical device manufacturers, these disclosures will require added infrastructure to address tracking and reporting requirements. Second, investors may find opportunities in these burdens. Software, web services and consulting services have sprung up to assist physicians, pharmaceutical manufacturers and device manufacturers in remaining compliant with new obligations.