June 19, 2014 Articles

Opening Pandora's Box: The Open Payments Reporting Requirements

Techniques to help ensure that the submission of Phase 2 transactions is as timely, complete, and accurate as possible.

By Christian Dingler and Jack Tanselle

While the platitudes change, it is clear that the Open Payments initiative is an inflection point for the pharmaceutical and medical-device industries. All applicable manufacturers have submitted summary aggregate-spend information for the 2013 reporting period, and are now focused on compiling, validating, and reporting transaction-level spend information for Phase 2 submission. As announced by the Centers for Medicare and Medicaid Services (CMS), applicable manufacturers must submit Phase 2 data between June 1 and June 30, 2014, leaving companies just 30 days to finalize seemingly countless transfers of value.

There are potential legal and monetary risks to noncompliance with Open Payments reporting requirements, as internal and external counsel have likely informed their applicable manufacturer clients. As stated within the final rule of the Sunshine Act, failure to submit required Open Payments information can result in civil monetary penalties of up to $150,000 per annual submission. The “knowing failure” to submit required information may expose an applicable manufacturer to $1 million in civil monetary penalties per annual reporting period. Data validation prior to submission is critical, as compliance with Open Payments does not exempt applicable manufacturers from potential liability associated with the federal anti-kickback statute or the False Claims Act. The eventual publication of transactional information is expected to garner much publicity, and an applicable manufacturer’s ability to justify payments is highly important.

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