To amend title XI of the Social Security Act to provide for transparency in the relationship between physicians and manufacturers of drugs, devices, or medical supplies for which payment is made under Medicare, Medicaid, or SCHIP, and for other purposes.

Summary: Physician Payments Sunshine Act of 2008 - Amends part A of title XI of the Social Security Act to require quarterly transparency reports to the Secretary of Health and Human Services of payments to physicians or their employers, or to a covered organization in which a physician has a significant professional membership interest, by manufacturers of covered drugs, devices, or medical supplies under titles XVIII (Medicare), XIX (Medicaid), or XXI (State Children's Health Insurance Program (SCHIP)) of the Social Security Act.

Amends the Internal Revenue Code to prohibit tax deductions for the advertising, promotion, or marketing by manufacturers of drugs, devices, and medical supplies on whom a penalty is imposed for failing to meet the requirements of this Act.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Physician Payments Sunshine Act of 
2008''.

SEC. 2. QUARTERLY TRANSPARENCY REPORTS FROM MANUFACTURERS OF COVERED 
              DRUGS, DEVICES, OR MEDICAL SUPPLIES UNDER MEDICARE, 
              MEDICAID, OR SCHIP.

    Part A of title XI of the Social Security Act (42 U.S.C. 1301 et 
seq.) is amended by inserting after section 1128F the following new 
section:

``SEC. 1128G. QUARTERLY TRANSPARENCY REPORTS FROM MANUFACTURERS OF 
              COVERED DRUGS, DEVICES, OR MEDICAL SUPPLIES UNDER 
              MEDICARE, MEDICAID, OR SCHIP.

    ``(a) Reporting of Payments or Other Transfer of Value.--On January 
1, 2009, and the first day of each fiscal year quarter beginning 
thereafter, each manufacturer of a covered drug, device, or medical 
supply who provides a payment or other transfer of value, directly, 
indirectly, or through an agent, subsidiary, or other third party, to a 
physician; to an entity that a physician is employed by, has tenure 
with, or has a significant ownership interest in; or to a covered 
organization in which a physician has a significant professional 
membership interest, shall submit to the Secretary, in such electronic 
form as the Secretary shall require, the following:
            ``(1) The name of--
                    ``(A) the physician;
                    ``(B) if a payment or other transfer of value was 
                provided to an entity that the physician is employed 
                by, has tenure with, or has a significant ownership 
                interest in, the name of the entity; and
                    ``(C) if a payment or other transfer of value was 
                provided to an organization so specified in which the 
                physician has such a significant professional 
                membership interest, the name of the organization.
            ``(2) The address of--
                    ``(A) the physician's office;
                    ``(B) in the case of an entity required to be named 
                under paragraph (1)(B), the primary place of business 
                or headquarters for the entity; and
                    ``(C) in the case of an organization required to be 
                named under paragraph (1)(C), the primary place of 
                business or headquarters of the organization.
            ``(3) The facility with which the physician is affiliated, 
        if any.
            ``(4) The value of the payment or other transfer of value.
            ``(5) The date on which the payment or other transfer of 
        value was provided.
            ``(6) A description of the nature of the payment or other 
        transfer of value, indicated (as appropriate for all that 
        apply) as--
                    ``(A) compensation;
                    ``(B) food, entertainment, or gifts;
                    ``(C) trips or travel;
                    ``(D) a product or other item provided for less 
                than market value;
                    ``(E) participation in a medical conference, 
                continuing medical education, other educational or 
                informational program or seminar, or funded research 
                (such as lab-based, epidemiology, or health services 
                research) that is not a clinical trial; provision of 
                materials related to such a conference, educational or 
                informational program or seminar, or research; or 
                remuneration for promoting or participating in such a 
                conference, educational or informational program or 
                seminar, or research;
                    ``(F) product rebates or discounts;
                    ``(G) consulting fees or honoraria;
                    ``(H) dividend, profit distribution, stock or stock 
                option grant, or any ownership or investment interest 
                held by a physician in a manufacturer (excluding a 
                dividend or other profit distribution from, or 
                ownership or investment interest in, a publicly traded 
                security and mutual fund (as described in section 
                1877(c)); or
                    ``(I) any other economic benefit, as defined by the 
                Secretary.
            ``(7) The purpose of the expenditure according to 
        categories specified by the Secretary, such as consulting, 
        education, royalty, and research.
    ``(b) Annual Summary Report.--Each manufacturer of a covered drug, 
device, or medical supply that is required to submit information under 
subsection (a) during a year shall submit a report to the Secretary not 
later than December 31 of the year that summarizes, in such electronic 
form as the Secretary shall specify, each submission of information 
under subsection (a) made by the manufacturer during the year. The 
summary report shall include the aggregate amount of all transfers of 
anything of value that is less than $25, including any compensation, 
gift, honorarium, speaking fee, consulting fee, travel, discount, cash 
rebate, or services.
    ``(c) Reporting Date for Applicable Clinical Trials.--
            ``(1) In general.--Notwithstanding subsection (a), a 
        payment or other transfer of value made for the general funding 
        of a clinical trial described in paragraph (2) shall be 
        disclosed in the first quarterly report after the date clinical 
        trial information for such trial is required to be posted under 
        section 402(j)(2)(D) of the Public Health Service Act.
            ``(2) Clinical trial.--A clinical trial described in this 
        paragraph is an applicable clinical trial for which clinical 
        trial information is required to be submitted under section 
        402(j)(2)(C) of the Public Health Service Act.
    ``(d) Penalty for Noncompliance.--Any manufacturer of a covered 
drug, device, or medical supply that knowingly fails to submit 
information required under subsection (a) or (b) in accordance with 
regulations promulgated to carry out such subsection, shall be subject 
to a civil money penalty of not less than $10,000, but not more than 
$100,000, for each such failure. Such penalty shall be imposed and 
collected in the same manner as civil money penalties under subsection 
(a) of section 1128A are imposed and collected under that section.
    ``(e) Public Availability.--Not later than June 1, 2009, the 
Secretary shall establish procedures to ensure that the information 
reported under subsection (a) and the summary reports submitted under 
subsection (b) are readily accessible to the public through an Internet 
website that is easily searchable, downloadable, and understandable.
    ``(f) Report to Congress.--Not later than April 1 of each year 
beginning with 2010, the Secretary shall submit to Congress a report 
that includes the following:
            ``(1) The information submitted under subsections (a) and 
        (b) during the preceding year, aggregated for each manufacturer 
        of a covered drug, device, or medical supply that submitted 
        such information during such year.
            ``(2) A description of any enforcement actions taken to 
        carry out this section, including any penalties imposed under 
        subsection (d), during the preceding year.
    ``(g) Definitions.--In this section:
            ``(1) Covered drug, device, or medical supply.--The term 
        `covered drug, device, or medical supply' means any drug, 
        biological product, device, or medical supply for which payment 
        is available under title XVIII or a State plan under title XIX 
        or XXI (or a waiver of such a plan).
            ``(2) Covered organization.--The term `covered 
        organization' means an organization that is involved in health 
        care financing, organization, or delivery.
            ``(3) Manufacturer of a covered drug, device, or medical 
        supply.--The term `manufacturer of a covered drug, device, or 
        medical supply' means any entity--
                    ``(A) with annual gross revenues that exceed 
                $1,000,000; and
                    ``(B) which is engaged in the production, 
                preparation, propagation, compounding, conversion, or 
                processing of a covered drug, device, or medical 
                supply.
            ``(4) Payment or other transfer of value.--
                    ``(A) In general.--The term `payment or other 
                transfer of value' means a transfer of anything of 
                value that exceeds $25, and includes any compensation, 
                gift, honorarium, speaking fee, consulting fee, travel, 
                discount, cash rebate, services, or dividend, profit 
                distribution, stock or stock option grant, or any 
                ownership or investment interest held by a physician in 
                a manufacturer (excluding a dividend or other profit 
                distribution from, or ownership or investment interest 
                in, a publicly traded security or mutual fund (as 
                described in section 1877(c)).
                    ``(B) Exclusions.--Such term does not include the 
                following:
                            ``(i) Product samples that are intended for 
                        patients.
                            ``(ii) A payment or other transfer of value 
                        made for the general funding of a clinical 
                        trial, other than an applicable clinical trial 
                        for which clinical trial information is 
                        required to be submitted under section 
                        402(j)(2)(C) of the Public Health Service Act.
                            ``(iii) A transfer of anything of value to 
                        a physician when the physician is a patient and 
                        not acting in his or her professional capacity.
                            ``(iv) Compensation paid by a manufacturer 
                        of a covered drug, device, or medical supply to 
                        a physician who is directly employed by and 
                        works solely for such manufacturer.
            ``(5) Physician.--The term `physician' has the meaning 
        given that term in section 1861(r).
            ``(6) Significant professional membership interest.--The 
        term `significant professional membership interest' means, with 
        respect to a physician and a covered organization, the 
        physician is a voluntary paying member of such organization or 
        the physician receives professional certification through such 
        organization.''.

SEC. 3. LIMITATION ON TAX DEDUCTIONS FOR ADVERTISING BY CERTAIN 
              MANUFACTURERS OF DRUGS, DEVICES, OR MEDICAL SUPPLIES.

    (a) In General.--Part IX of subchapter B of chapter 1 of subtitle A 
of the Internal Revenue Code of 1986 (relating to items not deductible) 
is amended by adding at the end the following:

``SEC. 280I. LIMITATION ON TAX DEDUCTIONS FOR ADVERTISING BY CERTAIN 
              MANUFACTURERS OF DRUGS, DEVICES, OR MEDICAL SUPPLIES.

    ``(a) In General.--No deduction shall be allowed under this chapter 
for any taxable year for any expenditure relating to the advertising, 
promoting, or marketing (in any medium) of any covered drug, device, or 
medical supply manufactured by the taxpayer if, during the taxable 
year, a penalty is imposed on the taxpayer under section 1128G(d) of 
the Social Security Act (relating to quarterly transparency reports 
from manufacturers of covered drugs, devices, or medical supplies under 
Medicare, Medicaid, or SCHIP).
    ``(b) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Covered drug, device, or medical supply.--The term 
        `Covered drug, device, or medical supply' has the meaning given 
        such term by section 1128G(g) of the Social Security Act.
            ``(2) Aggregation rules.--All members of the same 
        controlled group of corporations (within the meaning of section 
        52(a)) and all persons under common control (within the meaning 
        of section 52(b)) shall be treated as 1 person.''.
    (b) Conforming Amendment.--The table of sections for such part IX 
is amended by adding after the item relating to section 280H the 
following:

``Sec. 280I. Limitation on tax deductions for advertising by certain 
                            manufacturers of drugs, devices, or medical 
                            supplies.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning ending after the date of the enactment 
of this Act.