I 

110TH CONGRESS 

2D SESSION H. R. 5605 

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. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 13, 2008 

Mr. DEFAZIO (for himself, Mr. STARK, Mr. BERRY, Mr. CHANDLER, Mr. 

MORAN of Virginia, Mr. HINCHEY, Mr. MCGOVERN, Mr. ISRAEL, Mr. 

DOGGETT, Ms. LEE, Mr. WU, and Mr. KUCINICH) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Physician Payments 

3 Sunshine Act of 2008’’. 

4 SEC. 2. QUARTERLY TRANSPARENCY REPORTS FROM MAN5 UFACTURERS OF COVERED DRUGS, DEVICES, 

6 OR MEDICAL SUPPLIES UNDER MEDICARE, 

7 MEDICAID, OR SCHIP. 

8 Part A of title XI of the Social Security Act (42 

9 U.S.C. 1301 et seq.) is amended by inserting after section 

10 1128F the following new section: 

11 ‘‘SEC. 1128G. QUARTERLY TRANSPARENCY REPORTS FROM 

12 MANUFACTURERS OF COVERED DRUGS, DE13 VICES, OR MEDICAL SUPPLIES UNDER MEDI14 CARE, MEDICAID, OR SCHIP. 

15 ‘‘(a) REPORTING OF PAYMENTS OR OTHER TRANS16 FER OF VALUE.—On January 1, 2009, and the first day 

17 of each fiscal year quarter beginning thereafter, each man18 ufacturer of a covered drug, device, or medical supply who 

19 provides a payment or other transfer of value, directly, 

20 indirectly, or through an agent, subsidiary, or other third 

21 party, to a physician; to an entity that a physician is em22 ployed by, has tenure with, or has a significant ownership 

23 interest in; or to a covered organization in which a physi24 cian has a significant professional membership interest, 

25 shall submit to the Secretary, in such electronic form as 

26 the Secretary shall require, the following: 


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1 ‘‘(1) The name of— 

2 ‘‘(A) the physician; 

3 ‘‘(B) if a payment or other transfer of 

4 value was provided to an entity that the physi5 cian is employed by, has tenure with, or has a 

6 significant ownership interest in, the name of 

7 the entity; and 

8 ‘‘(C) if a payment or other transfer of 

9 value was provided to an organization so speci10 fied in which the physician has such a signifi11 cant professional membership interest, the 

12 name of the organization. 

13 ‘‘(2) The address of— 

14 ‘‘(A) the physician’s office; 

15 ‘‘(B) in the case of an entity required to 

16 be named under paragraph (1)(B), the primary 

17 place of business or headquarters for the entity; 

18 and 

19 ‘‘(C) in the case of an organization re20 quired to be named under paragraph (1)(C), 

21 the primary place of business or headquarters 

22 of the organization. 

23 ‘‘(3) The facility with which the physician is af24 filiated, if any. 


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1 ‘‘(4) The value of the payment or other transfer 

2 of value. 

3 ‘‘(5) The date on which the payment or other 

4 transfer of value was provided. 

5 ‘‘(6) A description of the nature of the payment 

6 or other transfer of value, indicated (as appropriate 

7 for all that apply) as— 

8 ‘‘(A) compensation; 

9 ‘‘(B) food, entertainment, or gifts; 

10 ‘‘(C) trips or travel; 

11 ‘‘(D) a product or other item provided for 

12 less than market value; 

13 ‘‘(E) participation in a medical conference, 

14 continuing medical education, other educational 

15 or informational program or seminar, or funded 

16 research (such as lab-based, epidemiology, or 

17 health services research) that is not a clinical 

18 trial; provision of materials related to such a 

19 conference, educational or informational pro20 gram or seminar, or research; or remuneration 

21 for promoting or participating in such a con22 ference, educational or informational program 

23 or seminar, or research; 

24 ‘‘(F) product rebates or discounts; 

25 ‘‘(G) consulting fees or honoraria; 


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1 ‘‘(H) dividend, profit distribution, stock or 

2 stock option grant, or any ownership or invest3 ment interest held by a physician in a manufac4 turer (excluding a dividend or other profit dis5 tribution from, or ownership or investment in6 terest in, a publicly traded security and mutual 

7 fund (as described in section 1877(c)); or 

8 ‘‘(I) any other economic benefit, as defined 

9 by the Secretary. 

10 ‘‘(7) The purpose of the expenditure according 

11 to categories specified by the Secretary, such as con12 sulting, education, royalty, and research. 

13 ‘‘(b) ANNUAL SUMMARY REPORT.—Each manufac14 turer of a covered drug, device, or medical supply that is 

15 required to submit information under subsection (a) dur16 ing a year shall submit a report to the Secretary not later 

17 than December 31 of the year that summarizes, in such 

18 electronic form as the Secretary shall specify, each submis19 sion of information under subsection (a) made by the man20 ufacturer during the year. The summary report shall in21 clude the aggregate amount of all transfers of anything 

22 of value that is less than $25, including any compensation, 

23 gift, honorarium, speaking fee, consulting fee, travel, dis24 count, cash rebate, or services. 


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1 ‘‘(c) REPORTING DATE FOR APPLICABLE CLINICAL

2 TRIALS.— 

3 ‘‘(1) IN GENERAL.—Notwithstanding subsection 

4 (a), a payment or other transfer of value made for 

5 the general funding of a clinical trial described in 

6 paragraph (2) shall be disclosed in the first quar7 terly report after the date clinical trial information 

8 for such trial is required to be posted under section 

9 402(j)(2)(D) of the Public Health Service Act. 

10 ‘‘(2) CLINICAL TRIAL.—A clinical trial de11 scribed in this paragraph is an applicable clinical 

12 trial for which clinical trial information is required 

13 to be submitted under section 402(j)(2)(C) of the 

14 Public Health Service Act. 

15 ‘‘(d) PENALTY FOR NONCOMPLIANCE.—Any manu16 facturer of a covered drug, device, or medical supply that 

17 knowingly fails to submit information required under sub18 section (a) or (b) in accordance with regulations promul19 gated to carry out such subsection, shall be subject to a 

20 civil money penalty of not less than $10,000, but not more 

21 than $100,000, for each such failure. Such penalty shall 

22 be imposed and collected in the same manner as civil 

23 money penalties under subsection (a) of section 1128A are 

24 imposed and collected under that section. 


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1 ‘‘(e) PUBLIC AVAILABILITY.—Not later than June 1, 

2 2009, the Secretary shall establish procedures to ensure 

3 that the information reported under subsection (a) and the 

4 summary reports submitted under subsection (b) are read5 ily accessible to the public through an Internet website 

6 that is easily searchable, downloadable, and understand7 able. 

8 ‘‘(f) REPORT TO CONGRESS.—Not later than April 

9 1 of each year beginning with 2010, the Secretary shall 

10 submit to Congress a report that includes the following: 

11 ‘‘(1) The information submitted under sub12 sections (a) and (b) during the preceding year, ag13 gregated for each manufacturer of a covered drug, 

14 device, or medical supply that submitted such infor15 mation during such year. 

16 ‘‘(2) A description of any enforcement actions 

17 taken to carry out this section, including any pen18 alties imposed under subsection (d), during the pre19 ceding year. 

20 ‘‘(g) DEFINITIONS.—In this section: 

21 ‘‘(1) COVERED DRUG, DEVICE, OR MEDICAL

22 SUPPLY.—The term ‘covered drug, device, or med23 ical supply’ means any drug, biological product, de24 vice, or medical supply for which payment is availVerDate Aug 31 2005 03:45 Mar 14, 2008 Jkt 069200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5605.IH H5605

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1 able under title XVIII or a State plan under title 

2 XIX or XXI (or a waiver of such a plan). 

3 ‘‘(2) COVERED ORGANIZATION.—The term ‘cov4 ered organization’ means an organization that is in5 volved in health care financing, organization, or de6 livery. 

7 ‘‘(3) MANUFACTURER OF A COVERED DRUG, 

8 DEVICE, OR MEDICAL SUPPLY.—The term ‘manufac9 turer of a covered drug, device, or medical supply’ 

10 means any entity— 

11 ‘‘(A) with annual gross revenues that ex12 ceed $1,000,000; and 

13 ‘‘(B) which is engaged in the production, 

14 preparation, propagation, compounding, conver15 sion, or processing of a covered drug, device, or 

16 medical supply. 

17 ‘‘(4) PAYMENT OR OTHER TRANSFER OF

18 VALUE.— 

19 ‘‘(A) IN GENERAL.—The term ‘payment or 

20 other transfer of value’ means a transfer of 

21 anything of value that exceeds $25, and in22 cludes any compensation, gift, honorarium, 

23 speaking fee, consulting fee, travel, discount, 

24 cash rebate, services, or dividend, profit dis25 tribution, stock or stock option grant, or any 


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1 ownership or investment interest held by a phy2 sician in a manufacturer (excluding a dividend 

3 or other profit distribution from, or ownership 

4 or investment interest in, a publicly traded se5 curity or mutual fund (as described in section 

6 1877(c)). 

7 ‘‘(B) EXCLUSIONS.—Such term does not 

8 include the following: 

9 ‘‘(i) Product samples that are in10 tended for patients. 

11 ‘‘(ii) A payment or other transfer of 

12 value made for the general funding of a 

13 clinical trial, other than an applicable clin14 ical trial for which clinical trial informa15 tion is required to be submitted under sec16 tion 402(j)(2)(C) of the Public Health 

17 Service Act. 

18 ‘‘(iii) A transfer of anything of value 

19 to a physician when the physician is a pa20 tient and not acting in his or her profes21 sional capacity. 

22 ‘‘(iv) Compensation paid by a manu23 facturer of a covered drug, device, or med24 ical supply to a physician who is directly 


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1 employed by and works solely for such 

2 manufacturer. 

3 ‘‘(5) PHYSICIAN.—The term ‘physician’ has the 

4 meaning given that term in section 1861(r). 

5 ‘‘(6) SIGNIFICANT PROFESSIONAL MEMBERSHIP

6 INTEREST.—The term ‘significant professional mem7 bership interest’ means, with respect to a physician 

8 and a covered organization, the physician is a vol9 untary paying member of such organization or the 

10 physician receives professional certification through 

11 such organization.’’. 

12 SEC. 3. LIMITATION ON TAX DEDUCTIONS FOR ADVER13 TISING BY CERTAIN MANUFACTURERS OF 

14 DRUGS, DEVICES, OR MEDICAL SUPPLIES. 

15 (a) IN GENERAL.—Part IX of subchapter B of chap16 ter 1 of subtitle A of the Internal Revenue Code of 1986 

17 (relating to items not deductible) is amended by adding 

18 at the end the following: 

19 ‘‘SEC. 280I. LIMITATION ON TAX DEDUCTIONS FOR ADVER20 TISING BY CERTAIN MANUFACTURERS OF 

21 DRUGS, DEVICES, OR MEDICAL SUPPLIES. 

22 ‘‘(a) IN GENERAL.—No deduction shall be allowed 

23 under this chapter for any taxable year for any expendi24 ture relating to the advertising, promoting, or marketing 

25 (in any medium) of any covered drug, device, or medical 


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1 supply manufactured by the taxpayer if, during the tax2 able year, a penalty is imposed on the taxpayer under sec3 tion 1128G(d) of the Social Security Act (relating to quar4 terly transparency reports from manufacturers of covered 

5 drugs, devices, or medical supplies under Medicare, Med6 icaid, or SCHIP). 

7 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur8 poses of this section— 

9 ‘‘(1) COVERED DRUG, DEVICE, OR MEDICAL

10 SUPPLY.—The term ‘Covered drug, device, or med11 ical supply’ has the meaning given such term by sec12 tion 1128G(g) of the Social Security Act. 

13 ‘‘(2) AGGREGATION RULES.—All members of 

14 the same controlled group of corporations (within 

15 the meaning of section 52(a)) and all persons under 

16 common control (within the meaning of section 

17 52(b)) shall be treated as 1 person.’’. 

18 (b) CONFORMING AMENDMENT.—The table of sec19 tions for such part IX is amended by adding after the 

20 item relating to section 280H the following: 

‘‘Sec. 280I. Limitation on tax deductions for advertising by certain manufacturers of drugs, devices, or medical supplies.’’. 

21 (c) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to taxable years beginning ending 

23 after the date of the enactment of this Act. 

Æ 


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