II 

111TH CONGRESS 

1ST SESSION S. 301 

To amend title XI of the Social Security Act to provide for transparency 

in the relationship between physicians and manufacturers of drugs, devices, biologicals, or medical supplies for which payment is made under 

Medicare, Medicaid, or SCHIP. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 22, 2009 

Mr. GRASSLEY (for himself, Mr. KOHL, and Ms. KLOBUCHAR) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

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, biologicals, or medical supplies for which payment is made under Medicare, 

Medicaid, or SCHIP. 

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

3 SECTION 1. SHORT TITLE. 

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

5 Sunshine Act of 2009’’. 


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1 SEC. 2. TRANSPARENCY REPORTS AND REPORTING OF 

2 PHYSICIAN OWNERSHIP OR INVESTMENT IN3 TERESTS. 

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

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

6 1128F the following new section: 

7 ‘‘SEC. 1128G. TRANSPARENCY REPORTS AND REPORTING 

8 OF PHYSICIAN OWNERSHIP OR INVESTMENT 

9 INTERESTS. 

10 ‘‘(a) TRANSPARENCY REPORTS.— 

11 ‘‘(1) PAYMENTS OR OTHER TRANSFERS OF

12 VALUE.— 

13 ‘‘(A) IN GENERAL.—Except as provided in 

14 subsection (e), on March 31, 2011, and on the 

15 90th day of each calendar year beginning there16 after, any applicable manufacturer that pro17 vides a payment or other transfer of value to a 

18 covered recipient (or to an entity or individual 

19 at the request of or designated on behalf of a 

20 covered recipient), shall submit to the Sec21 retary, in such electronic form as the Secretary 

22 shall require, the following information with re23 spect to the preceding calendar year: 

24 ‘‘(i) The name of the covered recipi25 ent. 


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1 ‘‘(ii) The business address of the cov2 ered recipient and, in the case of a covered 

3 recipient who is a physician, the specialty 

4 and Medicare billing number of the covered 

5 recipient. 

6 ‘‘(iii) The value of the payment or 

7 other transfer of value. 

8 ‘‘(iv) The dates on which the payment 

9 or other transfer of value was provided to 

10 the covered recipient. 

11 ‘‘(v) A description of the form of the 

12 payment or other transfer of value, indi13 cated (as appropriate for all that apply) 

14 as— 

15 ‘‘(I) cash or a cash equivalent; 

16 ‘‘(II) in-kind items or services; 

17 ‘‘(III) stock, a stock option, or 

18 any other ownership interest, divi19 dend, profit, or other return on invest20 ment; or 

21 ‘‘(IV) any other form of payment 

22 or other transfer of value (as defined 

23 by the Secretary). 

24 ‘‘(vi) A description of the nature of 

25 the payment or other transfer of value, inVerDate Nov 24 2008 05:04 Jan 23, 2009 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S301.IS S301

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1 dicated (as appropriate for all that apply) 

2 as— 

3 ‘‘(I) consulting fees; 

4 ‘‘(II) compensation for services 

5 other than consulting; 

6 ‘‘(III) honoraria; 

7 ‘‘(IV) gift; 

8 ‘‘(V) entertainment; 

9 ‘‘(VI) food; 

10 ‘‘(VII) travel; 

11 ‘‘(VIII) education; 

12 ‘‘(IX) research; 

13 ‘‘(X) charitable contribution; 

14 ‘‘(XI) royalty or license; 

15 ‘‘(XII) current or prospective 

16 ownership or investment interest; 

17 ‘‘(XIII) compensation for serving 

18 as faculty or as a speaker for a con19 tinuing medical education program; 

20 ‘‘(XIV) grant; or 

21 ‘‘(XV) any other nature of the 

22 payment or other transfer of value (as 

23 defined by the Secretary). 

24 ‘‘(vii) If the payment or other transfer 

25 of value is related to marketing, education, 


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1 or research specific to a covered drug, de2 vice, biological, or medical supply, the 

3 name of that covered drug, device, biologi4 cal, or medical supply. 

5 ‘‘(viii) Any other categories of infor6 mation regarding the payment or other 

7 transfer of value the Secretary determines 

8 appropriate. 

9 ‘‘(B) AGGREGATE REPORTING.—Informa10 tion submitted by an applicable manufacturer 

11 under subparagraph (A) shall include the ag12 gregate amount of all payments or other trans13 fers of value provided by the applicable manu14 facturer to covered recipients (and to entities or 

15 individuals at the request of or designated on 

16 behalf of a covered recipient) during the pre17 ceding year. 

18 ‘‘(C) SPECIAL RULE FOR CERTAIN PAY19 MENTS OR OTHER TRANSFERS OF VALUE.—In 

20 the case where an applicable manufacturer pro21 vides a payment or other transfer of value to an 

22 entity or individual at the request of or des23 ignated on behalf of a covered recipient, the ap24 plicable manufacturer shall disclose that payVerDate Nov 24 2008 05:04 Jan 23, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S301.IS S301

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1 ment or other transfer of value under the name 

2 of the covered recipient. 

3 ‘‘(2) PHYSICIAN OWNERSHIP.—In addition to 

4 the requirement under paragraph (1)(A), on March 

5 31, 2011, and on the 90th day of each calendar year 

6 beginning thereafter, any applicable manufacturer or 

7 applicable group purchasing organization shall sub8 mit to the Secretary, in such electronic form as the 

9 Secretary shall require, the following information re10 garding any ownership or investment interest (other 

11 than an ownership or investment interest in a pub12 licly traded security and mutual fund, as described 

13 in section 1877(c)) held by a physician (or an imme14 diate family member of such physician (as defined 

15 for purposes of section 1877(a))) in the applicable 

16 manufacturer or applicable group purchasing organi17 zation during the preceding year: 

18 ‘‘(A) The dollar amount invested by each 

19 physician holding such an ownership or invest20 ment interest. 

21 ‘‘(B) The value and terms of each such 

22 ownership or investment interest. 

23 ‘‘(C) Any payment or other transfer of 

24 value provided to a physician holding such an 

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1 ty or individual at the request of or designated 

2 on behalf of a physician holding such an owner3 ship or investment interest), including the infor4 mation described in clauses (i) through (viii) of 

5 paragraph (1)(A), except that in applying such 

6 clauses, ‘physician’ shall be substituted for ‘cov7 ered recipient’ each place it appears. 

8 ‘‘(D) Any other information regarding the 

9 ownership or investment interest the Secretary 

10 determines appropriate. 

11 ‘‘(b) PENALTIES FOR NONCOMPLIANCE.— 

12 ‘‘(1) FAILURE TO REPORT.— 

13 ‘‘(A) IN GENERAL.—Subject to subpara14 graph (B), except as provided in paragraph (2), 

15 any applicable manufacturer or applicable 

16 group purchasing organization that fails to sub17 mit information required under subsection (a) 

18 in a timely manner in accordance with rules or 

19 regulations promulgated to carry out such sub20 section, shall be subject to a civil money penalty 

21 of not less than $1,000, but not more than 

22 $10,000, for each payment or other transfer of 

23 value or ownership or investment interest not 

24 reported as required under such subsection. 

25 Such penalty shall be imposed and collected in 


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1 the same manner as civil money penalties under 

2 subsection (a) of section 1128A are imposed 

3 and collected under that section. 

4 ‘‘(B) LIMITATION.—The total amount of 

5 civil money penalties imposed under subpara6 graph (A) with respect to each annual submis7 sion of information under subsection (a) by an 

8 applicable manufacturer or applicable group 

9 purchasing organization shall not exceed 

10 $150,000. 

11 ‘‘(2) KNOWING FAILURE TO REPORT.— 

12 ‘‘(A) IN GENERAL.—Subject to subpara13 graph (B), any applicable manufacturer or ap14 plicable group purchasing organization that 

15 knowingly fails to submit information required 

16 under subsection (a) in a timely manner in ac17 cordance with rules or regulations promulgated 

18 to carry out such subsection, shall be subject to 

19 a civil money penalty of not less than $10,000, 

20 but not more than $100,000, for each payment 

21 or other transfer of value or ownership or in22 vestment interest not reported as required 

23 under such subsection. Such penalty shall be 

24 imposed and collected in the same manner as 

25 civil money penalties under subsection (a) of 


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1 section 1128A are imposed and collected under 

2 that section. 

3 ‘‘(B) LIMITATION.—The total amount of 

4 civil money penalties imposed under subpara5 graph (A) with respect to each annual submis6 sion of information under subsection (a) by an 

7 applicable manufacturer or applicable group 

8 purchasing organization shall not exceed 

9 $1,000,000. 

10 ‘‘(3) USE OF FUNDS.—Funds collected by the 

11 Secretary as a result of the imposition of a civil 

12 money penalty under this subsection shall be used to 

13 carry out this section. 

14 ‘‘(c) PROCEDURES FOR SUBMISSION OF INFORMA15 TION AND PUBLIC AVAILABILITY.— 

16 ‘‘(1) IN GENERAL.— 

17 ‘‘(A) ESTABLISHMENT.—Not later than 

18 November 1, 2009, the Secretary shall establish 

19 procedures— 

20 ‘‘(i) for applicable manufacturers and 

21 applicable group purchasing organizations 

22 to submit information to the Secretary 

23 under subsection (a); and 


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1 ‘‘(ii) for the Secretary to make such 

2 information submitted available to the pub3 lic. 

4 ‘‘(B) DEFINITION OF TERMS.—The proce5 dures established under subparagraph (A) shall 

6 provide for the definition of terms (other than 

7 those terms defined in subsection (g)), as ap8 propriate, for purposes of this section. 

9 ‘‘(C) PUBLIC AVAILABILITY.—The proce10 dures established under subparagraph (A)(ii) 

11 shall ensure that, not later than September 30, 

12 2011, and on June 30 of each calendar year be13 ginning thereafter, the information submitted 

14 under subsection (a) with respect to the pre15 ceding calendar year is made available through 

16 an Internet website that— 

17 ‘‘(i) is searchable and is in a format 

18 that is clear and understandable; 

19 ‘‘(ii) contains information that is pre20 sented by the name of the applicable man21 ufacturer or applicable group purchasing 

22 organization, the name of the covered re23 cipient, the business address of the covered 

24 recipient, the specialty of the covered re25 cipient, the value of the payment or other 


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1 transfer of value, the date on which the 

2 payment or other transfer of value was 

3 provided to the covered recipient, the form 

4 of the payment or other transfer of value, 

5 indicated (as appropriate) under subsection 

6 (a)(1)(A)(v), the nature of the payment or 

7 other transfer of value, indicated (as ap8 propriate) under subsection (a)(1)(A)(vi), 

9 and the name of the covered drug, device, 

10 biological, or medical supply, as applicable; 

11 ‘‘(iii) contains information that is able 

12 to be easily aggregated and downloaded; 

13 ‘‘(iv) contains a description of any en14 forcement actions taken to carry out this 

15 section, including any penalties imposed 

16 under subsection (b), during the preceding 

17 year; 

18 ‘‘(v) contains background information 

19 on industry-physician relationships; 

20 ‘‘(vi) in the case of information sub21 mitted with respect to a payment or other 

22 transfer of value described in subsection 

23 (e), lists such information separately from 

24 the other information submitted under 

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1 rately listed information as funding for 

2 clinical research; 

3 ‘‘(vii) contains any other information 

4 the Secretary determines would be helpful 

5 to the average consumer; and 

6 ‘‘(viii) provides the covered recipient 

7 an opportunity to submit corrections to the 

8 information made available to the public 

9 with respect to the covered recipient. 

10 ‘‘(2) CONSULTATION.—In establishing the pro11 cedures under paragraph (1), the Secretary shall 

12 consult with the Inspector General of the Depart13 ment of Health and Human Services, affected indus14 try, consumers, consumer advocates, and other inter15 ested parties in order to ensure that the information 

16 made available to the public under such paragraph 

17 is presented in the appropriate overall context. 

18 ‘‘(d) ANNUAL REPORTS AND RELATION TO STATE

19 LAWS.— 

20 ‘‘(1) ANNUAL REPORT TO CONGRESS.—Not 

21 later than April 1 of each year beginning with 2011, 

22 the Secretary shall submit to Congress a report that 

23 includes the following: 

24 ‘‘(A) The information submitted under 

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1 gated for each applicable manufacturer and ap2 plicable group purchasing organization that 

3 submitted such information during such year. 

4 ‘‘(B) A description of any enforcement ac5 tions taken to carry out this section, including 

6 any penalties imposed under subsection (b), 

7 during the preceding year. 

8 ‘‘(2) ANNUAL REPORTS TO STATES.—Not later 

9 than April 1 of each year beginning with 2011, the 

10 Secretary shall submit to States a report that in11 cludes a summary of the information submitted 

12 under subsection (a) during the preceding year with 

13 respect to covered recipients in the State. 

14 ‘‘(3) RELATION TO STATE LAWS.— 

15 ‘‘(A) IN GENERAL.—Effective on January 

16 1, 2010, subject to subparagraph (B), the pro17 visions of this section shall preempt any law or 

18 regulation of a State or of a political subdivi19 sion of a State that requires an applicable man20 ufacturer (as defined in subsection (g)) to dis21 close or report information (as described in sub22 section (a)) regarding a payment or other 

23 transfer of value provided by the applicable 

24 manufacturer to a covered recipient (as so de25 scribed). 


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1 ‘‘(B) NO PREEMPTION OF ADDITIONAL RE2 QUIREMENTS.—Subparagraph (A) shall not 

3 preempt any law or regulation of a State or of 

4 a political subdivision of a State that requires 

5 the disclosure or reporting of information not 

6 required to be disclosed or reported under this 

7 section. 

8 ‘‘(e) DELAYED REPORTING FOR PAYMENTS MADE

9 PURSUANT TO PRODUCT DEVELOPMENT AGREEMENTS

10 AND CLINICAL INVESTIGATIONS.—In the case of a pay11 ment or other transfer of value made to a covered recipient 

12 by an applicable manufacturer pursuant to a product de13 velopment agreement for services furnished in connection 

14 with the development of a new drug, device, biological, or 

15 medical supply, or by an applicable manufacturer in con16 nection with a clinical investigation, the applicable manu17 facturer may report the value of such payment or other 

18 transfer of value in the first reporting period under sub19 section (a) after the earlier of the following: 

20 ‘‘(1) The date of the approval or clearance of 

21 the covered drug, device, biological, or medical sup22 ply by the Food and Drug Administration. 

23 ‘‘(2) Two calendar years after the date such 

24 payment or other transfer of value was made. 

25 ‘‘(f) IMPLEMENTATION.— 


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1 ‘‘(1) CONSULTATION.—The Secretary shall con2 sult with the Inspector General of the Department 

3 of Health and Human Services on the implementa4 tion of this section. 

5 ‘‘(2) LIMITATION ON REVIEW.—There shall be 

6 no judicial review of the implementation of this sec7 tion. 

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

9 ‘‘(1) APPLICABLE GROUP PURCHASING ORGANI10 ZATION.—The term ‘applicable group purchasing or11 ganization’ means a group purchasing organization 

12 (as defined by the Secretary) that purchases, ar13 ranges for, or negotiates the purchase of a covered 

14 drug, device, biological, or medical supply. 

15 ‘‘(2) APPLICABLE MANUFACTURER.—The term 

16 ‘applicable manufacturer’ means a manufacturer of 

17 a covered drug, device, biological, or medical supply. 

18 ‘‘(3) CLINICAL INVESTIGATION.—The term 

19 ‘clinical investigation’ means any experiment involv20 ing 1 or more human subjects in which a drug or 

21 device is administered, dispensed, or used. 

22 ‘‘(4) COVERED DEVICE.—The term ‘covered de23 vice’ means any device for which payment is avail24 able under title XVIII or a State plan under title 

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


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1 ‘‘(5) COVERED DRUG, DEVICE, BIOLOGICAL, OR

2 MEDICAL SUPPLY.—The term ‘covered drug, device, 

3 biological, or medical supply’ means any drug, bio4 logical product, device, or medical supply for which 

5 payment is available under title XVIII or a State 

6 plan under title XIX or XXI (or a waiver of such 

7 a plan). 

8 ‘‘(6) COVERED RECIPIENT.—The term ‘covered 

9 recipient’ means the following: 

10 ‘‘(A) A physician. 

11 ‘‘(B) A physician medical practice. 

12 ‘‘(C) A physician group practice. 

13 ‘‘(7) EMPLOYEE.—The term ‘employee’ has the 

14 meaning given such term in section 1877(h)(2). 

15 ‘‘(8) KNOWINGLY.—The term ‘knowingly’ has 

16 the meaning given such term in section 3729(b) of 

17 title 31, United States Code. 

18 ‘‘(9) MANUFACTURER OF A COVERED DRUG, 

19 DEVICE, BIOLOGICAL, OR MEDICAL SUPPLY.—The 

20 term ‘manufacturer of a covered drug, device, bio21 logical, or medical supply’ means any entity which is 

22 engaged in the production, preparation, propagation, 

23 compounding, conversion, processing, marketing, or 

24 distribution of a covered drug, device, biological, or 


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1 medical supply (or any subsidiary of or entity affili2 ated with such entity). 

3 ‘‘(10) PAYMENT OR OTHER TRANSFER OF

4 VALUE.— 

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

6 other transfer of value’ means a transfer of 

7 anything of value and includes, subject to sub8 paragraph (B), without limitation, any com9 pensation, gift, honorarium, speaking fee, con10 sulting fee, travel, services, dividend, profit dis11 tribution, stock or stock option grant, or owner12 ship or investment interest. 

13 ‘‘(B) EXCLUSIONS.—An applicable manu14 facturer shall not be required to submit infor15 mation under subsection (a) with respect to the 

16 following: 

17 ‘‘(i) Any payment or other transfer of 

18 value provided by an applicable manufac19 turer to a covered recipient where the ag20 gregate amount transferred to, requested 

21 by, or designated on behalf of the covered 

22 recipient does not exceed $100 during the 

23 calendar year. Such aggregate amount 

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1 count any payment or other transfer of 

2 value described in clauses (ii) through (ix). 

3 ‘‘(ii) Product samples that are not in4 tended to be sold and are intended for pa5 tient use. 

6 ‘‘(iii) Educational materials that di7 rectly benefit patients or are intended for 

8 patient use. 

9 ‘‘(iv) The loan of a covered device for 

10 a short-term trial period, not to exceed 90 

11 days, to permit evaluation of the covered 

12 device by the covered recipient. 

13 ‘‘(v) Items or services provided under 

14 a contractual warranty, including the re15 placement of a covered device, where the 

16 terms of the warranty are set forth in the 

17 purchase or lease agreement for the cov18 ered device. 

19 ‘‘(vi) A transfer of anything of value 

20 to a covered recipient when the covered re21 cipient is a patient and not acting in the 

22 professional capacity of a covered recipient. 

23 ‘‘(vii) Discounts (including rebates). 

24 ‘‘(viii) In-kind items used for the pro25 vision of charity care. 


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1 ‘‘(ix) A dividend or other profit dis2 tribution from, or ownership or investment 

3 interest in, a publicly traded security and 

4 mutual fund (as described in section 

5 1877(c)). 

6 ‘‘(11) PHYSICIAN.—The term ‘physician’ has 

7 the meaning given that term in section 1861(r). For 

8 purposes of this section, such term does not include 

9 a physician who is an employee of the applicable 

10 manufacturer that is required to submit information 

11 under subsection (a).’’. 

Æ 


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