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What is the Sunshine Act?

The Sunshine Act is Section 6002 of the Patient Protection and Affordable Care Act. The Sunshine Act, officially the Transparency Reports and Reporting of Physician Ownership or Investment Interests, is intended to lower healthcare costs by bringing potential conflicts of interest to light.

Help for the Little Guys

The Sunshine Act addresses conflicts of interest by making drug and device manufacturers more accountable. The Sunshine Act calls for annual financial disclosures. This means that pharmaceutical companies must come clean with information such as how much money they have paid specific doctors or hospitals, or how many shares doctors and their families own in a particular pharmaceutical manufacturing company. These companies must keep track of the payments and report them to the Centers for Medicare & Medicaid Services (or CMS) through the National Physician Payment Transparency Program.

Under the umbrella of the Sunshine Act, the entire industry is no longer controlled by “Big Pharma.”  Allegations have always existed that accuse the big, well-funded pharmaceutical manufacturers of manipulating the system and influencing how it works. Many claim that through financial perks, they are able to influence medical research, test results of certain products, physicians and insurance companies, Now, with financial transparency, the playing field is more level.

Specifics of the Sunshine Act

The Sunshine Act covers applicable manufacturers of drugs, devices, biological, or medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program. Manufacturers must submit a report including:

The name and address of the recipient.

The amount, date of, and description of payment or transfers of value to “covered recipients”.

“Covered recipients” can include physicians and teaching hospitals. A teaching hospital is defined as any hospital or psychiatric hospital that received indirect medical education, or direct graduate medical education. Such payments include:

  1. Gifts
  2. Consulting fees
  3. Research activities
  4. Speaking fees
  5. Direct compensation for serving as speaker or faculty for medical education programs
  6. Grants
  7. Charitable contributions

And if the payment pertains to the education or research specific to a covered drug, device, biological, or medical supply, the drug, device, biological, or medical supply must be named in the report.

Applicable manufacturers and applicable Group Purchasing Organizations (GPOs) must report:

  1. Ownership and investment interests held by physicians in such entities
  2. Ownership and investment interests held by family members of physicians in such entities


Not every item or transaction that takes place between a pharmaceutical manufacturer and a doctor or hospital is required to be tracked and documented under the Act. Products or discounts that directly benefit patients are not subject to the same scrutiny. Information that does not need to be submitted in the federal report includes:

  1. Product samples intended for patient use, not sale
  2. Discounts
  3. Educational materials directly benefitting patients
  4. Educational materials intended for patient use
  5. Payments providing health care for employees (when an applicable manufacturer offers a self-insured plan)

Initial Reports

Data collection from these applicable manufacturers and applicable group purchasing organizations is set to begin on August 1, 2013. The first federal reports are due to be submitted by March 31, 2014. CMS will release the data on a public website by September 30, 2014.


Noncompliance with the Sunshine Act can include fines of up to $100,000. Resources used in researching this article include the Centers for Medicare & Medicaid Services fact sheets about the Affordable Care Act. There’s also a Guidance for Clinical Investigators, Industry, and FDA Staff, Financial Disclosure by Clinical Investigators, issued by the FDA in February 2013.

It remains to be seen just how the Sunshine Act will affect the pharmaceutical industry and medicine as a whole. In all likelihood, not every company will comply and not every physician or hospital will come away with their reputations intact. It was a long and lucrative ride for many, but it finally appears to be over.