My expertise lies in the financial realm, not the regulatory one. But it’s important for me to understand the financial implications of changes in the regulatory oversight of the clinical research enterprise. So let’s take note of some recent developments in the regulatory environment, and the companies that may be positioned to benefit from them.

Physician Payment Sunshine Provision (PPSP)
Beginning August 1, 2013, “applicable manufacturers” must collect data regarding the “payment of value” to a “covered recipient” dispensing a “covered drug, biological or medical supply.” The data must be reported to the Centers for Medicare and Medicaid (CMS) by March 31, 2014. CMS will begin releasing that information on a public website on September 30, 2014. The intent of Congress in passing this provision of the Affordable Care Act (ACA) was to bring more disclosure and transparency to drug companies’ payments to physicians for promoting the use of their products. After much lobbying by industry to convince regulators that payments to clinical researchers do not represent those types of inducements, CMS adjusted its proposed rules to accommodate 1) the nature of payments to investigators and research organizations, and 2) the long-term nature of many clinical trials.

A survey conducted by the market research firm Industry Standard Research suggests that most primary investigators in the U.S. are familiar with the law, and that they do not believe that disclosing their payments will negatively affect their willingness to continue conducting research. However, most sites will need help in collecting and reporting this aggregate spending data in accordance with the law’s strict requirements. CFS Clinical is one company that offers services such as this to sponsors.

Medicare Secondary Payer Act (MSP) In Clinical Trials
This law was embedded in the Medicare, Medicaid, and SCHIP Extension Act of 2007. The signing of the Strengthening Medicare and Repaying Taxpayers Act (SMART Act) in January 2013 triggered its enforcement, beginning immediately. Federal law requires sponsors to pay for complications or injuries caused by a drug or device undergoing clinical trial evaluation. Previously, Medicare was the primary insurer for its covered subjects and the sponsor was a secondary payer. The sponsor is now considered the primary payer for those individuals. Sponsors are now required not only to proactively monitor and report adverse events to CMS, but also to have a process in place to determine the Medicare eligibility of each research subject. Failure to comply with this dual requirement can result in a sponsor being fined $1,000 per day per case and being subject to other penalties.

This new law is aimed at shifting the costs of dealing with adverse events from Medicare to sponsors. It applies to any mis-directed liability payments made for adverse events occurring since December 1980. Sites and investigators have not been required to document the Medicare eligibility status of each clinical study participant. Indeed, it seems that many do not have the tools to collect, verify, and safely store the required information. Sponsors must now insure that sites acquire this capability. Verified Clinical Trials is one company marketing a software system that can gather, certify, and report the appropriate data in a manner consistent with HIPAA privacy rules.

Financial Implications
Is there any doubt that the increased government-related paperwork described above will lead to an increase in the cost of conducting clinical research? I think not.

Will these new laws justify their costs by uncovering instances of egregious behavior by primary investigators, enhancing the treatment of Medicare beneficiaries in clinical trials, or improving the efficiency of clinical research? Sadly, I also think not.