The new federal law adds another layer of complexity to the required reporting for life science companies. The federal law requires life science companies to track and report on a wide range of payments made to covered recipients, including healthcare practitioners and teaching hospitals (any payment/gift over $10 or $100 aggregate in a given year) which will be made publicly available via a searchable online database. These payments must be reported individually rather than simply disclosing the aggregate payments.

As with the many enacted and pending state disclosure laws, the federal law has yet a different required report format, specification codes, and disclosure requirements. And since the federal government does not use state identifier numbers, companies must move towards adopting a more universal customer ID, such as NPI.
In addition, there is the issue of preemption. The federal law may preempt existing state reporting rules and gift bans if the state laws are similar to or less stringent than the federal requirements. However, this condition does not displace state reporting requirements that are more rigorous than the new federal law. For example, some state laws have total bans on “gifts” to physicians regardless of dollar amounts, which would supercede the federal guidelines. Therefore, companies must be sure to stay up to date on all regulations to determine what their report requirements are.

The new federal law imposes significant financial penalties for noncompliance – up to $150,000 per year for unknowingly failing to report a payment, and up to $1 million per year for knowingly failing to report. Given the relatively short implementation timeline, companies need to start understanding the implications to their business now to start to efficiently and accurately collect data starting in 2012.