We previously reported on Ontario's Health Sector Payment Transparency Act, 2017 (the “Act”), which will require reporting of “transfers of value” from the pharmaceutical and medical device industries to prescribed “recipients” (whether directly or through an intermediary). Transfers of value are broadly defined in the Act to include payments, benefits, gifts, advantages, and perquisites or any other prescribed benefit. Although the legislation was passed on December 12, 2017, it is not yet in force, pending issuance of regulations defining, among other things, the meaning of the term “recipient”.
Last week, Ontario published for consultation, draft regulations which contain an exhaustive list of persons and entities that constitute recipients. The list includes the following:
- Physicians, nurses, dentists (and other Healthcare professionals that are members of colleges) and their professional corporations
- Hospital operators
- Long-term care home operators
- Various not-for-profit entities that operate clinics or provide health services (e.g. nurse-practitioner clinics)
- Independent health facilities
- Pharmacy operators
- Owners/operators of laboratories and specimen collection centres
- Healthcare professional associations
- Advocacy groups relating to particular diseases
- Group purchasing organizations
- Individuals who are board members, directors, officers, appointees, employees or agents of any of the foregoing
We note that some of the recipients (e.g. healthcare professional associations and advocacy groups) need not be Ontario-based, which presumably means that transfers of value made to these recipients will have to be allocated between Ontario and other jurisdictions.
The draft regulations provide a list of prescribed benefits that will have to be reported, including: cash, in-kind items or services, compensation for services, honoraria, grants and donations, event sponsorships, membership fees, rebates and discounts, value-adds provided in connection with a procurement, supplies and equipment, leases for supplies and equipment lasting more than 90 days, entertainment, food and beverages, travel and accommodation, gifts, royalties and inventory listing or stocking fees. Only transactions with a dollar value of less than $10 need not be reported. There are otherwise very limited exceptions to the reporting requirement (e.g. payment of salary/benefits under a contract of service, products to be provided to patients free of charge, educational materials to be used for the benefit of patients (e.g. anatomical models)). A notable exception is payments made by drug manufacturers in accordance with ordinary commercial terms as permitted under the Ontario Drug Benefit Act in relation to interchangeable drug products.
Under the Act, the information that must be reported consists of: (i) the names of the parties to the transaction (whether a party is a business or an individual); (ii) the parties' business addresses; (iii) the date of the transfer of value; (iv) the dollar value of the transfer of value (or the approximate dollar value in the case of a non-monetary transfer of value); and (v) a description of the transfer of value, including the reasons for the transfer of value. The draft regulations require reporting of additional information in relation to classification of the transfers of value (e.g. fees for service as speaker, fees for professional services and consulting, research (including clinical trials), food and beverage, gift and entertainment, grants, education, operational support, etc). According to the draft regulations, reports will need to be filed annually.
The broad categories of recipients that trigger the reporting requirement, the expansive definition of transfers of value, as well as the detailed reporting requirements imposed by the draft regulations represent a significant burden for the pharmaceutical and medical device industries.
The government is seeking feedback on the draft regulations by April 6, 2018.