Will the Sun Shine All Over Canada? Making the Financial Relationships of the Medical Industry Transparent (Part 1: Theoretical Transparency)

By Jean-Christophe Bélisle-Pipon

While Canada is often viewed positively for its public, comprehensive, universal, and accessible health care system, not all is rosy. Canada often lags behind other countries in terms of pharmaceutical policies. Sometimes, this is advantageous (e.g., delaying the approval of a product to wait for more clinical data or real-world efficiency, so to better assess risk-benefit and determining the maximum selling price), but more often simply a problem: until recently, transparency in Canada was more a buzzword than a strong and assumed government stance.

However, a few days ago in Ontario, the omnibus Strengthening Quality and Accountability for Patients Act received royal assent, thus enacting the Health Sector Payment Transparency Act. This clearly marked the beginning of shedding light on the financial relationships and payments to health care providers and organizations made by the medical industry (pharmaceutical and medical device companies), the explicit goal being to strengthen patient trust in the health care system (including research and education activities) by allowing patients to assess whether their health care providers are subject to influence by industry and to foster more informed choice. While the United States enacted the Physician Payments Sunshine Act (PPSA) in 2010, which requires payment disclosure, this is a first in Canada.

The main provisions of the Act

Payors (e.g., manufacturers, wholesalers, marketing firmsand CME providers) will now need to report direct and indirect “transfers of value” (meals, hospitality, travel expenses, grants, consulting fees, speakers’ payments, gifts, or any other benefit). What must be declared: the name of the parties to the transaction (organizations and individuals as well as potential intermediaries), the date and the dollar value, and a description and the reasons for the transfer of value. All transactions having direct or indirect links with medical products are covered by the law,, which include drugs and medical devices, but does not include natural health products. Both the physician who receives a payment and the company that grants it must keep and disclose all evidence of transfer. At least once a year, the Health Ministry publishes the information.

To monitor practices and punish offenses,, the act gives the government the power to investigate the conformity of the information transmitted, and authorized inspectors can investigate and search premises, even without the need for a warrant. A sanctioning regime is put in place for both individuals and organizations: daily fines to individuals can be up to $10,000 for the first offense, and $25,000 for subsequent offenses, while for corporations the first offense may be up to $50,000 and $100,000 for any recurrence. What is quite interesting is that the responsibility is explicitly put on corporate directors and officers. This may pave the way for increased accountability from senior management and to individualize responsibility instead of simply diluting it within a corporation.

Theoretical transparency, for the moment

Although enforced, the act is still missing the regulations specifying its application. Specifically, three dimensions are crucial to ensure its effectiveness. First, the prescribed threshold (dollar value) triggering the compulsory disclosure of a transfer of value has not been established yet. Without such a threshold the act is in no way applicable. Regulations will need to clarify both a threshold for individual payments as well as a cumulative threshold. For example, PPSA requires the disclosure of transfers of value of more than $10. A low threshold would allow having a more comprehensive picture and the better assessment of the cumulative effect of even modest payments. Second, this leads to issues of clarification on the frequency and method of reporting. The government wants to ensure that the mechanisms of disclosure are efficient, while being as simple and effortless as possible (especially for individuals). This is an important concern since about a third of PPSA data was not disclosed during the first few years due to inaccuracy or inconsistency. Third, the prescribed length of time for the retention of records has not yet been stated. With regard to pharmaceutical companies, in general, financial documents must be kept for 7 years, versus 25 years for all clinical documents. If the public disclosure is proactive ( the information is made public in less than a year), 7 years should be sufficient for the retention period.

Without these clarifications, and the implementation of an effective platform, transparency is only achieved on paper.

Stay tuned for Part 2! 

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