Author: Mark Vanderveken
On September 27, 2017, the Government of Ontario tabled a bill to enact the Health Sector Payment Transparency Act, 2017, (the “Act”) which will implement reporting of transfers of value from the pharmaceutical and medical device industries to prescribed recipients. This new legislation is intended to increase the transparency of financial relationships within Ontario’s health care system to improve patients’ ability to make informed health care decisions and provide information for health system evaluation, planning, and policy analysis.
1. Who is subject to the reporting requirement?
The reporting requirement applies broadly to persons and organizations that sell or promote medical products (including drugs and medical devices, but excluding natural health products):
· Manufacturers (and persons who perform manufacturing services on behalf of manufacturers) that sell medical products;
· Wholesalers, distributors, importers, and brokers that promote or facilitate the sale of medical products;
· Marketing firms or persons who perform activities for the purpose of promoting medical products; and
· Persons who organize continuing education events for members of a health profession on behalf of a manufacturer that sells medical products.
2. When is the reporting requirement triggered?
The reporting requirement is triggered when one of the aforementioned persons or organizations provides a transfer of value, directly or indirectly, to prescribed recipients to be specified in future regulations. We expect that all regulated health professions will be prescribed recipients under the Act, as will hospitals and other health care organizations.
3. What types of transfers of value must be reported?
A transfer of value is broadly defined in the Act to include payments, benefits, gifts, advantages, and perquisites. A person or organization providing such a transfer of value is called a “payor” under the Act. A payor is not required to report a transfer of value below a prescribed threshold dollar value to be specified in future regulations. The manner and frequency of reports to the Minister will also be prescribed by future regulations. It is expected that the types of transfers to be reported will be wide ranging, and include consulting fees, research grants, fees for speeches or participation on advisory boards, reimbursement for attendance at conferences, dinners and other forms of business entertainment.
4. What information must be reported?
A payor must report the following information to the Minister of Health and Long-Term Care:
· The names of the parties to the transaction (whether a party is a business or an individual);
· The parties’ business addresses;
· The date of the transfer of value;
· The dollar value of the transfer of value (or the approximate dollar value in the case of a non-monetary transfer of value); and
· A description of the transfer of value, including the reasons for it.
In addition, the Act empowers the Minister to request that transaction intermediaries and their affiliates, as well as payors’ affiliates, report the aforementioned information and the source of the transfer of value.
The Minister is required to comply with the notice provisions of the Freedom of Information and Protection of Privacy Act in respect of personal information indirectly collected in reports under the Act.
Records created or received in respect of the transfer of value must be retained by both payors and recipients for the prescribed length of time to be specified in future regulations.
5. Where will the reported information be disclosed?
The Minister will disclose the reported information on a website at least once per year. We expect that the website will feature a publicly searchable database of the reported information.
6. How will the Act be enforced?
The Act empowers the Minister to appoint inspectors who may, without a warrant, enter premises to examine and make copies of records relating to transfers of value that are subject to the reporting requirement. Inspectors may also question any person and audit the accounts of the parties to a transfer of value, intermediaries, and their respective affiliates. Parties subject to inspection must cooperate and provide reasonable assistance to an inspector.
An inspector can apply to a provincial judge or justice of the peace for an order compelling a person not being investigated to produce data or documents if there are grounds to believe that such materials will provide evidence respecting an offence under the Act.
The Minister or an inspector may serve a compliance order on a person who is believed to have failed to comply with the Act and regulations (however, a person may be prosecuted under the Act whether or not a compliance order has been served). A person in receipt of a compliance order may provide submissions to the Minister within 14 days showing how the person has complied. On notice to the person, the Minister may also apply to the Superior Court of Justice for a court order directing the person to comply.
The Minister will publish the names of persons to whom compliance and court orders are directed (unless the 14 day submissions period in respect of a compliance order has not yet expired, or the Minister has rescinded the compliance order) as well as a description of the non-compliance on a website.
7. What are the penalties for non-compliance?
The Act imposes monetary penalties for non-compliance that are determined based on the nature of the person in non-compliance and the number of prior offences. The Act sets out fines, up to a specified maximum, for each day or part of a day on which the offence occurs or continues, as shown below:
8. Are there any defences to a charge of non-compliance?
The Act makes available due diligence and reasonable mistake of fact defences only in respect of a charge that a payor, intermediary, or affiliate has reported false or misleading information to the Minister.
If passed by the legislature, the Act will impose significant new reporting obligations on organizations in the pharmaceutical and medical device industries. Public scrutiny of the financial relationships between industry and health care professionals will likely increase, opening the door to the politicization and further regulation of such relationships. Industry players and health care professionals alike should be prepared to account for and justify established practices that may be characterized as transfers of value under the new reporting regime. Organizations that will be classified as payors under the Act would be well advised to assess their current practices and implement policies and establish reporting infrastructure to ensure compliance with the Act once enacted, which we expect will occur in 2019.