New Transparency Reporting Obligations under Italian Sunshine Act
Complying with the Transparency Reporting Obligations in the Italian Sunshine Act
With the adoption of Law No. 62, dated May 31, 2022, also known as the Italian Sunshine Act, the Italian Ministry of Health introduces transparency reporting obligations for companies involved in the manufacturing and marketing of healthcare products and services. The new law shares many similarities with analogous regulations in other jurisdictions while spanning a very broad scope of reporting companies, setting tight reporting periods for “transfers of value” and introducing a number of other specific requirements.
The text of the law defines the reporting entities, the types of transfers of value, agreements and benefits which must be reported, and the timelines and penalties for non-compliance. Below, we go into more detail on these and other aspects of the Italian Sunshine Act and explain how Italian companies operating in the pharma and healthcare manufacturing space can get compliance-ready before the law becomes operational.
Who Shall Report?
Before the new law, the only companies from the pharma and healthcare space in Italy who had transparency obligations in relation to the transfers of value were the members of trade associations, such as Farmindustria and Confindustria Dispositivi Medici. Other businesses not participating in trade organizations were complying with such requirements on a voluntary basis.
The new regulation expands the scope of reporting entities subject to new transparency reporting obligations. The law offers a very broad definition of reporting entities, which include manufacturing companies that directly or indirectly engage in the production or marketing of medical products or services, including non-healthcare products that can be marketed in the human and veterinary health sectors.
Due to such a broad definition, the Ministry of Health of Italy has implemented public consultation to collect comments and contributions from affected businesses. The results of the consultation, which ran from August 17 until October 08, 2023, will be used by the Ministry to draft a decree to make amendments and corrections in the law as well as to provide clarifications on the roles of different actors.
What Shall Be Reported?
According to the Italian Sunshine Act, healthcare manufacturers and other applicable entities have to report on a broad range of transactions in favor of healthcare professionals (HCPs) and healthcare organizations (HCOs). Specifically, the law makes it an obligation to report on:
• transfers of value, including agreements and donations of money, goods, services or other benefits,
• agreements which produce direct or indirect benefits, including participation in conferences, training events, committees, commissions, and consultative bodies, as well as establishment of consultancy, teaching or research relationships,
• shares and bonds of manufacturing businesses and other applicable entities paid as partial or full compensation to HCPs or HCOs,
• fees for granting licenses for intellectual property rights.
The obligation to report any “transfers of value” in favor of healthcare professionals applies where the amount of such individual transfers exceeds 100 EUR or where their total annual value exceeds 1,000 EUR. In cases where the transfer is made in favor of a healthcare organization, the respective amounts make 1,000 EUR for an individual transfer, while the total annual value threshold equals 2,500 EUR.
Where the Data Should Be Reported?
The reporting entities will disclose their information on transfers of value, agreements, shares and bonds in the Italian Sanità Trasparente database, administered by the Ministry of Health. The records in the database will be open to public review for 5 years and will have distinct sections for each type of transfer, disbursement and agreement, as well as information about penalties applied to non-compliant manufacturers.
According to Article 3 of the Law, the manufacturers of medical products and other reporting entities have to report transfers of value as well as agreements with HCPs and HCOs within six months after the semester when such transfers and agreements took place.
Meanwhile, Article 4 of the Law allows reporting entities to file data on shares and bonds held by HCPs and HCOs in such entities as well as fees on granting licenses for property rights to such HCPs/HCOs until January 31st of the next year.
Note on Privacy Concerns
The Italian Sunshine Act contains an important clause addressing privacy issues related to information disclosure. While the pre-existing regulations allowed disclosure on transfers of value in aggregate form in certain cases, for example, when collecting consent for such disclosure was impossible, the Sunshine Act is explicit in its requirement for individual disclosure.
To this end, the new law establishes that healthcare professionals and organizations provide consent for disclosure of their information automatically when there is a transfer of value, signing of the agreement or receipt of shares or other benefits. Importantly, the reporting entities are obliged to notify the HCPs and HCOs of publishing their information in the database of the Ministry of Health in each case of disclosure.
Penalties for Non-Compliance
The non-complying manufacturers and other reporting entities under the Italian Sunshine Act face heavy penalties for each instance where they fail to report according to their transparency obligations. The text of the law includes the following sanctions for non-compliance:
• 1,000 EUR plus the amount of each transfer of value or other disbursement multiplied by twenty times,
• 5,000 EUR to 50,000 EUR for failure to report transfer of shares and bonds to HCPs or HCOs or payment of fees for intellectual property licenses.
• 5,000 EUR to 100,000 EUR for providing false information about transfers of value, agreements, transfers of shares or payment for licenses.
At the same time, the Sunshine Act decreases sanctions for reporting entities with annual turnover below 1 million EUR. To qualify for reduced penalties, a defaulting manufacturer should be a standalone company without any affiliation or contractual relationships with other manufacturing businesses.
Learn More With MedCompli
While the Transparent Healthcare database envisioned by the Italian Sunshine Act is still in the making, the manufacturers of medical products and other reporting entities specified in the law need to take steps to ensure compliance by the moment the register becomes operational. The applicable manufacturers and entities need to review their internal policies on interacting with HCPs and HCOs and introduce internal frameworks to ensure compliance.
The scope of reporting, short deadlines and stringent penalties call for the application of digital technologies to provide for data collection, data storage and timely filing according to the new Italian Sunshine Act. For more information on software solutions which can help ensure compliance with reporting requirements for transfers of value to healthcare professionals and companies in various jurisdictions, please don’t hesitate to contact the MedCompli team for a free consultation and demo.