Is a distributor considered an applicable manufacturer if it holds title to devices and drugs and distributes and sells medical devices and drugs from a manufacturer to hospitals and ambulatory surgery centers or covered recipients for use in surgical procedures, and payment for all products is limited to commercial insurance and private payer only?
An applicable manufacturer, as defined by 42 C.F.R § 403.902, is an entity that is engaged in the production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply, or is under common ownership with an applicable manufacturer and provides assistance or support to such entity with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale or distribution of a covered product or a distributor or wholesaler (including, but not limited to, repackagers, relabelers, and kit assemblers) that do not hold title to any covered drug, device, biological or medical supply. A “covered device” (including a medical supply that is a device) is any device for which (1) payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP), either separately (such as through a fee schedule or formulary) or as part of a bundled payment, and (2) by law, requires premarket approval by or premarket notification to the FDA. The question of whether a distributor falls within the definition of an applicable manufacturer, as defined in 42 C.F.R. § 403.902, depends in part on whether payment is available for any of the distributor’s products under Medicare, Medicaid, or CHIP. A distributor is not considered an applicable manufacturer for purposes of Open Payments if the distributor only distributes and sells a manufacturer’s medical devices and drugs and payment is not available under Medicare, Medicaid, or CHIP. However, it is worth noting that under the final rule, if an entity manufactures at least one covered drug, device, biological, or medical supply, then it qualifies as an applicable manufacturer and must report all payments or transfers of value to covered recipients, regardless of whether or not they are related to a covered product. Similarly, if a distributor distributes at least one covered drug, device, biological or medical supply, then it qualifies as an applicable manufacturer and must report all payments or transfers of value to covered recipients, regardless of whether or not they are related to a covered product, except if a limitation on reporting applies as specified in § 403.904(b).Key words: Open Payments, Sunshine Act