Who is Attacking the Sunshine Act: Part 2
November 2, 2012
Industry Wants to Exclude its Overseas Manufacturing Facilities from Reporting
As we noted in Part 1, CMS was supposed to finalized regulations for the implementation of the Sunshine Act by October, 2011. It’s over a year later, and we still have no published regulations. Why?
"Well," says Nial Brennan, a spokesman for CMS, "that agency has had to wade through a great many challenges to the proposed regulations from the 'stakeholders' in the statutory scheme." AME decided to take a look at the objections that were filed in response to the regulations.
50 pages of objections from Big Pharma
It honestly came as no surprise to us that Big Pharma, while paying lip-service to the idea of transparency, presented the longest set of objections.
On February 17, 2011, the last possible day on which objections to the proposed regulations could be considered, the Pharmaceutical Research and Manufacturers of America (“PhRMA”), big Pharma’s lobbying organization, sent in a 50-page set of objections to the proposed regulations. Because of this careful timing by counsel for PhRMA, their objections went unanswered by other stakeholders or consumer groups. Member companies of PhRMA include all of the major American pharmaceutical manufacturers, including Eli Lilly and Company, GlaxoSmithKline, Pfizer, Merck & Co., Johnson & Johnson, etc.
While the list of objections was long, and ranged from the logical and well-presented to the obscure and petty, the first objection raised, and the one that big Pharma gave the longest argument to, was the most disturbing.
PhRMA argued that the Sunshine Act should be applied only to manufacturers making drugs in the United States. In other words, if the drug companies happen to be foreign companies (or foreign subsidiaries of US companies), those companies shouldn’t have to report the payments they are making to US doctors (for research, for royalties, for speaking engagements, or anything else), even though the drugs that they are making are marketed and sold in the US
Huh?
PhRMA’s lawyers are arguing – extensively and artfully – that things like paying a US doctor to give advice about a drug or just selling and marketing a product in the US does not mean that a company is actually “operating” in the US. And while this argument does not make sense to us, particularly, they are clearly hoping that it will convince CMS – and if not CMS, perhaps a federal district court judge.
Why do United States drug companies care if the Sunshine Act covers foreign manufacturers?
That is a very good question. And we are guessing that we know the answer to it. The US members of PhRMA sell and distribute drugs that are manufactured by their subsidiaries, and a great many of those subsidiaries are not US-based.
If this “exception” is accepted by the CMS and Congress, could these large multi-nationals avoid reporting payments to doctors simply by funneling the payments through their subsidiaries?
Well, they would certainly have a lot of subsidiaries to choose from. Here, for example, are the subsidiaries for two of the largest US-based, multi-national drug companies, Eli Lilly & Company and Abbott Laboratories.
Eli Lilly & Company Subsidiaries:
| State or Jurisdiction of Incorporation or Organization | |
|---|---|
| Alnara Pharmaceuticals, Inc. | Massachusetts |
| AME Torreview LLC | Delaware |
| Andean Technical Operations Center | Peru |
| Applied Molecular Evolution, Inc. | Delaware |
| Avid Radiopharmaceuticals, Inc. | Pennsylvania |
| del Sol Financial Services, Inc. | British Virgin Islands |
| Dista Ilac Ticaret Ltd. Sti. | Turkey |
| Dista, S.A. | Spain |
| Dista-Produtos Quimicos & Farmaceuticos, LDA | Portugal |
| E L Management LLC | Delaware / Canada |
| Elanco Animal Health Ireland Limited | Ireland |
| Elanco Animal Health, Korea, Ltd. | Korea |
| Elanco Trustees Limited | Ireland |
| Elanco-Valquimica, S.A. | Spain |
| ELCO for Trade and Marketing, S.A.E. | Egypt |
| ELCO Insurance Company Limited | Bermuda |
| ELCO International Sales Corporation | US Virgin Islands |
| ELCO Management, Inc | Delaware |
| ELGO Insurance Company Limited | Bermuda |
| Eli Lilly (B.V.I.) Holding Company Unlimited | British Virgin Islands |
| Eli Lilly (Malaysia) Sdn. Bhd. | Malaysia |
| Eli Lilly (NZ) Staff Benefits Custodian Limited | New Zealand |
| Eli Lilly (Philippines), Incorporated | Philippines |
| Eli Lilly (S.A.) (Proprietary) Limited | South Africa |
| Eli Lilly (Singapore) Pte. Ltd. | Singapore |
| Eli Lilly (Suisse) S.A. | Switzerland |
| Eli Lilly and Company | Indiana |
| Eli Lilly and Company (India) Pvt. Ltd. | India |
| Eli Lilly and Company (Ireland) Limited | Ireland |
| Eli Lilly and Company (Ireland) Trustees Limited | Ireland |
| Eli Lilly and Company (N.Z.) Limited | New Zealand |
| Eli Lilly and Company (Taiwan), Inc. | Taiwan |
| Eli Lilly and Company Limi | United Kingdom |
| Eli Lilly Asia Pacific SSC Sdn Bhd | Malaysia |
| Eli Lilly Asia, Inc. | Delaware |
| Eli Lilly Asian Operations, Limited | Hong Kong |
| Eli Lilly Australia Pty. Limited | Australia |
| Eli Lilly Benelux S.A. | Belgium |
| Eli Lilly B-H d.o.o. | Bosnia |
| Eli Lilly Canada Inc. | Canada |
| Eli Lilly CR s.r.o. | Czech Republic |
| Eli Lilly Danmark A/S | Denmark |
| Eli Lilly de Centro America, S.A. | Guatemala |
| Eli Lilly de Mexico, S.A. de C.V. | Mexico |
| Eli Lilly do Brasil Limitada | Brazil |
| Eli Lilly Egypt, S.A.E. | Egypt |
| Eli Lilly European Clinical Trial Services SA | Belgium |
| Eli Lilly Export S.A. | Switzerland |
| Eli Lilly farmacevtska druzba, d.o.o. | Slovenia |
| Eli Lilly Finance, S.A. | Switzerland |
| Eli Lilly Ges.m.b.H. | Austria |
| Eli Lilly Group Limited | United Kingdom |
| Eli Lilly Group Pension Trustees Limited | United Kingdom |
| Eli Lilly Holding Company Ltd. | United Kingdom |
| Eli Lilly Holdings Ltd. | United Kingdom |
| Eli Lilly Hrvatska d.o.o. | Croatia |
| Eli Lilly Industries, Inc. | Delaware |
| Eli Lilly Interamerica Inc., y Compania Limitada | Chile |
| Eli Lilly Interamerica, Inc. | Indiana |
| Eli Lilly International Corporation | Indiana |
| Eli Lilly International Trading (Shanghai) Company Limited | China |
| Eli Lilly Israel Ltd. | Israel |
| Eli Lilly Italia S.p.A. | Italy |
| Eli Lilly Japan K.K. | Japan |
| Eli Lilly Nederland B.V. | Netherlands |
| Eli Lilly Nederland Holding B.V. | Netherlands |
| Eli Lilly Nigeria Ltd. | Nigeria |
| Eli Lilly Norge A.S | Norway |
| Eli Lilly Pakistan (Pvt.) Ltd. | Pakistan |
| Eli Lilly Polska Sp.z.o.o. (Ltd.) | Poland |
| Eli Lilly Regional Operations GmbH | Austria |
| Eli Lilly Romania SRL | Romania |
| Eli Lilly S.A. | Switzerland |
| Eli Lilly S.A. — Ireland Branch | Ireland |
| Eli Lilly Services, Inc. | British Virgin Islands |
| Eli Lilly Slovakia s.r.o. | Slovakia |
| Eli Lilly Spain Holding ETVE, S.L. | Spain |
| Eli Lilly Suzhou Pharmaceutical Co. Ltd. | China |
| Eli Lilly Sweden AB | Sweden |
| Eli Lilly Trading S.A. | Switzerland |
| Eli Lilly USA, LLC | Indiana |
| Eli Lilly Vostok S.A., Geneva | Switzerland |
| Eli Lilly y Compania de Mexico, S.A. de C.V. | Mexico |
| Eli Lilly y Compania de Venezuela, S.A. | Venezuela |
| EndoClone Incorporated | Delaware |
| GEMS Services S.A. | Belgium |
| GEMS Services S.A. — CC Branch | Belgium |
| Greenfield-Produtos Farmaceuticos, Lda. | Portugal |
| Hypnion, Inc. | Delaware |
| ICOS Corporation | Washington |
| ImClone GmbH | Switzerland |
| ImClone LLC | Delaware |
| ImClone Systems Corporation | Delaware |
| ImClone Systems International GmbH | Germany |
| Irisfarma S.A. | Spain |
| Ivy Animal Health, Inc. | Delaware |
| Kinsale Financial Services, Ltd. | Ireland |
| Lilly Asia Ventures Fund I, L.P. | Cayman Islands |
| Lilly Asia Ventures Fund II, L.P. | Cayman Islands |
| Lilly Cayman Holdings | Cayman Islands |
| Lilly China Research and Development Co., Ltd. | China |
| Lilly del Caribe, Inc. | Cayman Islands |
| Lilly Deutschland GmbH | Germany |
| Lilly France S.A.S. | France |
| Lilly Global Services, Inc. | Indiana |
| Lilly GmbH | Germany |
| Lilly Holdings GmbH | Austria |
| Lilly Holdings, LLC | Delaware |
| Lilly Hungaria KFT | Hungary |
| Lilly Ilac Ticaret Limited Sirketi | Turkey |
| Lilly Korea Ltd. | Korea |
| Lilly Nederland Holding B.V. | Netherlands |
| Lilly Pharma Fertigung & Distribution GmbH | Germany |
| Lilly Pharma Holding GmbH | Germany |
| Lilly Pharma Ltd. | Russia |
| Lilly Pharma Produktion GmbH & Co. KG | Germany |
| Lilly Portugal – Produtos Farmaceuticos, Lda. | Portugal |
| Lilly S.A. | Spain |
| Lilly Singapore Centre for Drug Discovery Pte. Ltd. | Singapore |
| Lilly Trading Co. LTD | China |
| Lilly USA, Corp. | Indiana |
| Lilly USA, LLC | Indiana |
| Lilly Ventures Fund I LLC | Delaware |
| Lilly Ventures Management Company LLC | Delaware |
| Lilly-NUS Centre for Clinical Pharmacology | Singapore |
| OY Eli Lilly Finland AB | Finland |
| Pharmabrand, S.A.I.C. | Greece |
| Pharmaserve-Lilly S.A.C.I. | Greece |
| PT. Eli Lilly Indonesia | Indonesia |
| SGX Pharmaceuticals, Inc. | Delaware |
| Spaly Bioquimica, S.A. | Spain |
| UAB Eli Lilly Lietuva | Lithuania |
| Vanthys Pharmaceutical Development Private Limited | India |
| Vital Pharma Productos Farmaceuticos | Portugal |
Abbott Laboratories Foreign Subsidiaries:
| Foreign Subsidiaries | Country in Which Organized |
|---|---|
| Alnara Pharmaceuticals, Inc. | Massachusetts |
| Abbott Laboratories Argentina, S.A. | Argentina |
| Abbott Australasia Pty. Limited | Australia |
| Abbott Australia Holdings (Pty) Ltd. | Australia |
| Abbott Laboratories Executive Superannuation Pty.Limited | Australia |
| Abbott Laboratories Superannuation Pty. Limited | Australia |
| Knoll Australia Pty. Ltd. | Australia |
| Abbott Gesellschaft m.b.H. | Austria |
| Abbott Hospitals de Costa Rica Ltd. | Bahamas |
| Abbott Hospitals Limited | Bahamas |
| Abbott Laboratories de Costa Rica Ltd. | Bahamas |
| Abbott Laboratories (Bangladesh) Ltd. | Bangladesh |
| Murex Diagnostics International, Inc. | Barbados |
| Abbott, S.A. | Belgium |
| Abbott Belgian Pension Fund A.S.B.L. | Belgium |
| Abbott Ireland | Bermuda |
| Abbott Biotechnology Ltd. | Bermuda |
| Abbott Laboratories (Bermuda) Ltd. | Bermuda |
| Abbott Laboratorios do Brasil Ltda. | Brazil |
| Abbott Laboratories, Limited | Canada |
| International Murex Technologies Corporation | Canada |
| Abbott Laboratories de Chile Limitada | Chile |
| Shanghai Abbott Pharmaceutical Co., Ltd. 75%* | China |
| Abbott Laboratories de Colombia, S.A. | Colombia |
| Abbott Laboratories s.r.o. | Czech Republic |
| Abbott Laboratories A/S | Denmark |
| Abbott Laboratorios del Ecuador Cia. Ltda. | Ecuador |
| Abbott Limited Egypt | Egypt |
| Abbott, S.A. de C.V. | El Salvador |
| Abbott Equity Holdings Ltd. | England |
| Abbott Investments Limited | England |
| Abbott Laboratories Limited | England |
| Abbott (UK) Finance Limited | England |
| Abbott (UK) Holdings Limited | England |
| Abbott Laboratories Trustee Company Limited | England |
| Abbott Vascular Devices Limited | England |
| Abbott Vascular Devices (2) Limited | England |
| IMTC Holdings (UK) Limited | England |
| Knoll Ltd. | England |
| Knoll Pharma Ltd. | England |
| Knoll Pharmaceuticals Company Ltd. | England |
| Lupharma UK Holding One Limited | England |
| MediSense Britain Limited | England |
| MediSense Contract Manufacturing Limited | England |
| MediSense UK Limited | England |
| Laboratories Ltd. | Hong Kong |
| Murex Biotech Limited (UK) | England |
| Murex Biotech (UK) Limited | England |
| Abbott OY | Finland |
| Abbott France S.A.S. | France |
| Alcyon Analyzer SAS | France |
| Knoll Sante Active S.A. | France |
| Abbott Holding G.m.b.H. | Germany |
| Abbott G.m.b.H. & Co. KG | Germany |
| Abbott Diagnostics G.m.b.H | Germany |
| Abbott Management GmbH | Germany |
| GAG Aktiengesellschaft fur Wohnungs- | Germany |
| Heidelberg Innovation GmbH | Germany |
| Heidelberg Innovation GmbH & Co. | Germany |
| S.T.E.P. Personalentwicklungs-gesellschaft mbH | Germany |
| Abbott Laboratories (Hellas) S.A. | Greece |
| Abbott Grenada Limited | Grenada |
| Abbott Laboratorios, S.A. | Guatemala |
| Abbott Laboratories Limited | Hong Kong |
| Abbott Laboratories (Hungary) Ltd. | Hungary |
| Abind Healthcare Private Limited | India |
| Abbott India Limited 58.2% | India |
| Lenbrook Pharmaceuticals Ltd. | India |
| P. T. Abbott Indonesia 99.99% | Indonesia |
| Abbott Laboratories, Ireland, Limited | Ireland |
| Abbott Ireland Ltd. | Ireland |
| Abbott Vascular Devices Ireland Limited | Ireland |
| BiodivYsio Limited | Ireland |
| Murex Medical Research Limited | Isle of Mann |
| Technology License Company Limited | Isle of Mann |
| Abbott S.p.A. | Italy |
| Autonomous Employee Welfare Fund for | Italy |
| Abbott S.p.A. | Dirigenti |
| Abbott West Indies Limited 51% | Jamaica |
| Consolidated Laboratories Limited | Jamaica |
| Abbott Japan K.K. | Japan |
| Dainabot Co., Ltd. 82% | Japan |
| Hokuriku Seiyaku Co., Ltd. | Japan |
| Knoll Japan KK | Japan |
| Tofuku Shoii K.K. | Japan |
| Abbott Korea Limited | Korea |
| Abbott Middle East S.A.R.L. | Lebanon |
| Abbott Laboratories (Malaysia) Sdn. Bhd. | Malaysia |
| Abbott Laboratories de Mexico | Mexico |
| Abbott Logistics B.V. | The Netherlands |
| Abbott B.V. | The Netherlands |
| Abbott Laboratories B.V. | The Netherlands |
| Abbott Finance B.V. | The Netherlands |
| Abbott Holdings B.V. | The Netherlands |
| Knoll B.V. | The Netherlands |
| MediSense Europe B.V. | The Netherlands |
| IMTC Holdings B.V. | The Netherlands |
| IMTC Finance B.V. | The Netherlands |
| Abbott Laboratories (N.Z.) Limited | New Zealand |
| Abbott Norge AS | Norway |
| Abbott Laboratories (Pakistan) 83.42% | Limited Pakistan |
| Abbott Laboratories, C.A. | Panama |
| Abbott Overseas, S.A. | Panama |
| Abbott Laboratorios S.A. | Peru |
| Abbott Laboratories (Philippines) | Philippines |
| Knoll Philippines, Inc. | Philippines |
| Abbott Laboratories Sp. z.o.o. | Poland |
| Abbott Laboratorios, Limitada | Portugal |
| Abbottfarma – Promocao de Produtos Farmaceuticos, Limitada | Portugal |
| Abbott Laboratories (Singapore) Private Limited | Singapore |
| Abbott Laboratories Slovakia s.r.o. | Slovakia |
| Abbott Laboratories South Africa Pty. Ltd. | South Africa |
| Knoll Pharmaceuticals South Africa Pty. Ltd. | South Africa |
| Abbott Laboratories, S.A. | Spain |
| Abbott Cientifica, S.A. | Spain |
| Bioresearch S.A. | Spain |
| Murex Diagnosticos, S.A. | Spain |
| Liade S.A. | Spain |
| Abbott Scandinavia A.B. | Sweden |
| Abbott A.G. | Switzerland |
| Abbott Laboratories S.A. | Switzerland |
| Abbott Finance Company S.A. | Switzerland |
| Knoll AG | Switzerland |
| Knoll Bio-Research S.A. | Switzerland |
| Abbott Laboratories Limited | Thailand |
| Abbott Laboratuarlari Ithalat Ihracat | Turkey |
| Ve Tecaret Limited | Sirketi |
| Abbott Laboratories Uruguay Limitada | Uruguay |
| Abbott Laboratories, C.A. | Venezuela |
Sources:
- List of subsidiaries reported to the SEC by Eli Lilly & Co., as of December 31, 2011.
- SEC Info • www.secinfo.com • Fran Finnegan & Company • 10/9/12
* Shanghai Abbott Pharmaceutical Co., Ltd. is 75% owned by Abbott