Sunshine Act: Accounting for Equity Options

Abstract

The “Sunshine Act” of the Patient Protection and Affordable Care Act was designed to speak to public concerns over physician and industry relationships.  There are no rigorous accounting standards set in place for determining dollar values of payments, and errors are most exaggerated in the case of stock options due to the leveraged nature of these instruments.  A historical perspective on stock options accounting provides useful insight into potential societal impact of errors contained in the Sunshine Act.  We outline accounting and structural flaws within the current databases and propose solutions to close these loopholes.