A highly anticipated proposal requiring drug and medical-device companies to disclose their often-controversial consulting agreements with doctors is now part of health care legislation unveiled before the Senate Finance Committee on Wednesday.

The provision is tucked within an $856 billion health care overhaul that was introduced Wednesday by Sen. Max Baucus, D-Mont., the committee's chairman.

Introduced in 2007 by Sens. Charles Grassley, R-Iowa, and Herb Kohl, D-Wis., the Physician Payments Sunshine Act initially languished, but it gained key support from the medical technology industry.

Because Minnesota is a hotbed of medical technology companies, including industry giant Medtronic Inc., St. Jude Medical Inc., Boston Scientific Corp. and hundreds of smaller companies, the proposed law has been closely watched here.

The version in the Baucus legislation calls for drug and medical device companies to file annual reports showing payments to doctors for services such as marketing, education and research beginning March 31, 2012. The information would be available to the public on the Internet.

Companies failing to report could incur financial penalties up to $1 million.

For more than two years, Kohl and Grassley have been investigating the financial relationships between doctors and industry. Med-tech companies argue that the relationships help make devices safer and more effective. Critics say they may taint doctors' treatment decisions.

Some of this information is already available. In January, Park Nicollet Health Systems became the second health care system in the nation to post its doctor relationships on its website. And Fridley-based Medtronic Inc. will begin posting its payments to doctors next year.

The Baucus law generally preempts state laws calling for similar disclosure. Currently, a half-dozen states, including Minnesota, require drug companies to divulge payments to doctors.

Meanwhile, a $4 billion tax on medical device makers to help fund health care reform, also part of the Baucus legislation, has drawn opposition from additional Minnesota lawmakers.

In a letter to Baucus dated Wednesday, Reps. Erik Paulsen and Michele Bachmann, both Republicans, and Betty McCollum, a Democrat, said medical technology is "an industry where growth should be incentivized, not taxed."

While health care reform "is needed and must be paid for, the proposed tax would slow medical innovation, increase costs for consumers and harm job growth," they wrote.

Earlier this week, U.S. Sens. Amy Klobuchar and Al Franken wrote Baucus a letter expressing similar concerns. On Tuesday, the two Democrats formally expressed their opposition to the annual tax. Gov. Tim Pawlenty also wrote a letter this week to the senators urging them to oppose the tax.

Janet Moore • 612-673-7752