Healthy Skepticism Library item: 8281

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Publication type: news

Ginsberg T.
Threat to health-data cottage industry
The Philadelphia Inquirer 2007 Feb 5
http://health.groups.yahoo.com/group/iatrogenic/message/2926

Full text:

A federal case involves a N.H. law banning use of prescription information for marketing. Big pharma, processors are braced.

By Thomas Ginsberg
Inquirer Staff Writer
Next time you take medicine, consider the surprisingly lucrative and circuitous path of that scrap of paper known as a drug prescription form:

After the pharmacy fills your order, it sells information about your drug and doctor – though not necessarily about you – to a health-data company, such as IMS Health Inc., Verispan L.L.C. and Wolters Kluwer, all in the Philadelphia area.

There, powerful computers create a veritable scorecard of physicians’ drug preferences by combining your transaction with millions of others from doctors and pharmacies nationwide. IMS in Plymouth Meeting says it processes more transactions, on a daily basis, than does the New York Stock Exchange.

Then, the data companies resell this information to, among others, pharmaceutical companies, which employ thousands of sales representatives to pitch drugs to doctors. Many companies tailor their bonuses for reps and pitches – and sometimes rewards – for individual doctors based on these prescription tallies.

Producing this powerful data is a long-standing cottage industry worth hundreds of millions of dollars a year, employing at least 2,000 people in the Philadelphia region, according to the local companies.

And now it’s facing its biggest threat in years.

Today in New Hampshire, a federal judge is scheduled to hear closing arguments in a case involving a new state law there that would ban this use of prescriber data for promotional purposes.

IMS and Verispan are suing to block the law as an unconstitutional violation of their commercial rights. New Hampshire’s attorney general defends it as a legal way to protect physician confidentiality and reduce health-care costs, blamed in part on sales reps’ pushing ever-costlier drugs.

The case carries weighty implications for pharmaceutical marketing nationwide and locally.

“This would throw a powerful monkey wrench into the pharmaceutical marketing machine,” said Abigail Field, legislative director at the New Jersey Public Interest Research Group, a consumer group. “If the courts uphold it, if it’s legal, there will be interest in enacting similar laws in other states.”

So far, no bans have been introduced in Pennsylvania or New Jersey, where many big drug companies are based. Versions have passed in Vermont and Maine, but were defeated in Arizona, Hawaii, Nevada, West Virginia and California. A similar federal ban has been introduced in Congress.

Doctors and nurse practitioners – the people whose decisions are being monitored and identities tracked – tend to oppose the sales pressures, but differ on whether the data should be confidential.

Harry Zall, a West Philadelphia psychiatrist who sees about 50 patients a week, faulted his colleagues for succumbing to sales pitches based on the data.

“I suppose a ban might protect some doctors against their own vulnerabilities,” Zall said. “For me, I would say I don’t care if the data is collected. Send whoever you want, and if I don’t agree, I’m not going to prescribe it.”

But an outspoken opponent, Dean Abramson, a gastroenterologist in Cedar Rapids, Iowa, said the data were being used to sway physicians. “To think they have a right to influence our prescribing is wrong. They do not have that right,” he said.

Firing back, the industry’s main lobby group, Pharmaceutical Research and Manufacturers of America, or PhRMA, warns that “ending the collection of prescribing data will hamper pharmaceutical companies’ ability to provide current information about drugs to physicians who need it most, including important developments about new indications and new side effects.”

In statements and court filings, IMS and Verispan argue that true cost-cutting cannot be achieved by restricting the flow of information. “This rationale is flawed and, in effect, criminalizes the collection of provider-identified data, making all outreach to physicians less efficient, while not curtailing marketing,” the companies argue.

Although the law permits “non-commercial” use of data for such things as research or safety tracking, IMS and Verispan likely could not charge enough for those uses to make the service profitable.

Stakes are high for the data companies. The biggest is IMS, a Connecticut-based company that employs about 1,700 people in Montgomery County. It derived 48 percent – $842.3 million – of its 2005 revenue from “sales force effectiveness” products, including its prescription-tracking service Xponent, run from Plymouth Meeting.

The service “monitors prescription activity from retail pharmacies, long-term care and mail-service pharmacies using a patented statistical methodology to project the prescription activity of nearly 1.4 million individual prescribers on a weekly and monthly basis,” according to IMS’ annual report.

Verispan, a Yardley-based private company employing about 500 people, tracks prescriptions through its Vector One service. It does not release figures on its business.

Neither IMS nor Verispan would say how its business might be hurt by a ban. But both have vowed to fight to the U.S. Supreme Court if necessary.

Wolters Kluwer, a Dutch-based information company that is not part of the lawsuit but supports it, runs a smaller prescription-data service from its Healthcare Analytics unit in Yardley. It employs 100 to 200 people there, according to Jeffery McCaulley, president and CEO of Wolters Kluwer Health division, in Conshohocken.

“Would it kill our business? No,” McCaulley said. “But it’s important for our business. There are responses to a ban we could take, but many of them would not recover the public-health benefit, and that’s why we are so passionate about this.”

The American Medical Association, whose massive database of U.S. physicians forms the basis of some data collection, has tried to mitigate the dispute by creating an “opt-out” for physicians. But only 5,300 out of nearly one million have done so, it said.

The AMA earned $44.5 million in 2005 – nearly a fifth of its total $243.6 million revenue – by licensing its Masterfile to health-information companies mostly for marketing purposes, it said.

“We use this money to finance our advocacy and professional standards,” said Robert Musacchio, AMA’s senior vice president for business and publishing.

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Contact staff writer Thomas Ginsberg at 215-854-4177 or tginsberg@phillynews.com.