US Pharm. 2007;32(6):67-70.
The New Hampshire Legislature enacted a law that
bans pharmacies, insurance companies, and similar entities from transferring
or using prescriber-identifiable data for certain commercial purposes.1
Violations of the statute are punishable as a misdemeanor if the offender is
a person and are treated as a felony if the wrongdoer is any other legal
entity such as a corporation; violators are also subject to civil penalties.
2 The legislative history indicates that: "The legislature passed the
law to protect patient and physician privacy and to save the State, consumers,
and businesses money by reducing health care costs by encouraging the use of
generic drugs as opposed to brand name and newer, more expensive medications.
New Hampshire is the only state that has enacted such legislation to date."
Several other states are considering introducing similar measures.
Two organizations that use data of this type filed a lawsuit contending that
the law impermissibly restricts their First Amendment right to free speech.
3 They asked a federal district court to enter an injunction prohibiting
the state from enforcing the law. The plaintiffs IMS and Verispan are
considered to be the world's leading providers of information, research, and
analysis to the pharmaceutical and health care industries. IMS, which is
considered the largest operator in the field, purchases prescriber information
from approximately 100 different suppliers. Verispan, the other plaintiff, is
a company thought to be only about one tenth the size of IMS, obtains its
information from about 30 to 40 suppliers. The majority of these suppliers are
pharmacies that receive payments from the data miners. The record showed that
these two organizations collectively acquire and analyze data from billions of
prescription transactions per year in the United States.
In reviewing this matter, the federal district
court judge authoring the opinion noted:
A lucrative market has developed in recent
years for data identifying the prescribing practices of individual health care
providers ("prescriber-identifiable data"). Pharmacies acquire prescription
data in the ordinary course of business. Data mining companies … purchase the
prescription data, remove information identifying patients before it leaves
the pharmacy, combine what remains with data from other sources, and sell the
combined data to interested purchasers. The data miners' biggest clients by
far are pharmaceutical companies, which use the data to develop marketing
plans targeted to specific prescribers.4
One way that pharmaceutical manufacturers use this
data is to identify "early prescribers" of newly marketed medications. This,
of course, is a way for companies that have expended millions of dollars in
research and clinical marketing prior to obtaining a premarket clearance from
the FDA to get a legitimate quick start on recovering research and development
dollars. Another use of this data is for the drug makers to develop marketing
strategies and detailing ideas for pharmaceutical representatives to "detail"
The judge's written opinion containing his ruling
includes some fascinating statistics. There are approximately 1.4 million
licensed health care providers authorized by state laws to issue prescriptions
in the U.S. for approximately 8,000 different prescription-only products in
various forms, strengths, and doses. These prescriptions are filled by
approximately 54,000 retail pharmacies and other licensed medical facilities
throughout the country. Adding a little more statistical data not relevant to
the case, but certainly interesting, these numbers suggest that each physician
supports about 26 pharmacies.5
According to the judge, the system works like
Retail pharmacies acquire prescription data
during the regular course of business. For each prescription filled, a record
is kept that includes the name of the patient, information identifying the
prescriber, the name, dosage, and quantity of the prescribed drug, and the
date the prescription was filled. If the pharmacy is part of a larger
organization with multiple retail outlets, each outlet's prescription data is
ultimately aggregated with data from other outlets and stored in a central
In compliance with state and federal laws
regarding patient privacy, the pharmacies that participate in the data-mining
process allow the companies doing the information gathering to install
software on their computers that encrypts any information identifying patients
before it is transferred to their computers.
This "prescriber-identifiable" data is combined
with prescriber reference information that permits the data miners to match
prescriptions to the correct prescriber, supply the prescriber's correct name,
and add address, specialty, and other professional information about the
prescriber to the prescription data. These prescriber reference files are
obtained from sources that include the American Medical Association's (AMA)
Physician Masterfile. The AMA's Masterfile contains demographic, educational,
certification, licensure, and specialty information for more than 800,000
active U.S. medical doctors and over 90% of osteopathic doctors.
This information, as might be imagined, is
extremely important to the marketing strategies of the pharmaceutical and
related industries. According to evidence, substantially all of the revenue
generated by the two companies in 2005, 2004, and 2003 involved sales of
prescriber-identifiable data to pharmaceutical producers. The information is
also sold to biotechnology firms, pharmaceutical distributors, government
agencies, insurance companies, health care groups, researchers, consulting
organizations, the financial community, manufacturers of generic drugs,
pharmacy benefit managers, and others. Some of the purchasers of this data
use, license, sell, or transfer the information for advertising, marketing,
and promotional purposes.7
There should be little doubt that these data are
crucial to physician-aimed marketing tactics. For example, the judge noted
that in 2000:
[T]he pharmaceutical industry spent
approximately $15.7 billion on marketing, $4 billion of which was dedicated to
direct-to-physician strategies. More recent estimates suggest the industry
currently spends between $25 billion and $30 billion per year on marketing.
The large pharmaceutical companies spend roughly 30 percent of their revenues
on promotion, marketing, and administration, while spending only approximately
13 percent on research and development."
The judge noted that drug makers depend on a
variety of direct marketing techniques to reach health care providers,
including efforts to enlist the support of "thought leaders," characterized as
"physicians and researchers whose views are accorded special weight in the
medical community." He went on to observe that pharmaceutical companies enlist
the support of these individuals by sponsoring their research, retaining them
to serve as consultants and speakers, and entertaining them at dinners and
other events. He also stated that the tacit support of thought leaders is
deemed by pharmaceutical companies to be highly valuable in persuading others
to prescribe their products.
Insofar as face-to-face or one-on-one "detailing"
goes, the judge noted that sales representatives often provide prescribers
with both written and oral information about particular drugs in an effort to
persuade them to prescribe the drugs being detailed and that they also offer
prescribers free samples that can then be distributed to patients at no
charge. He wrote that certain reports estimate that the total annual retail
value of sampled drugs exceeds $11 billion. He went on to claim that because
some prescribers are reluctant to meet with sales representatives, "small
gifts, free meals, and other inducements are also frequently offered to health
care providers and their staffs in an effort to facilitate access and
encourage receptivity to the representative's sales pitch." The judge asserted
that in addition to facilitating access, "such inducements help sales
representatives build relationships with prescribers that can make them more
receptive to the product information that sales representatives provide."
For a variety of reasons, the judge granted the plaintiffs' request for an
injunction by holding that the New Hampshire law banning the use of physician
prescribing data is an unconstitutional violation of the First Amendment's
guarantee of free speech. He concluded that, "The challenged law restricts the
transmission of truthful information concerning the prescribing practices of
New Hampshire's health care providers [and that] it is not exempt from First
Amendment review merely because it targets factual information rather than
viewpoints, beliefs, emotions, or other types of expression." He also opined
that the statute in question "restricts speech by preventing pharmaceutical
companies from using prescriber-identifiable information both to identify a
specific audience for their marketing efforts and to refine their marketing
messages." In coming to this conclusion, the judge reasoned that the statute's
primary purpose "is to affect commercial transactions by making it more
difficult for pharmaceutical companies to convince health care providers to
prescribe brand-name drugs when less expensive and equally effective
alternatives are available."
New Hampshire argued that it has a substantial
interest in protecting prescriber privacy by "limiting unwarranted intrusions
into the decision-making process of prescribing physicians." The judge
responded that the statute does not promote public health or influence health
cost savings, even though he did accept the basic premise that pharmaceutical
companies use prescriber-identifiable data to make detailing more persuasive.
In his opinion, "Any general claim that the public health is undermined when
the effectiveness of detailing for brand-name drugs is increased depends upon
the counterintuitive and unproven proposition that, on balance, brand-name
drugs are more injurious to the public health than generic alternatives." When
the state claimed that it should be entitled to ban the use of
prescriber-identifiable data because it is being used to target "early
adopters" for the marketing of dangerous new drugs, the judge determined that
the evidence "did not establish either that early adopters are more likely to
be influenced by detailing than other health care providers or that new drugs
are generally more injurious to the public health than existing medications."
Accordingly, he concluded that the state did not show the law promotes public
The state also tried to advance the notion that
the statute directly promotes its interest in containing health care costs.
But this assertion, the judge said, depends on the assumption that any health
care cost savings that will result from a ban on the use of
prescriber-identifiable data can be achieved without compromising patient care
and that less expensive generic drugs are just as effective as the more
expensive brand name drugs. In this judge's mind, "This proposition is far
from self-evident [because] non-bioequivalent generic drugs are not always as
effective as brand-name alternatives." The judge did not stop here. He went on
to state, "Even in cases where non-bioequivalent generic drugs will work as
well or better than a brand-name alternative for most patients, there may be
some patients who will benefit by taking the branded medication.
Yet, a ban on the use of
prescriber-identifiable data affects both helpful and harmful brand-name
prescribing practices in the same way."
In conclusion, he wrote:
Because the state failed to prove that any
reductions in health care costs that may result from a ban on the use of
prescriber-identifiable data can be achieved without compromising patient
care, I am unable to endorse [the] argument that the Prescription Information
Law can be justified as a cost containment measure.
After finding the law unconstitutional, the judge
offered some pointers as to how the state might reduce health care costs
without offending the constitution by restricting protected speech:
First, if legislators are concerned that
pharmaceutical companies are improperly using samples, gifts, meals, and other
inducements to promote inadvisable prescribing practices, they can address
this perceived problem by following other states that have adopted laws that
limit such practices.8
Second, if legislators fear that pharmaceutical
detailing is simply too effective to go unrebutted, they can require the State
to enter the intellectual marketplace in several different ways with competing
information that will help health care providers balance and place in context
the sales messages that detailers deliver. Among other things, they can
require the State to prepare and distribute "best practice" guidelines that
educate health care providers as to both the health and cost implications of
their prescribing decisions; require the State to develop counter-detailing
programs that make health care providers aware of the cost implications of
their prescribing decisions;9 or they can require health
care providers to regularly participate in continuing medical education
programs that are specifically designed to provide practitioners with the best
available information concerning the advantages and disadvantages of
prescribing generic drugs rather than brand-name drugs.
Finally, if legislators are concerned that
pharmaceutical companies are using prescriber-identifiable data to drive up
Medicaid drug costs, they can address the issue directly by properly
implementing a Medicaid Pharmacy Program that takes into account the
cost-effectiveness of brand-name drugs when compared with nonbioequivalent
generic alternatives. New Hampshire's Medicaid Pharmacy Benefit Program
requires health care providers to obtain authorization from state officials
before prescribing certain drugs for Medicaid patients.10
The State has also adopted regulations that both authorize the State to take
cost considerations into account when deciding which drugs should be subjected
to the prior authorization requirement,11 and permit the
State to reject requests to prescribe drugs that are subject to prior
authorization.12 Accordingly, the State can prevent
unnecessary expenditures on brand-name drugs simply by subjecting such drugs
to prior authorization and rejecting requests to prescribe them when they are
not medically necessary.
This is an opinion from a federal district court judge sitting in New
Hampshire. The Attorney General of that state has indicated that an appeal
will be made to the next higher court. Do not be surprised if it winds up on
the doorstop of the U.S. Supreme Court. For the moment, all this decision
means is that the status quo that existed prior to the state's attempted ban
on data-mining procedures is preserved. The plaintiffs can continue with
business as usual.
As far as its implications to pharmacy, the case
also means that pharmacies that permit data mining of the information that
gets stored in computer records may continue participating in these
activities. But do not get complacent. As indicated, several other states are
anticipating adopting legislation of this type. Further, the outcome of this
case could be reversed at some future point. Obviously, this warrants some
attention to developments in this arena.
The other piece of information that may be
troubling for pharmacists is the judge's suggestion to expand the use of
"prior authorization" procedures in Medicaid programs. This kind of approach
to the cost-containment goals of states can shift a large burden of time and
expenses to pharmacists if a physician prescribes a drug subject to these
requirements without getting the state's permission.
1. See 2006 N.H. Laws § 328, codified at N.H. Rev. Stat. Ann. §§
318:47-f, 318:47-g, 318-B:12(IV) (2006) (Prescription Information Law). The
Prescription Information Law became effective on June 30, 2006 and is codified
at N.H. Rev. Stat. Ann. §§ 318:47-f[*20] , 318:47-g,
318-B:12(IV) (2006). The statute states: "Records relative to prescription
information containing patient-identifiable and prescriber-identifiable data
shall not be licensed, transferred, used, or sold by any pharmacy
benefits manager, insurance company, electronic transmission intermediary,
retail, mail order, or Internet pharmacy or other similar entity,
for any commercial purpose, except for the limited purposes of pharmacy
reimbursement; formulary compliance; care management; utilization review by a
health care provider, the patient's insurance provider or the agent of either;
health care research; or as otherwise provided by law. Commercial purpose
includes, but is not limited to, advertising, marketing, promotion, or any
activity that could be used to influence sales or market share of a
pharmaceutical product, influence or evaluate the prescribing behavior of an
individual health care professional, or evaluate the effectiveness of a
professional pharmaceutical detailing sales force."
2. N.H. Rev. Stat. Ann. § 318:55.
3. IMS Health Inc, v. Ayotte (Attorney General of New Hampshire, Slip
Op No 06-cv-280-PB, Opinion No. 2007 DNH 061 P (April 30, 2007), USDC, NH,
2007 U.S. Dist. LEXIS 31779.
5. 1.4 million prescribers divided by 54,000 pharmacies.
6. See Note 3.
7. It was noted that the "Plaintiffs also make prescriber-identifiable data
available at little or no cost for non-marketing purposes to academic
researchers, medical researchers, humanitarian organizations, and law
enforcement authorities. These entities use the information to track patterns
of disease and treatment, conduct research and clinical trials, implement best
practices, and engage in economic analyses." See Id, footnote 2
of the opinion.
8. See, e.g., Minn. Stat. Ann. § 151.461 (2007) and Cal. Health and
Safety Code § 119402(d)(1) (2007).
9. See, e.g., W. Va. Code Ann. § 5-16C-9(5) (2006) (authorizing state
to develop counter-detailing programs).
10. See generally, 2004 N.H. Laws, ch. 188 (authorizing the New
Hampshire Department of Health and Human Services to establish a preferred
drug list and a prior authorization process).
11. N.H. Admin. Rules, He-W 570.06(f)(3),
12. N.H. Admin. Rules, He-W 570.06(I)-P).
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