Does HIPAA Prohibit “Precision-Targeted” Marketing of Drugs?

By Ronald L. Scott

On August 14, 2002 the U.S. Department of Health and Human Services (HHS) published modifications to its "Privacy Rule," a health information privacy regulation issued pursuant to the Health Insurance Portability and Accountability Act of 1996 (HIPAA). See Federal Register, August 14, 2002.  The modifications were proposed March 27, 2002.  See HHS Proposes Changes to the HIPAA Privacy Rule at Privacy/020514HHS.html.

The Privacy Rule as modified seems to strengthen privacy requirements for marketing, because the changed rules “[require] covered entities to obtain patient authorization for all communications defined as ‘marketing.’”  See id.  HHS and some commentators felt this patients would have greater privacy protection than that provided in the “opt-out” provisions contained in the original Privacy Rule. See id.

Prior to HIPAA, some pharmacies allegedly misused patient information.  See, e.g.,  The CVS File Buy Program: Are Your Pharmacy Records Safe? at Privacy/010821Filebuy.html.   Now some pharmaceutical companies are aggressively exploiting the exceptions to the definition of “marketing.”  HHS excluded communications regarding prescription refill reminders, case management and disease management programs from the definition of “marketing.”  Therefore, some patient communications that have features of “marketing” (certainly as the term is ordinarily used) may not require an authorization from the patient.

The amended Privacy Rule defines marketing as “a communication about a product or service that encourages recipients of the communication to purchase or use the product or service, unless the communication is made …[f]or case management or care coordination for the individual, or to direct or recommend alternative treatments, therapies, health care providers, or settings of care to the individual.”  See §164.501 available at (emphasis added).

The Wall Street Journal (WSJ) reported that Merck has been paying pharmacies to send letters to their patients taking the daily version of Fosamax, a drug used for treatment of osteoporosis, advising the patients to consider switching to the weekly version.  See Swallow This:  How Drug Makers Use Pharmacies to Push Pricy Pills, WSJ (May 1, 2002). Not coincidentally, Merck is defending patent litigation that could eliminate its patent protection on the daily version. Id.  And the “patient education” program has been successful, raising sales of Fosamax to $1.25 billion from $844 million in 2000. Id.  Walgreen’s, Eckerd’s, and Wal-Mart all use patient information to send targeted mailings to their pharmacy customers on behalf of drug companies.  Id.  The mailings sometimes simply promote refills of a particular brand-name drug, or sometimes encourage patients to consider taking a competing drug. Id.  The drug companies pay the pharmacies up to $1.50 for each letter they mail—or as much as $3.50 for a phone call to the patient. Id. The Florida Attorney General is investigating Eckerd’s marketing practices, and private breach of confidentiality lawsuits have been filed against Eckerd’s and Walgreen’s. Id.

Another variation of targeting marketing is called  “point-of-purchase” (POP) marketing. Customers purchasing prescription drugs find “health newsletters” with display ads for the prescribed drug, or sometimes a competing drug, enclosed with the descriptions for use and warnings provided with prescription drugs.   See Drug Makers Find New Way to Push Pills, WSJ (June 14, 2002).  The computer generated newsletters are customized based on the patients prescription, age, gender, and even whether the patient is covered by health insurance. Id.

Pharmacies and drug companies may claim that targeted marketing is really “patient education” and falls within the HIPAA marketing exceptions for case management, care coordination or recommended alternative treatments.  When HIPAA becomes effective (for most covered entities) in April 2003, no doubt a zealous prosecutor will test such claims in court.

But some physicians are not happy with the new marketing initiatives. Dr. Philip R. Alper calls POP “a new entry in the long list of physician-unfriendly maneuvers that interfere with getting drugs to patients.”  See Prescribing for Dummies, Internal Medicine World Report (Aug. 2002). I applaud his conclusion:   “[i]t’s time that Enron ethics end and that pharmacy be allowed to return to its historic professionalism.”