Twenty years ago, IMS Health got the idea to purchase prescription records from pharmacies, license physician information from the AMA’s Physician Masterfile, and link the two databases so as to create something new and different: prescriber-level data (PLD).
It was a brilliant idea. Almost immediately, pharmaceutical and device companies, government analysts and public health officials began lining up to buy raw PLD and/or the reports that IMS created from it.
And with good reason. By applying statistical tools to analyze PLD (a technique known in the vernacular as “Data Mining”) IMS and the purchasers of its data could obtain fresh insight into many topics of interest. These include prescribing pattern variations across regions, where and when influenza outbreaks occur, how physicians respond to these outbreaks and hundreds of others. Drug makers found PLD information to be particularly helpful. With it, they could refine marketing pitches and improve sales force efficiency, among other things.
Since those early days, the scope of the data compiled by IMS and other PLD providers has expanded to a point where it is truly breathtaking. The AMA Masterfile includes current and historical data on 880,000 physicians. IMS and similar companies collect information on more than 70% of all prescriptions filled in the US. SDI Health, another PLD provider, has billing information from 100% of inpatient and outpatient activity at 500 hospitals dating back to 2002. Their databases are large enough to detect national trends and withstand the most exquisite stratification analyses. Furthermore, PLD providers have perfected ways to exclude information from their databases that could be used to identify patients, so the data comply with HIPAA and other privacy-protecting laws.
IMS’ idea has proven to be one of the most lucrative health-related innovations in recent memory. The company reported revenues of $2.2 billion as recently as 2007, and was recently taken private in a deal worth more than $5 billion.
In addition to IMS and SDI, the “Big 4” PLD providers also include Wolters-Kluwer Health and Cegedim Dendrite. Recently, Practice Fusion, Humedica, IBM and other companies have entered the fray with various modifications on the original theme.
In the last few years however, 3 states have passed laws that essentially ban the sale of PLD to drug companies. The legislative trend constitutes a potentially devastating threat to the business success of PLD providers. In enacting the bans, lawmakers in Vermont, New Hampshire and Maine reasoned that distributing PLD violated the privacy of physicians and increased health care costs, for example by helping drug companies persuade physicians to prescribe brand-name rather than generic drugs.
Not surprisingly, IMS and other PLD providers mounted legal challenges to the legislation in all 3 states.
“We strongly believe the First Amendment protects the full dissemination of prescriber-identifiable data, which is vital to efforts to improve the quality, efficiency and safety of our healthcare system,” the PLDs said in a statement referable to their New Hampshire challenge. “Further, we agree with prior decisions that without these data the potential exists to compromise patient care.”
Taking a similar line of reasoning in the Vermont case, PLD providers argued that state’s ban “harms patients by making it more difficult to communicate timely and often vital information about new medicine and safety updates on existing medicine.”
Elsewhere, PLD providers argued that their data helps public health officials by locating areas where certain illnesses are concentrated and helps law enforcement officials identify doctors that overprescribe certain drugs, including narcotics.
The results of the court battles have been inconclusive. The US Court of Appeals for the 2nd Circuit in New York struck down the Vermont law, saying that it violated the First Amendment because it restricted the free flow of information. However, the US Court of Appeals for the 1st Circuit in Boston upheld the laws in Maine and New Hampshire.
The Supremes Take the Case
Responding to entreaties by lawmakers in all 3 states and the PLDs themselves, the Supreme Court announced last week that it will settle the issue once and for all. It will do so in its review of the Vermont case, which is blandly named Sorrell v. IMS.
Vermont Attorney General William Sorrell welcomed the move. “Vermont doctors pressed for this law because of their concerns about privacy and because they view this data mining practice as an intrusion into the way doctors practice medicine,” he said.
Despite the potentially devastating impact of a negative Supreme Court ruling on the matter, the PLDs are probably pleased as punch to see the case make it to the Supreme Court. That’s because at least 15 states had been considering bills to restrict access to prescribing data in recent years, and the decision by the Boston Appeals court might well have emboldened them to go ahead and pass similar legislation. Such an outcome would have amounted to death by a thousand cuts for the PLDs.
That said, a multi-billion dollar industry, which has made many people rich and, let’s face it, had an undeniably favorable impact on public health surveillance programs over 2 decades, hangs in the balance. The Supreme Court, as currently constituted, has been among the most pro-business this nation has seen in 50 years. Expect the PLDs to prevail, but not before their shareholders spend a whole lot of sleepless nights between now and April, when the court finally rules on Sorrell v. IMS.
Glenn Laffel, MD, PhD, is a successful entrepreneur in health information technology. He blogs at Pizaazz.