Huge buyer of medical drug records plans IPO

Information about your prescriptions is routinely bought and resold. IMS Health, one of the most active traders in the field, wants to go public.

By Forbes Digital Jan 6, 2014 2:50PM
Image: Prescription medicine expenses © Don Farrall, Photodisc, Getty ImagesBy Adam Tanner, Forbes contributor

Nearly every time you fill a prescription, your pharmacy sells details of the transaction to outside companies which compile and analyze the information to resell to others. The data includes age and gender of the patient, the name, address and contact details of their doctor, and details about the prescription.

A 60-year-old company little known by the public, IMS Health, is leading the way in gathering this data. It says it has assembled "85% of the world's prescriptions by sales revenue and approximately 400 million comprehensive, longitudinal, anonymous patient records."

IMS Health sells data and reports to the top 100 worldwide global pharmaceutical and biotechnology companies, as well as consulting firms, advertising agencies, government bodies and financial firms.

In a Jan. 2 filing to the Security and Exchange Commission announcing an upcoming IPO, IMS said it processes data from more 45 billion healthcare transactions annually (more than six for each human on earth, on average) and collects information from more than 780,000 different streams of data worldwide.

Although consumers are not informed about such transactions, they have taken place for years.

"The selling of prescription data really began in earnest in the late 1980s," said Per Lofberg, executive vice president of CVS Caremark (CVS), the nation's largest pharmacy. "There was some controversy around that. It wasn't so much for the patient privacy, because none of this has any patient identifiers, but it was controversial in relation to physician privacy."

Pharmaceutical companies want to know what doctors are prescribing what medications. If Pfizer (PFE) knows that a doctor is prescribing Cialis made by rival Eli Lilly (LLY), it might have a sales rep make the case for Viagra instead. "That allows pharmaceutical manufacturers basically  to profile individual doctors in terms of what they are prescribing, what their practice looks like, whether they are using drug A or drug B," Lofberg said.

Privacy experts have expressed concern that even anonymized health records, pieced with other information, could identify individuals. This issue is one that IMS singled out in its filing as one of the risk factors to its business.

"There is ongoing concern from privacy advocates, regulators and others regarding data protection and privacy issues," the company said. "Also, there are ongoing public policy discussions regarding whether the standards for de-identified, anonymous or pseudonomized health information are sufficient, and the risk of re-identification sufficiently small, to adequately protect patient privacy."

IMS filing says the backbone of its information processing of the 45 billion records annually takes place in Carlstadt, N.J. They also have teams of 1,200 India, 500 in the Philippines, 200 in China and 200 in Spain, the filing said.

Could clever outside data scientists actually unmask people’s identities through their anonymized prescription records?

"It could be done. Are there pretty serious penalties for trying to do that and then doing something with it? Yes," says Bob Merold, a health care industries consultant who worked as an executive for IMS for nine years. "Obviously, if somebody wants to do it, they can and then they worry about the consequences. But the general feeling is that the benefits from having this stuff, particularly in terms of controlling the health care system and spending, is so much greater that we have to live with the risks and be vigilant on the enforcement."

Deborah Peel, a Freudian psychoanalyst who founded Patient Privacy Rights in Austin, Texas, has long been concerned about corporate gathering of medical records.

"I've spent 35 years or more listening to how people have been harmed because their records went somewhere they didn’t expect," she says. "It got to employers who either fired them or demoted them or used the information to destroy their reputation.

"It's just not right. I saw massive discrimination in the paper age. Exponential isn't even a big enough word for how far and how much the data is going to be used in the information age," she continued. "If personal health data 'belongs' to anyone, surely it belongs to the individual, not to any corporation that handles, stores, or transmits that information."

Companies dealing in health data must follow the 1996 Health Insurance Portability and Accountability Act, which sets out privacy standards on who can use and disclose personal health data.

"For decades, our market research business was built using health information that did not identify a patient -- long before the passage of HIPAA or other privacy laws," IMS said in its SEC filing. "We continue to engage in strong privacy and security practices in the collection, processing, analysis, reporting and use of information."

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1Comment
Jan 8, 2014 11:19AM
avatar
Never mind! The most active traders for these medical drugs all overdosed.
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