Testimony of Don L. Bell, II

Before the

National Committee on Vital and Health Statistics
Subcommittee on Privacy and Confidentiality

July 14, 2004

Thank you for the opportunity to discuss the marketing provisions of the HIPAA privacy rules.  I am Don Bell, General Counsel for the National Association of Chain Drug Stores.  NACDS members operate over 32,000 community pharmacies and employ over 100,000 pharmacists.

Pharmacies Protect Privacy

Initially, let me reaffirm that pharmacies recognize the tremendous value of protecting patient privacy.  Confidentiality is an important aspect of the professionalism that our pharmacists practice every day.  Protecting privacy is the foundation for the bond of trust that links pharmacists and patients.  For decades pharmacists have been rated at or near the top of the list of America’s most trusted professionals.

Protecting privacy is also a good business practice.  Pharmacies can attract customers only when the public trusts them to protect the confidentiality of medical records.  NACDS members have no interest in adopting marketing strategies that endanger that trust.

Distinguishing Marketing And Health Care

The marketing provisions of the HIPAA privacy rules attempt to limit the misuse of protected health information for marketing purposes.  That is an appropriate goal.  In pursuing that goal, however, the government should not restrict health care communications between patients and pharmacists.

The basic issue is how to distinguish between marketing and health care communications.  The HIPAA privacy rules say, in part, that marketing means “to make a communication about a product or service that encourages recipients of the communication to purchase or use the product or service….”  This is a broad definition.  Encouraging a patient to purchase or use a product or service is a common aspect of many communications by health care providers.  Because America has a market-based health care system, marketing and health care communications are not always separated by a bright line.  For example, a pharmacist who encourages a patient with diabetes to use a glucometer is performing a valuable health care service, even though the pharmacy may profit if the customer purchases the glucometer from that pharmacy.  Therefore, NACDS recommends that the definition of marketing should be modified to apply only when the “principal purpose” of a communication is to “sell” a product or service that is not related to the health of the patient.

Our experience is that informed consumers make better health care decisions.  It is important for pharmacists to be able to inform consumers about the availability, quality and price of health care products and services.  We should be careful not to assume that there is something wrong with informing consumers about products and services.  In the past, limitations on marketing have inadvertently resulted in reduced price competition, as consumers were kept in the dark about the availability and cost of products and services.

Applicability Of Marketing Limitations To Pharmacy Communications

Since I testified before this Subcommittee in 2001, the HHS Office for Civil Rights has clarified how to distinguish between marketing and health care in the context of communications between pharmacists and their patients.  For the most part, OCR has appropriately characterized important pharmacy communications as health care communications rather than marketing.  Let me describe some common communications between pharmacists and their patients, and explain why those communications are primarily health care communications rather than marketing advertisements.

Refill Reminders:  The first example is commonly referred to as a “refill reminder.”  When patients fail to refill their prescriptions as ordered by their physicians, a pharmacist may call or write the patients to remind them of their doctors’ orders.  Rather than charge patients for these reminders, a pharmacy may be paid by a third party, such as the manufacturer of the drug.  There is no need to disclose patient information to the manufacturer.  Instead, a pharmacy can simply tell the manufacturer how many refill reminders it made, and the manufacturer pays a fee for each refill reminder.

Studies prove that refill reminders save lives.  Refill reminders also save money, because patients who take their medications as prescribed are less likely to end up in the hospital.

OCR has correctly determined that refill reminders are treatment activities.  OCR has written that “it is not ‘marketing’ when … a pharmacy or other health care provider mails prescription refill reminders to patients, or contracts with a mail house to do so.”

Recommending Medications:  Patients often ask their local pharmacists which medications they should take for their medical conditions.  Recommending a drug to a patient is a perfectly legitimate health care activity.  For that reason, OCR correctly determined that “recommendations of specific brand-name or over-the-counter pharmaceuticals … are not marketing.”

Recommending Alternative Medications:  Another example is recommending an alternative medication.  When patients are taking expensive brand name drugs, pharmacists may inform them about generic drugs that have the exact same ingredients, but cost much less.  Pharmacists may also inform patients about other medications that are biologically or therapeutically equivalent to the drugs they are taking, but have fewer side effects or greater ease of use.  These communications help patients save a tremendous amount of money and provide options for patients.

A drug manufacturer or other third party might pay a pharmacy to make those communications.  There is no need to disclose patient information to the manufacturer.  Instead, the pharmacy can simply tell the manufacturer how many of these communications were made to patients, and the manufacturer pays a set fee for each communication.

These drug “substitution” programs involve recommendations of “alternative treatments or therapies,” and thus should not be considered marketing.  OCR has written that “alternative treatment could also include alternative medicine” and “it is not marketing when a doctor or pharmacy is paid by a pharmaceutical company to recommend an alternative medication to patients.”

Recommending Other Health Care Products:  Recommendations of other health care products are also appropriately characterized as health care communications rather than marketing.  For example, OCR has written that “informing an individual who is a smoker about an effective smoking-cessation program is not marketing….”  Such communications by pharmacists to their patients promote patient health and should be encouraged, not discouraged.

Counseling And DUR:  Pharmacists often counsel their patients about the proper use of prescription medications.  Pharmacists also conduct drug utilization review to prevent drug interactions and ensure that their patients are properly taking appropriate medications.  HHS has correctly written that “pharmacists’ provision of customized prescription drug information and advice about the prescription drug being dispensed is a treatment activity.  Pharmacists’ provision of information and counseling about pharmaceuticals to their patients constitute treatment, and we exclude certain communications made in the treatment context from the definition of marketing.”  HHS added that “We define treatment broadly and include quality assessment and improvement activities in the definition of health care operations.  Covered pharmacies may conduct such activities, as well as treatment activities appropriate to improve quality and reduce errors.”

Disease State Management And Wellness Programs:  Diabetes self-management training, and similar disease state management programs, should be included within the exception for treatment.  For example, without obtaining patient authorizations, a pharmacy should be able to compile a list of patients who purchase diabetes medication and send them letters suggesting that they receive diabetes self-management training.  In its December 2002 Guidance OCR wrote that “disease management, health promotion, preventative care, and wellness programs” generally will not fall under the rules’ definition of marketing “because they are about the covered entity’s own health-related services.”

Despite alarmist rhetoric about how health care providers “might” misuse protected health information, the examples described above include the vast majority of real-life examples of pharmacies using prescription information to communicate with patients.  These communications help patients.  The vast majority of patient communications by pharmacies lead to better informed, healthier consumers.  We must avoid the false belief that it is wrong for pharmacies to earn money by informing patients about health care options.

NCL Best Practices Guide

Before recommending any revisions to the marketing provisions of the HIPAA privacy rules, the Subcommittee should review a new best practices guide issued by the National Consumers League (“NCL”).  NCL is a private, nonprofit consumer advocacy organization that has been representing consumers for over 100 years.  This week, NCL plans to issue a best practices guide entitled “Health Care Communications Provided By Pharmacies:  Best Practices Principles For Safeguarding Patient Privacy.”

Importantly, the NCL best practices guide recognizes the importance of pharmacy communication to patient health.  The NCL best practices guide notes the importance of providing useful information about prescription drugs, encouraging prescription compliance or adherence through refill reminders and other methods, recommending treatment alternatives and adjunctive therapies, and providing disease state management communications.  For example, the NCL best practices guide states that “it has been firmly established that communicating with pharmacy patients about the importance of adherence to therapy, including refill reminders, has important proven benefits to individual patients, to the public health and to the economy.”  The NCL best practices guide concludes that “a consensus exists among pharmacists, Congress, FDA, health care experts, consumer groups and patient advocacy groups that there is a critical need for improving patient access to reliable, understandable health information.”

The NCL best practices guide is also important because it provides an alternative to more mandatory regulations.  NCL’s best practices guide creates a voluntary framework for additional privacy protections.  If consumers want additional privacy protections, the market will reward  pharmacies that adopt best practices guidelines.  Although the NCL best practices guide is just being released this week, so far the response from pharmacies has been promising.  A voluntary, market-based approach by a trusted consumer advocate is better than rigid regulations.


Thank you again for considering my testimony.  NACDS pledges to work with the Subcommittee to help pharmacies understand and comply with the privacy rules.