Who is profiting from your healthcare records, and how

Companies are purchasing your health records and prescriptions data and selling the insights for billions of dollars.

I read about this in Adam Tanner’s great book, Our Bodies, Our Data. I’ve included my takeaways below, but encourage anyone interested in learning more to read the full book. It reads fast and is super detailed. The sections on terminology, data types, data companies, and the timeline are all summarized from the book.

Article Likes vs. Atrial Leaks

Google monetizes your search data, Facebook monetizes your social data, Amazon monetizes your shopping data. Why would we expect anything different with healthcare data?

The difference is an informed value trade-off. It is one thing to make the decision that the services offered by Google or Facebook are valuable enough to you that you are OK with them using your data to make money. For many people, these values are currently changing (and people are deleting their Facebook accounts as a result). The same can happen with Google: if you decide you don’t like what Google is doing, you can switch browsers, use Apple Maps, use Yahoo email, etc. If you decide Amazon’s use of your purchase data is not OK, you can shop on Jet.com. There is no equivalent choice being made in the healthcare system, in which little-known but very profitable companies access and sell your most intimate data at the times that you are most vulnerable.

The Data Economy

Let’s take a step back. There are two primary ways that user-generated data is sold in any line of business.

1. Advertising — Companies track your activity and various brands bid for your attention based on this data. Facebook gets paid for directing your attention, which is why you don’t pay them directly for their services. The major companies you expect are doing this (Facebook, Google, Amazon) as well as several companies you have never heard of (content publishers, browser add-ons, apps, etc.).
2. Sales for corporate market research — Companies sell your data to other companies to help them understand the market as a whole. Many companies who generate valuable user data will feed this data into a pool and get back aggregated data on their competition. This is used to understand how competitors are spending money and their user statistics. Corporations will buy this data directly, as will research and investment firms.

Healthcare data is being sold in both of these forms. Let’s take a deeper look at how health data is bought and sold. We’ll start by defining the landscape of health data.

Defining some terms used in healthcare data sales

Data Miners — The companies that purchase your health data to find insights that can be sold to pharmaceutical companies (and occasionally other buyers, like insurers). The largest data miner is IMS Health, now known as IQVIA.

Switches (aka clearinghouses) — Data processors which route claims from pharmacies or doctors offices to the correct payers (insurance companies or Medicare/Medicaid).

Pharmacy Benefit Managers (PBMs) — Companies hired by large payers to negotiate prices with drug manufacturers and pharmacies. Examples — Express Scripts, CVS Caremark.

Software Vendors — Companies selling computer software that allows them insight into all the data being processed via the software. This could be electronic health records software sold to doctors and hospitals, or prescriptions processing tools sold to pharmacies. Sometimes these companies have rights to share the data, other times they don’t (in 2003, pharmacies sued sixty software vendors for selling data, settling for $10.6mm).

Detailers (aka reps) — Salespeople dispatched by pharmaceutical companies to go sell drugs to doctors. Often associated with bringing lavish gifts and cozying up to doctors. Detailers are equipped with doctor-specific data they use to identify which are worth targeting. By understanding which doctors are most likely to prescribe a new drug (based on their prescribing history), detailers know where to spend their time for best return.

HIPAA (Health Insurance Portability and Accountability Act of 1996) — The US legislation that is meant to protect health data privacy, but only applies to healthcare providers, health plans, and health switches, meaning that other parties can freely trade and monetize this data. Also, this legislation doesn’t protect against advanced forms of data reconstruction that could identify your health data.

Types of your healthcare data sold

Pharmaceutical sales data — Data on how much of each drug is sold to pharmacies, which can be obtained from the pharmacies or drug wholesalers. IMS Health was doing this at scale in the 1970s, but then realized with computerization of pharmacies that the actual amounts of drugs being dispensed and prescribed could be more valuable than the drug sales to pharmacies.

Prescription data — The earliest examples of putting your health data up for sale was surveying pharmacies to determine amount of prescriptions across drugs. This started in the 1950s but rapidly became more prevalent when computers came around, making prescription records much more easily accessible.

Doctor-identified data — Data on every prescription that an individual doctor writes. A physician profile or dossier is created by working directly with the pharmacies to understand all prescriptions written and filled. This was used for drug detailers to directly target doctors. They would know exactly what each doctor had prescribed and if they were or weren’t using their company’s drugs. However, the doctors did not know that the salespeople had this data on them. While the American Medical Association (AMA) pushed back on this at first, they eventually acquiesced because 1) the data miners made the case that it was a net positive in helping pharmaceutical companies develop the most useful drugs and 2) the AMA benefited financially because they sold demographic data on their members back to the data miners to enhance doctor-identified datasets.

Claims data — Insurance claims data came to prominence as a tool for large companies to understand their healthcare costs. Claims data is not as granular as doctor dossiers or lab reports but has a uniformity advantage in that all records come in the same form and can be easily aggregated, avoiding some of the challenges of stitching together datasets across various doctors.

Electronic Health Record data — Data sold directly from the software vendors that create electronic health records, which are the systems where healthcare professionals record their notes. EHRs can be criticized for any number of shortcomings, primarily interoperability (the capability to share records across different systems). Some EHR vendors sell data from their records (Cerner, Practice Fusion) while most deny selling the data (Epic, Aetna, eClinicalworks, Salesforce Health Cloud, Surescripts).

Lab result data — LabCorp and Quest Diagnostics, the duopoly in US lab services, both sell their data to Medivo, a data miner, and get a cut of the profits.

Patient-level longitudinal data — This is the most informative data of all, and it is defined by linking together all the other data points into a comprehensive record tied to one (anonymized) patient. This includes claims data, prescription data, electronic health record data, lab data, and more. Where does this data come from? All the above: doctor or hospital processing the patient, healthcare payer, pharmacy, lab, or software vendors that have access to this data as a result.

Who are the companies that are using your healthcare data?

IMS Health (aka IQVIA) — IMS Health is the largest data miner by far. They’ve bought up much of their competition and have been profiting off health data since the 1950s. Their founding story was steeped in market manipulation and family betrayal, with their founder allegedly conspiring with his closest competitor to corner the pharmaceutical advertising market.

Cardinal Health & Arclight — One of the largest drug wholesalers in the US but essentially unknown to the public, Cardinal Health supplies pharmacies with drugs and provides a service to help pharmacies maximize their reimbursements based on what insurance is used. They have data on drug sales to pharmacies and patients.

Symphony Health — A close competitor to IMS Health in collecting longitudinal de-identified patient usage via multiple sources (insurance claims, procedures performed, prescriptions, EHRs from doctor’s offices and hospitals, blood and urine tests from labs), which has alleged that IMS has cornered the market by acquisition of rivals rather than innovation. They sued IMS for monopoly behavior in 2013 and IMS countersued for patent infringement. The groups settled in 2016 when IMS bought a company owned by Symphony’s parent company.

Pharmaceutical Data Services (aka Source International) — Launched by McKesson as their PBM arm, this company got their start by ranking doctors on likelihood to prescribe new drugs. As you could imagine, good data on this is extremely valuable to pharmaceutical companies. Merck, Pfizer, and Key Pharmaceuticals all got involved and used this data to inform their detailers on where their time was best spent trying to sell new drugs.

Walsh International — Company ran by former IMS executives which purchased Pharmaceutical Data Services in 1998 and pushed them to move beyond simple doctor rankings into detailed doctor dossiers on everything a doctor has prescribed in the past. The idea was to compete with an existing IMS Health service called Drug Distribution Data which merged data from drug wholesalers and pharmaceutical companies to calculate total drug sales by salesperson category. Drug Distribution Data fell short when it came to traveling sales (e.g. you receive a prescription in one place but fill it in another). Pharmaceutical Data Services was able to do better at this by collecting full doctor dossiers and counting their prescriptions, thus calculating their detailer sales record more accurately.

How have companies collected and sold your healthcare data collection over time?

1950s:

• IMS Health is founded as a pharmaceutical advertising agency.
• Pharmaceutical companies begin using surveys of pharmacies and doctors for market research.

1960s:

• Electronic health records conceived but rarely used.
• US companies start paying for healthcare for their employees, but as price of healthcare increases, they look for ways to defer costs, including selling claims data.
• Medicare and Medicaid launch, creating large amounts of data as part of their record keeping.

1970s:

• IMS acquires Lea Associates, leader in pharmacy survey data.

1980s:

• Claims data comes to forefront of healthcare data (displacing survey data) as Pharmaceutical Data Services, Health Data Institute, and MedStat Systems all launch and grow rapidly based on this data.

1990s:

• Patient-level data introduced to understand how long patients stay on certain drugs, switch drugs, etc.
• IMS launches doctor-profiling data in 1993, but closer to end of decade starts devoting more resources to patient-level data.

2000s:

• Pharmaceutical companies start spending immense amounts on drug detailers, stimulated by new drug launches and increased availability of doctor-level data.
• McKesson & Quintiles merge to create huge pharmacy dataset.
• Doctor-specific data is 50% of IMS revenue.
• IMS buys out competition in patient-level data and merges with Quintiles to create IQVIA.

2020 -:

• Increasingly digitized healthcare results in more and more data points for data miners to monetize and profit from your health records.

Take back control of your healthcare data.

Anonymized patient information is positive for the medical world. Big data enables research that reduces suffering from diseases worldwide. Still, there is a difference between advancing science and leveraging data for pricing discrimination or sales targeting. Whether advancing science or not, patients need a say in how their data is utilized.

Patients should be have the right to opt-in and stand to gain from the end profit, most likely in the form of small portions of equity in the company purchasing the data. More on this to come in our next post.

We are building the infrastructure for patients to opt-in and gain from their healthcare data at Syncd Health. Sign up for our newsletter and we’ll keep n you updated on the latest developments.

Note 11/11/19 — I’ve temporarily stepped away from Syncd Health to focus on another company, follow me at Mike Rondinaro to stay up to date.