Giant Food and Elensys: Looking out for Customers or Gross Privacy Invasions?

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In developing his business model, Rubin spoke with a representative from a major managed health care organization but quickly learned that managed care was not likely to be a viable vehicle for implementing his idea. While increased prescription compliance would likely lead to lower overall costs for these plans, the head of pharmacy at most managed care plans was primarily concerned with controlling prescription costs (i.e. utilization); the programs Rubin envisioned running would lead to increased utilization of prescription medications and therefore drive pharmacy costs up for the managed care plans. Further, people switched health care plans approximately every 18 months, meaning the next plan would reap the benefits of the former plan’s investment in the compliance program.

Rubin subsequently identified retail pharmacies as the potential partner with both a financial interest and a “professional obligation” to provide such services. This business model was attractive because pharmacies maintained an electronic record of every pharmacy transaction.

These data were needed to allow for timely communications with patients and to measure the effectiveness of these communications in improving compliance. The pharmacy data could help identify specific points or activities in a patient’s therapy, such as missing a refill or obtaining their last refill without a new prescription. Further, many pharmacies did not possess the in-house information systems resources to develop the database and tracking capabilities needed to manage compliance programs. In the Gallup surveys of public perceptions of the most trusted professions conducted early in 2002 and 2003, the public rated pharmacists in the top ten.7Elensys’ business model would build on this relationship between the consumer and the pharmacist by providing communication and prescription education materials about the consumer’s specific medications to the consumer from their local pharmacy.

The Elensys compliance programs were funded in one of two ways. Many were funded by the pharmaceutical manufacturers who approached a pharmacy to run a compliance program for all of the pharmacy’s patients for whom a specific drug was prescribed. Pharmacies could also pay Elensys themselves to run a program on their behalf.

The business was launched in July 1995 with two regional pharmacy chains as customers. Employees included two former Vice Presidents of Pharmacy at major pharmacy chains, and clinical pharmacists with both research and practical experience. By 1998, the firm grew to approximately twenty employees. At that time, Elensys received prescription data from approximately 15,000 pharmacies [O’Harrow 1998]. New customers were acquired primarily by making sales calls and by exhibiting at trade shows.

All communications to patients were sent on behalf of and at the direction of Elensys’ customers, the pharmacies. Thus, nothing was ever sent to a patient that hadn’t been previously reviewed and approved by the participating pharmacy chain. For example, once the pharmacy decided to run a compliance program for a particular medication, Elensys would enable the mailing of personalized letters to a pharmacy’s patients on the pharmacy’s letterhead, educating patients as well as reminding them to refill their prescriptions. The format of the letter could be customized based on the patient’s demographics using research on effective communication strategies for that demographic sub-group.

Pharmaceutical Industry Trends

In the 1990s, the move to managed care brought significant changes to the healthcare system and placed enormous pressures on the profits of the pharmaceutical industry. In the U.S., which constituted one-third of the world’s pharmaceutical market, 80% of the population was covered by managed care in 1993. In 1995, managed care organizations controlled 75% of the drug purchases in the U.S. The majority of these organizations employed formularies, a list of approved medicines, as one method of cost control; the insurance company would only pay for drugs listed on the formulary. By the mid-1990s, the same price pressures had also reached Europe with governments imposing price reductions on many drugs.8

Further, by 1996, approximately 86% of health maintenance organizations (HMO’s) routinely substituted generic products for patented drugs whenever possible, further reducing the profitability of the drug manufacturers. This trend away from the need to prescribe more expensive branded drugs was accelerated by the 1984 Waxman-Hatch Act that reduced barriers to entry in the pharmaceutical industry by accelerating the FDA approval process for bringing generic drugs to market. As a result of formularies, generics, and other cost pressures, pharmaceuticals appeared to be headed for commodity status. In an effort to combat these trends and to address a public health problem, prescription medicine noncompliance, the pharmaceutical companies initiated patient education programs.9

Patient Education Programs

During the 1990s, recognition of the importance of patient education concerning their conditions, their prescribed treatments, and their treatment options grew. This recognition was reflected in two regulatory programs:

- 1. In 1990, Congress required pharmacists to offer to discuss any information they deemed significant with any patients receiving benefits under Medicaid. Subsequently, some states adopted laws requiring counseling for all patients.

2. In 1996, Congress required pharmacists to disseminate “useful written information” to all consumers about their prescription drugs. Pharmacists responded to this requirement with a variety of tailored printed materials that they provided to consumers in a face-to-face encounter when people received their prescriptions. Because of the costs associated with developing and disseminating this information in a format that satisfies the requirements of the law, the materials were often funded by pharmaceutical manufacturers.10

Pharmacies also engaged in three other kinds of direct-to-patient (DTP) messaging.

- 1. Compliance messaging encouraged proper use of prescribed medications. In particular, the pharmacy or the pharmacist might remind a patient to finish a course of treatment such as taking all prescribed antibiotics, or to refill a prescription. In developed countries, on average only 50% of prescriptions are taken as prescribed, and nearly half of all patients stop taking their medication within the six months of being prescribed.11 Further, noncompliance, or the failure of an individual to take medication as prescribed,