The HIPAA Bypass

In my last post, I questioned the rationale behind pharmaceutical companies issuing ‘coupons’ for their expensive wares, when they could, instead, just charge a more reasonable price. Upon further reflection, I can now see two reasons for their doing this.

First and foremost, unless they made the drug significantly cheaper, it would not affect the price to people like me who depend on their prescription coverage. Chances are, the $40 discount would benefit my insurance carrier, and I would still have to pay the same ridiculously high co pay. The high co pay might affect my decision to use the drug, but with the $40 discount passed on to me, I am more likely to stick with it. This makes sense to me, and this is probably why most manufacturers issue coupons in the first place – to entice people to try their products when they might not do so under normal circumstances.

The second reason is much more nefarious – they are using the information you provide when you are applying for the coupon for marketing and other purposes.

Again, this is a reason why other manufacturers offer rebates on their products. When you fill out that rebate card, you identify yourself, and categorize your lifestyle, your preferences, and provide other demographic information, which is a valuable commodity. They can then use this information for marketing other products and services to you, or sell your name and information to other companies for marketing purposes.

For example, let’s say you send in a rebate for a stack of CD’s that you purchased at Staples. This identifies you as a computer user, and most likely, a fairly sophisticated one. If Staples is having a sale on printers in the future, they surely want to include you on the mailing list. In addition, a company like Dell would also like your name so that they can promote their products to you. Because of this, Dell would gladly pay Staples for your name and contact information.

Applying this model to health care, companies would pay doctors, insurers, and hospitals for lists of their patients with diabetes, for example, and then use these lists to market diabetic-related products.

The wholesaling of your private medical records has much more serious consequences than mere marketing. Companies might want to have this personal information before they conduct business with or perhaps even hire you.



For example, a bank may not wan to issue you a loan if you suffer from a life-threatening illness, or a potential employer may pass on your application if they discover that you suffer from chronic low back pain. In effect, publishing your private medical records would have great value to many different businesses – and dire consequences to you.

Fortunately, HIPAA put and end to this industry before it really had a chance to take off.

HIPAA, (Health Insurance Portability and Accountability Act) is a multi-faceted federal law that was enacted in 1996. One of the most important aspects of HIPPA is patient privacy. In essence, HIPPA says that health care providers cannot give out your health-related information without your specific permission. HIPPA is why every doctor’s office makes you sign a ‘Notification of Privacy Practices’ whenever you enroll as a new patient.

It seems that these coupons are a way of bypassing the HIPAA laws. For example, if you use a coupon for Lipitor, you are identifying yourself as a person with high cholesterol, and companies can now market lifestyle products and services, or even other pharmaceuticals, to you directly. This type of ‘targeted marketing’ is much more effective then ‘mass market’ advertising like a TV commercial. It’s more of a rifle shot then a shotgun blast – they know that you have a specific interest or need, and they can now do a full-court press on you. More seriously, a company might decide not to hire you because you have a perceived higher risk for heart disease.

The moral of this story is, be careful what coupons you apply for. If they give you an option not to ‘share’ your information, by all means choose this option. And if the coupon will identify you as somebody that would be undesirable in the business or financial worlds, by all means, think twice before handing over your name. That $40 coupon could potentially cost you many thousands of dollars somewhere down the road.



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