HIPAA Unconstitutional? Maybe Not, But New Marketing Regulations Are Coming

You may have seen the recent lawsuit alleging that HIPAA’s marketing regulations are unconstitutional.  In that case, the plaintiff is a company that “provides a refill reminder service and other adherence messaging services,” Adheris, Inc.

Adheris sued the Department of Health and Human Services because HIPAA’s regulations threaten to put it out of business.  In particular, HIPAA now requires patient authorizations for its kind of patient reminders.  As described by Adheris:

39.  In the final regulations, HHS excepted from the definition of “marketing” those communications made “[t]o provide refill reminders or otherwise communicate about a drug or biologic that is currently being prescribed for the individual,” but “only if any financial remuneration received by the covered entity in exchange for making the communication is reasonably related to the covered entity’s cost of making the communication.” 45 C.F.R. § 164.501d(defining “marketing”).

40.  In the Omnibus Final Rule, HHS explained that this provision permits remuneration “which cover[s] only the costs of labor, supplies, and postage to make the communication,” or in other words “only the pharmacy’s cost of drafting, printing, and mailing the refill reminders.” 78 Fed. Reg. at 5597. The Omnibus Final Rule further states that “[w]here the financial remuneration a covered entity receives in exchange for making a [refill reminder] communication generates a profit or includes payment for other costs, such financial remuneration would run afoul of the Act’s ‘reasonable in amount’ language.” Id.

41. Because it interprets the HITECH Act to require patient authorization for subsidized treatment communications (such as the refill reminders and adherence communications that Adheris provides) and severely limits the “reasonable in amount” cost exception to this requirement, the Omnibus Final Rule is having a materially adverse effect on Adheris, and threatens the continued operation of its core refill reminder and adherence business.

HHS appears to be taking the threat in this lawsuit seriously, as it has agreed (via a joint motion to the court with Adheris) to issue “further guidance” on its marketing regulations by September 23, 2013:

HHS intends to issue further guidance concerning the provision challenged by plaintiff in this litigation. The guidance will pertain to the financial remuneration that would be considered “reasonable” for providing refill reminders or other communications about a drug or biologic currently being prescribed to an individual. HHS expects to issue such guidance by September 23, 2013.

Watch this space for those regulations when they are issued.

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