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Inside Privacy Updates on Developments in Global Privacy & Data Security from Covington & Burling LLP

HHS to Issue Guidance on HIPAA Marketing Restrictions

Posted in Health Privacy, Litigation, Marketing

In a court filing on September 11, 2013, attorneys for the U.S. Department of Health and Human Services (HHS) announced that HHS intends to issue further guidance on certain new marketing restrictions under HIPAA, finalized last January as part of the final HITECH omnibus rule, and to delay enforcement of those new marketing restrictions until November 7, 2013, instead of commencing enforcement on September 23, 2013, as previously announced.     

Background

The filing is part of a recent court challenge to new HIPAA marketing restrictions, specifically the new requirement that, in order to avoid the need to obtain individual authorization, any financial remuneration made for communications about currently prescribed drugs (e.g., refill reminders) must be reasonably related to the covered entity’s cost of making the communication.  In the preamble to the final rule, HHS explained that “reasonably related” means a third-party may reimburse a covered entity or business associate for costs of labor, supplies, and postage to make the communication.  Financial remuneration for making the communication cannot generate a profit for the covered entity or business associate or include payment for other costs.  We previously addressed this and other aspects of changes to HIPAA’s marketing rules here.

This provision was challenged by Adheris, Inc., a company that provides refill reminders and adherence message services that are often subsidized by pharmaceutical companies.   In the complaint and accompanying memorandum of law, Adheris alleges that the new marketing restrictions violate the First Amendment because the content-based and speaker-based restrictions do not survive heightened scrutiny under Sorrell v. IMS Health, Inc.  In Sorrell, the Supreme Court found that a Vermont law prohibiting pharmacies from selling information about physician prescription practices violated the First Amendment, explaining that “speech in aid of pharmaceutical marketing” is protected by the First Amendment.  Adheris also alleges that HHS’s interpretation does not accord with the statute, in violation of the Administrative Procedure Act.

New Guidance

In a joint motion filed by both parties seeking to suspend the schedule for the plaintiff’s motion to enjoin the rule’s enforcement, the attorneys indicate that HHS “intends to issue further guidance concerning the provision challenged by plaintiff in this litigation” by September 23, the date that enforcement was previously scheduled to begin.  The motion explains that the guidance will pertain to acceptable financial remuneration for refill reminders and other communications about a drug or biologic that is currently being prescribed for an individual.  The motion also indicates that the Secretary will not enforce these restrictions for a period of 45 days, until November 7, 2013.

It remains to be seen whether HHS will reverse course in the new guidance and revert back to the interpretation put forth in the proposed HITECH rule to allow subsidized refill reminders as long as certain notice and opt-out procedures are met or whether HHS will broaden its interpretation of what constitutes “reasonable” compensation for these communications.