HHS To Revamp Limits On Payments To Pharmacies For Refill Reminder Programs

by Akerman LLP

The HIPAA Privacy Regulations have long required covered entities to seek a patient authorization in order to use or disclose protected health information ("PHI") for marketing purposes. However, the Office for Civil Rights made it clear in its Q and A on its website that pharmacies were allowed to provide refill reminders to patients without an authorization as this was generally considered to be part of "Treatment" and a covered entity can use or disclose PHI for treatment purposes.

Many of the drug companies have developed refill reminder programs with retail pharmacies to help assure that their drugs are being adhered to. Generally, the drug companies or a company on their behalf, paid the pharmacy for providing the refill reminders. These refill reminder programs have become an important revenue source for pharmacies. However, a question remained as to whether it was "marketing" when a pharmacy receives remuneration for sending these refill reminder letters to patients. 

The HITECH Act, enacted in 2009 to amend certain HIPAA provisions, provides that, with limited exceptions, a covered entity could not, directly or indirectly, receive remuneration in exchange for PHI without a valid authorization. However, the HITECH Act also states that a communication which would otherwise be marketing could be a "health care operation",  "if such communication describes only a drug or biologic that is currently being prescribed for the recipient of the communication", and the communication is made by the covered entity pursuant to a signed authorization or by a business associate pursuant to a business associate agreement. It is not clear why Congress required an authorization if the covered entity provided the communication, but not if the communication is made by the business associate.

There was a further requirement in the HITECH Act that the remuneration be "reasonable in amount" as described by the Secretary in regulations. The 2013 amendments to the HIPAA Privacy Regulations included a change to the definition of "Marketing" which provided further direction on what the term "reasonable in amount" meant:

(2) Marketing does not include a communication made: 

(i) To provide refill reminders or otherwise communicate about a drug or biologic that is currently being prescribed for the individual, 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 CFR 164.501.

The payments to pharmacies under these refill reminder programs generally exceed the cost of making the communication and if remuneration is limited to the pharmacy's cost of sending a refill reminder letter, there is no economic incentive for the pharmacies to send the communications (other than possible increased drug purchases and drug regimen adherence). Adheris, Inc., a company that works with drug manufacturers to provide refill programs to pharmacies, brought suit to enjoin HHS from enforcing the above language contending that the regulation's language limiting the allowed reimbursement to "the covered entity's cost of making the communication" violated its first amendment rights.  Adheris, Inc. vs. Sebelius, D.D.C., No. 1:13-cv-1342  In a recently filed joint motion, HHS has indicated that the HHS Secretary has decided “not to enforce the restrictions on remunerated refill reminders and other communications” until November 7, 2013 and plans to issue guidance on what remuneration is allowed to pharmacies by September 23, 2013. Presumably, this new rule will provide bright line guidance on when reimbursement paid to a pharmacy for refills is marketing and when it is not. Stay tuned.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Akerman LLP | Attorney Advertising

Written by:

Akerman LLP

Akerman LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.