Never was the adage that knowledge is power more true than in the battle among drug companies over sales to hospitals.
A long-simmering dispute between the leading alliance of academic medical centers and the prime provider of market data to the drug industry offers a rare glimpse into precisely how valuable are detailed figures on hospitals' drug purchases.
The flashpoint is a decision by the 130 hospitals of the University HealthSystem Consortium to block wholesalers from releasing details on their drug purchases to IMS America. Based in Plymouth Meeting, Pa., IMS provides the gold standard in drug market statistics, much as its sister company Nielsen Media Research serves as arbiter for television ratings.
At issue are data so detailed that they allow savvy drug companies to figure out the share of their drugs and those of competitors in individual hospitals. Armed with the information, drug company sales representatives, known as detailers, can target their sales efforts to undercut the competition.
More significantly, UHC said, the market intelligence can be used by drug companies to thwart hospitals' attempts to standardize an approved menu of drugs. Increasingly, hospitals are developing such drug lists, known as formularies, to contain costs and improve outcomes.
But sales reps for companies whose drugs are left out still roam hospital hallways buttonholing doctors to do an end run around the formularies. Known as counterdetailing in the trade, this strategy has been a sore point for hospitals.
"Pharmaceutical companies use the data to target their promotional activities, and market share shifts away from what hospitals feel is best to what the salespeople would like it to be," said Bill Fritz, director of pharmacy services at University Medical Center in Tuscon, Ariz., and the chair of a UHC task force that spearheaded the data-blocking effort. "These are our data, and we want to restrict the flow of our data to these data manipulators."
UHC's bold move might not completely halt the drug company counterattacks, said John Strong, a consultant with Ashland, Mass.-based Concepts in Healthcare. "But it will make it that much harder for the counterdetailers to figure out where their competitors' products are being used," Strong said.
As such, it could set a precedent for other hospital alliances or group purchasing organizations seeking to shield their members.
Oak Brook, Ill.-based UHS reached the decision to block the data access late last year after nearly three years of negotiations with IMS to find a way to supply data in a form that would protect the identity of individual hospitals.
"For almost two years they expressed confidence that they could develop a process to shield that data and make it more difficult to trace it back to an individual hospital," said Bob Benson, a vice president for purchasing at UHC. "We've made a number of attempts to work with them on this. And it was a sore spot (with members) because they felt that information was something they owned."
But IMS reversed its position on data shielding last year, Benson said, and UHC sought vendors that could satisfy the alliance's concerns. As a result, UHC signed a contract with Source Informatics, a division of National Data Corp. in Atlanta, which agreed to the teaching hospitals' terms. No money is involved, but UHC members will receive customized drug data reports from Source Informatics in exchange for their cooperation.
Drug companies say the market data have wholesome uses. The companies use the IMS data to evaluate the effectiveness of promotional activities, calculate commissions and spot market trends.
The UHC data represent 4% of all nonretail drug spending, according to IMS. But the figures come from some of the country's most prestigious hospitals delivering the most sophisticated kinds of care.
Furthermore, the alliance's decision could trigger copycat moves.
That would be bad news for IMS, which is preparing to be spun off in a public stock offering by parent Cognizant Corp. later this year. Far from conceding defeat, IMS is digging in, according to a letter sent late last month by a ranking IMS executive to drug company executives seeking their help (See graphic).
The letter implores drug honchos to pressure board members of Novation, the joint supply company created by UHC and VHA in January, to reconsider the decision and to bring up the issue while negotiating supply contracts.
"Ladies and gentlemen, it would be naive to view this situation as an isolated occurrence," wrote Robert Hooper, IMS senior vice president and general manager. "In fact, it is precedent-setting and, if left unaddressed, will certainly have a fundamentally negative impact on the way you conduct your business."
Individual hospitals in the past have blocked data access, IMS said, but never on an alliance-wide scale.