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Patricia O'Connell
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Privacy Practice Chair Kirk Nahra Discusses HIPAA’s Impact on Pharmacies

May 10, 2013

Kirk J. Nahra, chair of Wiley Rein’s Privacy Practice, was quoted in a May 8 Reuters article about the CVS pharmacy chain’s response to health-care privacy rule changes announced by the U.S. Department of Health and Human Services (HHS) in January.

CVS said this week that it will stop sending supplier-funded prescription refill reminders to its retail customers, in response to regulations updated under the Health Insurance Portability and Accountability Act (HIPAA). Reuters reported that other pharmacies may follow the lead of CVS, which will continue to remind customers to refill their prescriptions through an internal system that is not funded by drug companies.

The new HIPAA rule was required under the 2009 Health Information Technology for Economic and Clinical Health (HITECH) Act, which bars pharmacies from accepting payments from drugmakers for sending out certain types of health-related marketing communications. The law provided an exemption for refill reminders, as long as the payment was “reasonably related” to a pharmacy’s cost of sending the notification. The revised HHS rule only allows suppliers to compensate pharmacies for the cost of “labor, supplies and postage” related to the reminders.

While the HIPAA rules generally are permissive rather than requirements to disclose, and therefore this decision may simply reflect caution on CVS’s part, the new rules could still encourage other companies to follow CVS’s lead, Mr. Nahra told Reuters. It may be difficult for pharmacies to determine the exact cost of sending refill reminders on behalf of drug companies, and they may have little incentive to continue such a program if they can’t make a profit, he said.