Practice Fusion Pioneers Pharma-Sponsored Clinical Alerts as a Novel Digital Marketing Channel

Innovative applications and software services targeting physicians have been seeking viable revenue streams. Meanwhile, pharmaceutical companies are exploring new and effective approaches to digital marketing. Both supply and demand sides are engaging in a series of novel experiments. However, do these initiatives compromise user experience or violate anti-kickback laws governing pharmaceutical marketing? VCBeat has observed that startups such as Practice Fusion are testing the waters. Additionally, Rock Health predicts that Practice Fusion is likely to go public in 2015.14 Internet Healthcare Companies Most Likely to Go Public in 2015) Could such attempts help turn predictions into reality and emerge as a new marketing strategy for pharmaceutical companies? VCBeat has compiled this article based on reports from foreign media.

Merck & Co. Sponsors Patient Medication Reminder Feature

When Allan Treadwell reviews patient medical records on his computer, yellow alerts sometimes appear—reminding the physician that his patients require vaccinations against diseases such as hepatitis B and influenza.

When patients require vaccinations, the electronic health record (EHR) system triggers alerts to remind physicians. Merck & Co. has collaborated on the development of such functionality. Dr. Treadwell is not the only physician who finds these alerts beneficial. Merck has sent application notifications regarding this feature to Dr. Treadwell and more than 2,000 other healthcare professionals.

Practice Fusion, a startup specializing in medical record software, is built around providing this alert service. A four-month study found that, compared with the control group, the cohort using the alert software achieved a 73% increase in vaccination rates, resulting in an additional 25,000 patients receiving treatment. Practice Fusion has not disclosed the exact amount of sponsorship received from pharmaceutical companies such as Merck, but the company stated that this sponsorship model did not reduce service sales. Practice Fusion has raised $157.5 million in financing, reflecting a cutting-edge, data-driven business model. Healthcare providers increasingly use the software to document patient medical records; when patient information is entered into the system, the software automatically alerts physicians to any special treatments required by the patient. Pharmaceutical companies and other organizations have provided sponsorship to Practice Fusion.

Pharmaceutical Company Sponsorship Models May Not Necessarily Violate Anti-Kickback Laws

Practice Fusion is offered free of charge to certain clinics, integrating a database of 100 million medical records collected remotely via the internet and providing alerts when patients require specialized care. Its sponsorship-based information model supports software marketers by strategically gaining access to physicians and patients at opportune moments. Some experts argue that Practice Fusion’s approach of delivering sponsored alerts may blur the line between medical practice and marketing promotion.

However, Practice Fusion stated: “Alternatively, you may be willing to spend $30,000 to purchase this software.” Robert Wachter, Associate Chair of the Department of Medicine at the University of California, San Francisco, noted that the Anti-Kickback Statute prohibits pharmaceutical companies from directly or indirectly marketing their products to physicians. He argued that this sponsorship model raises suspicions of pharmaceutical promotion.

“Drawing the line between recommending guideline-directed medical care and promoting products driven by marketing or sales is a challenging endeavor,” said Dr. Joseph Kvedar, Vice President of Partners Healthcare, a nonprofit system affiliated with Harvard Medical School. “It is a risky proposition.”

As physicians increasingly reject traditional pharmaceutical marketing tactics, Practice Fusion and other medical software manufacturers have found a gateway to engage with doctors. When pharmaceutical sales representatives visit healthcare institutions, legal requirements mandate that pharmaceutical companies disclose any gifts provided to physicians and medical research centers, prohibiting the offering of excessively luxurious or high-value items.

In a November 2014 article in The New England Journal of Medicine, three physicians wrote that electronic health record systems have pioneered new avenues for accessing patient information. When patients have made medical decisions, businesses are permitted to conduct product marketing within healthcare settings.

Ryan Howard, CEO of Practice Fusion, stated that alert services enable more efficient and timely delivery of information to physicians, and someone must pay for them. Practice Fusion reported that approximately 112,000 healthcare professionals, including physicians and nurses, use the software, with monthly page views reaching 5.5 million.

Practice Fusion matches patients’ pre-set alerts in real time based on their health indicators and medical history, much like an online advertising system that targets users based on their browsing history. When a physician loads a patient’s profile, the software displays relevant notifications.

Pharmaceutical companies, laboratories, and insurance providers can pay for alert services, or place banner advertisements and facilitate sales bookings within the software. Practice Fusion also sells anonymized, aggregated patient data to pharmaceutical companies and other clients. For instance, pharmaceutical companies may purchase statistical data from physician prescribing systems.

Epic Systems, a leading U.S. provider of electronic health record (EHR) software, generates revenue by selling alert notification services but does not adopt a sponsorship-based revenue model. Athenahealth, a competitor of Practice Fusion, does not offer such services within its EHR software but does provide them through its mobile application, which has somewhat reduced its software sales volume. Colleen McGuffin, Vice President of Global Customer Operations and U.S. Operations at Merck Vaccines, stated that Practice Fusion’s sponsored vaccine alert service is highly effective. She did not elaborate on how much the company has invested in the sponsored vaccine alert program, nor did she disclose much about the revenue generated from it.

Practice Fusion Seeks a Win-Win-Win Sustainable Development Model

“Alerts are valuable to physicians and hospitals,” said Dr. Kvedar. They may improve patient outcomes, which increasingly affect insurance reimbursement amounts. They can also show physicians how they compare with their peers; Practice Fusion provides physician scorecards to display medical quality, using this metric to compete with physicians on other platforms.

Howard stated that he painstakingly developed Practice Fusion’s vaccine alerts to strictly adhere to government and industry guidelines, and evaluated the project in collaboration with expert attorneys in the field.

Furthermore, he stated that Merck & Co. had no opportunity to influence physicians’ prescribing practices or promote its own products. Although Merck is the sole provider for three major vaccines, it still faces competition from other players.

The Centers for Disease Control and Prevention launched a vaccination program. Physicians were compelled to opt for alert services sponsored by Merck, said Mr. Howard. The sponsor’s name, if any, would appear under “Funding Sources.”

Dr. Treadwell said he did not realize that Merck & Co. sponsored the alert service until he clicked through several screens. Although Practice Fusion’s sponsorship of alerts may raise ethical concerns, it does not necessarily violate anti-kickback laws, according to Ramy Fayed, a healthcare fraud expert at the law firm Dentons. He noted that opting into sponsored alerts is not a prerequisite for obtaining free software, so having sponsors cover costs for physicians will likely become a long-term model.

Practice Fusion is leveraging its alert services to drive growth and employing other strategies to build a data-collection business. It has terminated its sponsored alert partnership with Aetna and plans to announce a collaboration with another major pharmaceutical company involving reminder alerts for asthma patients.

Howard believes that his company’s platform can benefit public health. It can identify physicians who frequently prescribe abused medications such as OxyContin, or detect patterns to predict impending disease outbreaks. However, all of this must be built on the foundation of a sustainable business.