IMS Health (RX) has built a lucrative niche collecting data on which drugs physicians prescribe, then selling the information to pharmaceutical companies.
The US Supreme Court could shine a spotlight on this topic in the next few weeks if it decides to hear a closely watched case IMS has been fighting in New Hampshire.
The legal drama began in 2006, when New Hampshire passed the Prescription Information Law. It bars the collection of data on what drugs specific doctors prescribe---information drug companies use to fine-tune sales tactics. The law struck right at the heart of IMS's business model, which brought the Norwalk (Conn.) company $311 million in profits on $2.3 billion in sales in 2008. IMS and another data collection company, Verispan (now SDI Health), sued in federal court to challenge the law, which they believe violates their First Amendment rights to free speech.
Governments also purchase consumer data—and that alone could prompt the Supreme Court to hear the case. "If you want to track swine flu, you might want to know who's prescribing Tamiflu," says Jaideep Bajaj, managing director at ZS Associates, a marketing consulting firm in Boston that works with more than 100 pharmaceutical companies. "How do you do that without the data?"
Automated summary from: Business Week
