IMS Health is the largest provider of prescription information globally. IMS purchases data from pharmacies and processes over 55 billion healthcare transactions annually. IMG then shares this anonymized data with over 5000 clients, including the 100 largest pharmaceutical and biotechnology companies, as well as consulting firms, advertising agencies, and investors [1]. A description of the IMS data from their recent 10K:

Our scaled and growing data set contains over 15 petabytes of unique data and over 500 million comprehensive, longitudinal, anonymous patient records (i.e., records that are linked over time for each anonymous individual across healthcare settings). Based on this data, we deliver information and insights on approximately 90% of the world’s pharmaceuticals, as measured by sales revenue. [2]

Using IMS data, pharmaceutical companies can view which doctors are prescribing competitor’s medications and view prescriptions by geographical area to help design sales strategies. Additionally, investors can use this information to track drug revenue in almost real time - in fact it is impossible to compete as an investor in this space without this data, yet most investors do not even know that the data exists.

Another (public) data source is the CMS data. CMS has many different data sets, but the open payment data is easy to use and currently very applicable to multiple companies. For example, Citron Research recently argued that the CEO of Mallinckrodt mislead investors by stating on an investor call (see except below) that the percent of revenue of the drug Acthar which came from Medicare was ~25% when in fact Medicare and Medicaid accounted for 61% of sales in 2015 according to CMS data.

Question – Jason M. Gerberry: And then just as a quick follow-up, can you just remind us? What is your Acthar exposure to Medicare? Thanks.

Answer – Mark C. Trudeau: So with regards to your question on Medicare exposure to Acthar, a couple of things. One, if we look at our overall business, the combined proportion of our business that goes through Medicare and Medicaid combined it’s about a quarter of our business, roughly. Acthar is maybe a little bit higher than that.

The CMS data also shows Acthar is the most expensive drug per user in the entire Medicare system at $162,371. Misleading investors about information which is this material to a businesses is securities fraud, simply browsing the CMS data can prove this.

Additional use cases of CMS data can involve monitoring fees drugmakers pay to doctors, this is especially relevant to a company such as Insys Therapeutics. Insys makes one fentanyl based (an opioid drug up to 50 times as powerful as heroin) drug called Subsys. SIRF published an article earlier this year exposing Insys’s insurance reimbursement practices and ironically today the WSJ published an article discussing the rising death toll related to Subsys as well as the charges against certain doctors who received payments disguised as speaking fees for prescribing millions of dollars worth of Subsys prescriptions.

CMS data gives a list of all doctors who received payments from Insys in 2015. There were 140 doctors who received over $10,000 from the company (view this list here). This information can be valuable to investors (and potentially to federal investigators) as it can provide an early clue to aggressive sales practices as well as provide leads to researchers as to which doctors to speak to about certain drugs.

The CMS website has many different extremely interesting data sets and the organization is very keen on continuing to release more data and information, which could prove to be very valuable early on to a diligent investor.

[1] [2]