Canada: Managing The Privacy Side Effects Of Rx (And Other) Customer Loyalty Programs

Last Updated: May 25 2014
Article by Lydia Wakulowsky

On April 10, 1967, the Alberta College of Pharmacists prohibited pharmacists from offering customers inducements for the purchase of prescription drugs, blood products or professional services,1 stating that "[i]nducements cloud decisions that should be based solely on the best healthcare. Providing inducements [for Rx drugs] is disruptive to: impartial decision-making, the coordination and continuity of care; and the effective operation of health teams and Alberta's health system".2 Currently, seven other provinces have rules in various forms that prohibit or restrict pharmacists' use of such inducements. In response, the "Coalition of Consumer Choice", a group of retail grocers, consumer associations and patient advocates, are opposing the prohibition through an "I Earned It" petition calling on the provincial government to overturn it. Some have said that Rx loyalty programs build stronger bonds between patients and their pharmacies and encourage better patient adherence to prescription medication. 

The conflict of interest debate for health professionals practicing their profession in a retail environment is not new. It has become increasingly complex, particularly with interprofessional collaboration. Historically, the debate has concerned pharmacists selling Rx drugs (and medical devices), opticians and optometrists selling corrective lenses, and physicians having a business interest in pharmacies and other for-profit ventures. The debate will continue to engage health professionals practicing in team settings.

This bulletin reviews customer loyalty programs from a different perspective. Privacy considerations should be top of mind when developing and implementing Rx (and other) customer loyalty programs, particularly in light of new sophisticated data mining technologies and increasing cross-border transfers of personal information.

Privacy Considerations

Pharmacies may very well have the altruistic goal of encouraging patient adherence to prescription drugs. But stores generally launch customer loyalty programs to gain a bigger share of revenue by rewarding individuals for shopping at their store. The more money a customer spends, the greater the rewards. Often, customers can accumulate points that they redeem for "free" goods; sometimes, they can accumulate extra points when they purchase specific goods. Plastic loyalty cards with a magnetic strip or barcode contain a unique identification number. They enable the store to monitor a customer's transactions. When a purchase is made, data about the purchase (e.g. the product, place of purchase and date) is recorded. Over time, a customer's behavioural information gathered through the loyalty card can be substantial. And often, that data is collected and mined as part of a larger business intelligence initiative. The store can use the mined data to predict trends, refine marketing approaches and potentially sell aggregated data and insights to third parties.4 As data aggregation and mining has evolved, its impact on privacy has become increasingly complex and controversial. The main privacy concern is that profiles of individuals can be created. Once created, they can be disclosed inadvertently upon a security breach taking place.

Privacy Best Practices

Before a pharmacy embarks on an incentive program involving Rx drugs in those jurisdictions where it is allowed, the following matters (among others) should be diligently considered and addressed.

The terms and conditions for the customer loyalty program should clearly describe the program's collection and use of Rx drug data, including how the collected data will serve the program's purpose and any secondary purpose. Shoppers Drug Mart collects data from Optimum members for very broad purposes such as to communicate with the member, better understand the member's shopping and information needs and to offer the member relevant information, products, services and rewards to meet those needs. If a pharmacy were to collect Rx drug data, what use would be made of it? Would a pharmacy inform a customer buying insulin of community diabetes clinics? This might prove to be a valuable service to the customer. But would the pharmacy also predict future healthcare needs of participating customers (or family members when genetic health issues are involved)? Would individuals learn of their own predicted future healthcare needs from their pharmacy?5 What action would be taken on the basis of Rx drug data gleaned from a data mining program? Personal health information is considered to be sensitive and, under most privacy regimes, would require a customer's express consent. Query if valid express consent can be obtained under a long terms of use agreement, which many customers do not typically read and/or understand.

Another significant issue concerns Rx data that can be accessed from a Canadian pharmacy in the U.S. The terms and conditions of the program should clearly discuss the implications, and the Canadian pharmacy should ensure that it is in compliance with legal requirements pertaining to the cross-border transfers of personal information (some jurisdictions, such as Quebec, have stringent legal requirements for the transfer of personal information to foreign jurisdictions). In one situation, the U.S. Drug Enforcement Agency subpoenaed records from the database of a supermarket chain looking to see if certain individuals had purchased large quantities of plastic bags commonly used in drug transactions.6 Consider the case of the disabled Canadian woman who was denied entry to the U.S. because Homeland Security accessed a database that showed she had been hospitalized for clinical depression.7 If data is accessed or stored in the U.S., Homeland Security would have access to all customer loyalty program members' Rx drug histories. Customers should be made aware of this and, if participating members, be informed that they can opt out of having their pharmacy record their Rx drug data in the program database. Pharmacies should also consider if some Rx drug data is too sensitive to collect for purposes of the program (e.g. psychotropic, HIV/AIDS drugs) and limit their collection appropriately.

The pharmacy should consider if it will aggregate data and sell it to third parties. If so, the pharmacy should inform its customers of this and obtain their prior consent. While customers do not, generally, have privacy rights over aggregated data, this information might impact the validity of their knowledgeable, informed consent. Another issue that could impact informed consent is the ability of a pharmacy to change the program's terms and conditions, including changes that devalue conversion rates.8 When a customer weighs the benefits of joining an Rx drug program with the risks, the value of the points might be a consideration and informed consent might be negated.

The pharmacy must put appropriate privacy protections into its systems. Consider CVS's 50-million-member ExtraCare loyalty program, which had a potential security problem. Anyone with a member's card number, ZIP code and last name could access information concerning a member's over-the-counter drug and family planning purchases because CVS did not password protect this information. Access to a customer's ExtraCare number was simple. It is printed on all CVS receipts and is readable on keychain cards (which may be accessed by parking valets). Upon becoming aware of this security flaw, CVS pulled Internet access to the data. The access was restored after CVS added security to the site.9

The pharmacy must consider the result if a customer withdraws from a loyalty program. Will all information pertaining to the customer, including the purchase history, be removed from the loyalty program records permanently? The intent should be clearly set out in the terms and conditions.

A thoughtful legal and policy analysis at the commencement of a data aggregation and mining program (or a program that might appear to the public to have data mining potential) is worthwhile to avoid scrutiny from the public and privacy advocates once an Rx drug loyalty program is underway. It might be wise to bring in the appropriate privacy experts at the developmental stage to get input. It is certainly wise to consult with qualified legal counsel in developing the privacy framework for the program.

1 I refer to prescription drugs, blood products and professional services collectively as "Rx drugs" in this bulletin.

Inducement for Drugs and Professional Services: A Basis for a Prohibition at The prohibition comes into effect June 10, 2014.

Shoppers Drug Mart, as part of its Optimum rewards program, has a Very Important Baby program for new and expectant mothers. Identified members receive targeted newsletters on health and nutrition.

Consider the situation in the U.S. involving Target, which was able to figure out that a teenage girl was pregnant before her father did. By data mining the pregnant teenager's purchase history, Target was able to know that she was pregnant because she purchased various items that were highly predictive of pregnancy.

Privacy Rights Clearinghouse Fact Sheet #15: What Personal Information Should You Give to Merchants, quoting Robert O'Harrow, "Bargains at a Price: Shoppers' Privacy," Washington Post, Dec. 31, 1998, p. A-1.

"Disabled woman denied entry to U.S. after agent cites supposedly private medical details", November 28, 2013 at

Note that In July 2010, Shoppers Drug Mart announced a new conversion rate for its points. To get $1 in merchandise, customers would need 800 instead of 700 Shoppers Optimum points. In 2010, Option Consommateurs initiated a class action lawsuit against Shoppers Drug Mart, which operates in Quebec as Pharmaprix. Option Consommateurs alleged that the company broke Quebec's consumer protection laws when it changed the conditions of the chain's Optimum loyalty program, increasing the number of points necessary for savings, and impacting the 1.4 million Quebec residents who use the cards.262 In March 2012, a Quebec Superior Court judge agreed to hear the case.
8 Barry Berman, Developing an Effective Customer Loyalty Program, California Management Review Vol 49, No. 1 Fall 2006.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2014

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Lydia Wakulowsky
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions