We may think that what happens in our doctor’s office is confidential, but, in reality, our medical secrets fuel a multi-billion-dollar trade in patient information.
The leading firm in this opaque data trade is QuintilesIMS, a company founded as IMS in 1954 by an enigmatic German immigrant named Ludwig Wolfgang Frohlich. Today, the company that Frohlich founded is a titan in its field, worth nearly $20 billion.
Yet for all his accomplishments, Frohlich‘s name appears on the company’s website only once. In a way, that’s quite fitting — a case of a founder’s secretive nature setting the tone for his creation’s corporate DNA. Frohlich, a closeted Jew and closeted gay man, obscured his background, just as the company today works hard to keep its operations hidden from the many millions on whom it gathers data.
For decades, IMS has gathered copies of prescriptions to assemble reports on what medications individual doctors prescribe to patients. Such information enables sales reps from large brand-name pharmaceutical companies to visit key doctors and persuade them to favor their company’s drugs over those of rivals, not to mention over far cheaper generics.
For many years, physicians had no idea an outside commercial company monitored their prescribing. But the practice is totally legal. When doctors began to catch on and protested, several New England states tried to curb this trade. The U.S. Supreme Court overturned the laws in a 2011 landmark case that allowed the trafficking in medical data to continue.
In the years since, QuintilesIMS has dramatically stepped up its collection of anonymized data on individual patients, buying anonymized copies of our electronic health records, insurance claims, prescriptions and lab tests. Such data allows them to create extensive dossiers on more than half a billion people. The names and addresses on the files that QuintilesIMS sell for profit are removed, but experts say re-identification of such files is increasingly possible, a threat that could undermine patient confidence in revealing sensitive details to their health care providers.
Anonymized patient data is also matched with identified data broker profiles on people to profile groups most likely to suffer specific ailments. Drug companies can then target advertising to everyone in the group without violating HIPAA rules on medical data. Such details could also prompt life insurers to deny coverage — or other companies to favor or exclude certain groups.
In short, though you may have never heard of QuintilesIMS, the company knows about you, if only indirectly. Even if you are in great health, you likely know someone who has mental health complications, or drinking problems, or any other myriad health-related issues that could cause them harm if the information were to become publicly known.
For its part, QuintilesIMS is at pains to assure the public that it is a “global leader in protecting individual patient privacy.”
“Through a wide variety of privacy-enhancing technologies and safeguards, QuintilesIMS protects individual privacy while managing information to drive health care forward,” it said in a statement last October.
Still, QuintilesIMS reveals little about its inner workings, paralleling the reticence of its German emigrant founder, whose existence is mentioned a single time on its website, in its corporate history timeline. Imagine Ford telling its story without detailing Henry; McDonald’s without Ray Kroc, or Wal-Mart with little mention of Sam Walton.
In the 1950s and 1960s, Frohlich embodied the sophistication and panache of Madison Avenue, where he was the founder of one of New York City’s leading medical advertising agencies. He also kept as many secrets as fictional adman Don Draper. Many corners of Frohlich’s life remained hidden for more than half a century – until now.
Master of His Universe
A typical day at his L.W. Frohlich/Intercon advertising agency could easily be a scene in the television program “Mad Men.” It’s morning, and a chauffeur in an elegant fitted jacket and cap opens the sports car door for the boss. With a white handkerchief blooming from the pocket of his dark double-breasted suit, and The Wall Street Journal under his arm, Frohlich steps into the nine-story brick office building at 34 E. 51st Street that bears his name. He embodies the very image of the sophisticated executive.
As he rides the elevator, an awestruck junior employee beams a smile and says, eagerly, “Good morning, Mr. Frohlich!” The entry level copy editor knows to limit the elevator conversation to banal pleasantries; before a recent staff meeting with Frohlich, his supervisor reminded the young Med Man not to say anything in the company founder’s presence.
From an office dominated by a tall Asian wood panel of three Buddhist figures, the boss commands a medical advertising empire of 1,000 people in New York, London, Paris, Frankfurt, Milan, Madrid and Tokyo. By the end of the 1960s, Frohlich’s medical marketing research company, IMS Health, was operating in more than two dozen countries, including much of Western Europe, Iran, Peru, the Philippines and Turkey. The two businesses complement each other nicely, as IMS reports help make the case for more medical advertising.
After work Frohlich invites a top pharmaceutical executive to his Manhattan brownstone at 150 East 63rd Street for drinks in the basement bar before leading him upstairs where staff serves dinner on fine china and crystal under a chandelier. Later they repair to his box seats at the Metropolitan Opera, where he tells of his friendship with Swedish soprano Birgit Nilsson.
He might also mention the time he met Aaron Copland. Frohlich owned several radio stations, and his popular New York City classical station, WNCN-FM, had convinced the composer of Fanfare for the Common Man to host 52 WNCN shows. It was a great coup, even for the then considerable fee of $10,000. In 1968, Frohlich held a gala lunch at his agency’s ornate, top-floor dining room to mark the launch of the series.
The advertising executive arrived a few minutes late, so all eyes turned his way as he greeted Copland.
“Mr. Copland, I can’t tell you how much I enjoy your ballet Fancy Free.”
“Oh, I like it very much also,” the composer replied. Copland diplomatically failed to mention that his friend Leonard Bernstein actually wrote the score to Fancy Free, a story of three sailors on leave in New York City.
Despite the occasional faux pas, Frohlich’s hobnobbing with high society, his dignified demeanor and his knowing aura impressed his employees. “I was inspired by him, his attitude about the company. I wanted to do really great work for him,” said Gerald Weinstein, who worked at the L.W. Frohlich agency between 1951 to 1959 with an interruption for military service.
“I wanted to be L.W. when I grew up,” Joseph Iozzi, who joined the creative department in 1965, remembered half a century later.
“Like Mad Men, it was very much like that,” said Gerald Busby, who worked there from 1960 to ‘63. “They were often very good-looking men acting circumspectly.”
When Frohlich died, on September 28, 1971, hundreds of admirers attended the funeral service at St. Bartholomew’s Episcopal Church on Park Avenue. But even in death, Frohlich did not reveal his religious roots.
For all his charms and commanding presence, Frohlich represented an enigma, even to his closest associates. No one knew the bachelor all that well. Certain topics remained off limits, including his origins in Germany, his private life and the financial reality behind his two firms.
Frohlich’s reserve represented far more than Teutonic modesty. The executive, who used the first name Bill or L.W. in the United States, reinvented himself to make it in postwar America and hid key aspects of his identity.
Frohlich (Fröhlich in the original German) was born in Giessen, 32 miles north of Frankfurt, a year before the outbreak of World War I. The town long had a Jewish minority, and one of its members, Sigmund Livingston, immigrated to the United States in the late 19th century and founded the Anti-Defamation League in 1913.
Frohlich left for the United States in 1935, and applied for U.S. citizenship the following year. He prided himself on European manners and sophistication, yet associates knew nothing about his early life or how he came to the United States. Some thought that his authoritarian management style, fastidiousness and accent suggested a hidden Nazi past.
At the height of World War II in 1943, the FBI investigated him for connections to the Third Reich – but found none. If he wasn’t a Nazi, maybe he was a Jew, others thought. But Frohlich did not want to discuss his youth or private life.
To this day, some of Frohlich’s closest connections believe he had no personal connections to Judaism. “Having known him and known his sister and at one point met his mother — I would not have said that any of them is Jewish,” his attorney, Richard Leather, told me.
Frohlich’s sister Ingrid Frohlich, who later took her husband’s surname, Burns, identified herself as Lutheran. She belonged to an exclusive Palm Beach, Florida, country club that did not welcome Jews, and she expressed disapproval when a granddaughter announced plans to marry a Jew. “Ingrid disliked everything that was Jewish,” said Lars Ericson, a distant relative who socialized with Frohlich and later became president of IMS. “She would say, ‘Those Jewish people, I can’t stand them.’”
“His sister was adamant that she was not Jewish,” said Ericson. (Burns died in 2009 at age 95; her two daughters declined to comment for this article).
Frohlich was himself a member of several elite clubs, including the Maidstone Club, which had a reputation for excluding blacks and Jews near his East Hampton weekend house.
Yet in reality the Frohlich parents and ancestors were Jews, a fact he acknowledged in the very first sentence of his 1934 application to Goethe University in Frankfurt. “Although I am not of Aryan origin, I am hereby requesting permission to enroll,” he wrote.
With Adolf Hitler already purging Jews from German universities, Frohlich bolstered his political reliability by highlighting his parents’ service in WWI. He also filled out a supplemental questionnaire for “non-Aryan” students:
Do you have a parent of Aryan origin? Nein
Do you have a grandparent of Aryan origin? Nein
Did your father fight on the front for the German Reich in the world war? Yes, and has a certificate of severe wounds from the war
How long has your family been present in Germany? Since around the 15th century
Has your family renounced the Jewish religion? No
Frohlich had one more ace up his sleeve. In early 1933 he joined the Reichsarbeitsdienst, a youth work brigade whose members wore red Swastika armbands and Swastika pins on their caps, and had served in East Prussia.
He was admitted, but completed just a year of college. In 1935, a typeface company offered him a year assignment at its New York subsidiary. After a trip home a year later, he returned to New York and dropped out of college. By 1938, Frohlich’s sister Ingrid, their mother and his maternal grandparents joined him in New York. Had Frohlich remained in Germany, he could have faced Nazi persecution not only because he was a Jew, but also because of his sexual orientation: He was gay. This fact, confirmed to me by multiple Frohlich agency and IMS executives who worked closely with Frohlich, was one more detail he masked in his professional life. To help him do so, he would often bring sophisticated women to dinners with pharmaceutical executives.
The fate of his father, Leopold Frohlich — who had long before divorced his mother — provides a chilling example of what might have happened otherwise. On September 29, 1938— the very day Adolf Hitler met Neville Chamberlain to hammer out the Munich Agreement on the fate of the Sudetenland — the Gestapo arrested the elder Frohlich on charges of expressing political statements against the Sudeten Germans. On November 10, the day after the Kristallnacht pogrom, authorities sent him to Buchenwald. After trial and conviction, he was sent to the Sachsenhausen concentration camp near Berlin, where he died at age 63 on April 18, 1940.
An Enigma in New York
Well aware of anti-Jewish discrimination in America, Frohlich kept this background to himself. “You would sit at meetings where they would tell Jewish jokes, anti-Jewish jokes, and you had to sit there and swallow it, and laugh along with the boys,” said Michael Sonnenreich, the lawyer for Frohlich’s medical advertising rival Arthur Sackler, who was also Jewish. “That’s what you needed to do if you were going to make the business.”
John Kallir, who worked for Sackler’s McAdams agency and knew Frohlich slightly, understood such sentiments. Born to a Jewish father and a Catholic mother, he left his native Austria in 1938 after the Nazi Anschluss with Austria. He became one of a number of Jewish or half-Jewish German or Austrian immigrants in the medical advertising industry. “It was certainly a very embarrassing subject,” he said in 2015 about his Jewish heritage. “I didn’t want to talk about it.”
Not everyone felt that way. David Dubow, the New Yorker whom Frohlich entrusted with setting up IMS, embraced his Jewish heritage and had headed the Alpha Epsilon Pi Jewish fraternity while he was a New York University undergraduate.
As sensitive as his heritage and sexual orientation were during that era, Frohlich had an even bigger secret: the true nature of his relationship with Arthur Sackler, his career-long competitor whose family name endures today from his arts patronage and philanthropy, including in the Sackler wing of New York’s Metropolitan Museum of Art housing the Egyptian Temple of Dendur.
Despite their different temperaments and contrasting public profiles—and though one hailed from Germany and the other Brooklyn—the two men had much in common and became friends. Born within a few weeks of each other in 1913, they followed similar career paths. Sackler joined the William Douglas McAdams medical advertising agency in 1943, the same year Frohlich formed his agency. Sackler bought a majority stake in McAdams in 1947.
By all logic, the two men would have competed vigorously. In reality, they met regularly to divvy up business and share information about potential clients. It was an arrangement to their mutual advantage that insiders admitted only many decades later. “It was very, very important at that time to divide up business to make sure you could get as much business as possible because you could not have competing products,” Sonnenreich, the Sackler attorney, told me.
Leather, who served as Frohlich’s attorney starting in 1960, broadly confirmed this arrangement: “Those two agencies very much helped one another. They were very cooperative.”
Sonnenreich also said Sackler had a financial stake in the L.W. Frohlich agency, something several former Frohlich agency executives suspected but Sackler denied during his lifetime. “If it was an automobile company it would have been an antitrust suit, for God’s sake,” L.W. Frohlich executive Bill Castagnoli said shortly before his death in 2015.
Sackler’s attorney disagrees, calling the arrangement kosher. “It was not illegal. Two separate agencies, two separate reporting entities,” Sonnenreich said.
Frohlich died at age 58 of a brain tumor in 1971. The obituary the next day in The New York Times followed a Frohlich tradition of omissions and inventions. It said his middle name was William (not Wolfgang); that he graduated from college in 1931 at age 18 (he dropped out after his freshman year in 1935), and that he came to the United States in 1931 (he arrived in 1935 and immigrated permanently in 1936).
“That son of bitch won’t even admit he is Jewish,” Sackler once complained to a colleague.
The biggest secret of the Frohlich-Sackler partnership came to light only the following year. As IMS officials prepared to take the company public in 1972, they discovered that Frohlich had a clandestine agreement in which Arthur Sackler’s two brothers inherited the overwhelming share of IMS. Arthur Sackler had been a secret power behind the IMS throne.
The work of QuintilesIMS has grown and evolved dramatically since Frohlich’s era, but his legacy of secrecy endures. Data miners tell patients almost nothing about the vast commercial trade in their intimate medical secrets. Judging by how he lived his life, that is as much as Ludwig Frohlich would have wanted to tell the public.
Adam Tanner, is the author of the new book “Our Bodies, Our Data: How Companies Make Billions Selling Our Medical Records.”