Rx Data Mining Opponents Will Need New Pitch After Supreme Court Strikes Down Vermont Law

The court affirms the Second Circuit's ruling that a Vermont statute prohibiting drug companies from using Rx data to market to doctors imposes an impermissible restriction on free speech.

In striking down a Vermont law that prohibits pharmaceutical companies from using information about doctors' prescribing practices, the Supreme Court cleared the way for elimination of similar laws in Maine and New Hampshire.

In a 6-3 decision in Sorrell v. IMS Health Inc. the court affirmed a ruling by the U.S. Court of Appeals for the Second Circuit that the statute violates the First Amendment by restricting the speech of pharmaceutical marketers and data miners without adequate justification.

The court concluded that Vermont's statute disfavors speech (in this case marketing) that has a particular content and is made by particular speakers, namely pharmaceutical manufacturers. As a result, the court said it must be held to higher a standard in evaluating its restrictions on free speech than the "intermediate" standards applied to restrictions on commercial speech.

HIPAA May Be Model For Future State Laws

Vermont's law, enacted in 2007, prohibits entities from selling or using prescriber-identifiable data to market or promote drugs without the prescriber's consent. Data mining companies like IMS purchase such information from pharmacies and sell it to pharma companies who use it to target their drug marketing to specific physicians.

IMS, Verispan LLC and Source Healthcare Analytics Inc. filed suit against Vermont Attorney General William Sorrell to block implementation of the statute. Their suit was consolidated with a complaint filed by the Pharmaceutical Research and Manufacturers of America.

Main Representative Sharon Treat, executive director of the National Legislative Association on Prescription Drug Prices, said states may now look for alternative ways to address data privacy that the Supreme Court might find more acceptable.

"The decision does leave the door open" for states to pursue other ways to regulate the use of private information, she said. "If there is a glimmer of hope, that is it."

The court said Vermont "might have advanced its asserted privacy interest" by allowing the sale or disclosure of the information in only a few narrow and well justified circumstances. Instead, the court said, Vermont made prescriber-identifying information available "to an almost limitless audience."

It pointed to the Health Insurance Portability and Accountability Act of 1996 as the type of statute that would present a different case than the one presented here.

Treat said HIPAA, which bans the use of medical records, could be a model moving forward.

For now, though, the data-miners are triumphant. SDI said in a release that the ruling "is clear and unmistakable - these types of laws violate the Constitution and do nothing to improve healthcare, reduce costs or protect privacy as proponents had claimed."

Could The Ruling Undo The FD&C Act?

The court's majority held that Vermont's strictures on how the data could be used was too specific a limit on speech, while the dissenters argued that such targeted restrictions are within the powers of government.

"The State asks for an exception to the rule that information is speech, but there is no need to consider that request in this case," Justice Anthony Kennedy wrote in the opinion for the court.

"The state has imposed content- and speaker-based restrictions on the availability and use of prescriber-identifying information. So long as they do not engage in marketing, many speakers can obtain and use the information. But detailers cannot," he noted.

"Vermont's statutes could be compared with a law prohibiting trade magazines from purchasing or using ink," he continued.

In a dissenting opinion Justice Stephen Breyer, joined by Justices Ruth Bader Ginsburg and Elena Kagan, said the court should uphold Vermont's statute as constitutional. He said its restriction on use of data that could help pharmaceutical companies create better sales messages "is inextricably related to a lawful governmental effort to regulate a commercial enterprise."

Breyer said the First Amendment standards that apply to Vermont "would apply similarly to regulatory actions taken by other states or the federal government acting, for example, through Food and Drug Administration (FDA) regulation."

The U.S. government had sided with Vermont. Then Acting Solicitor General Neal Katyal argued in an amicus brief that there is no First Amendment right to the prescriber-identifiable data since pharmacies are in possession of the information solely as a result of government regulation (Also see "Supreme Court To Address Prescriber Data, Free Speech And Pharma Marketing In Sorrell V. IMS" - Pink Sheet, 25 Apr, 2011.).

- Brenda Sandburg ([email protected])