Oral argument: Apr. 26, 2011
Appealed from: United States Court of Appeals for the Second Circuit (Nov. 23, 2010)
FIRST AMENDMENT, COMMERCIAL SPEECH, DATA MINING, PRESCRIPTION DRUG RECORDS
In 2007, Vermont passed Act 80, which prohibits prescription drug companies from obtaining patients’ personal information for marketing purposes without the prescribing physician’s consent. The pharmaceutical companies sued the state of Vermont, seeking an injunction prohibiting the enforcement of Act 80 on the grounds that it was an unconstitutional restriction on their right to commercial speech. Vermont argues that Act 80 does not regulate speech protected by the First Amendment, and that the law is related to Vermont’s interests of protecting medical privacy, controlling health care costs, and protecting public health. On the other hand, the pharmaceutical companies argue that Act 80 is unconstitutional because it discriminates against the speech of pharmaceutical manufacturers and it is not related to Vermont’s state interests. The Supreme Court’s decision will affect patients’ and physicians’ privacy, the marketing of prescription drugs, and the status of other laws protecting consumer privacy.
Whether a law that restricts access to information in nonpublic prescription drug records and affords prescribers the right to consent before their identifying information in prescription drug records is sold or used in marketing runs afoul of the First Amendment.
Can a state prohibit the nonconsensual sale of doctors’ prescribing information contained in nonpublic prescription drug records, or is such a restriction an improper infringement on the free speech of pharmaceutical companies?
When filling prescriptions, Vermont pharmacies collect personal data about the patients and sell the data to data mining companies. See IMS Health, Inc. v. Sorrell, 630 F.3d 263, 267 (2d Cir. 2010). Once the data is compiled, data mining companies sell it to pharmaceutical manufacturers, who use the data to provide information to physicians on a drug’s use, side effects, and risks, in a practice called detailing. See id. Generally, pharmaceutical companies only conduct detailing campaigns for new, brand name prescription drugs. See id. Pharmaceutical companies also use the information to conduct direct marketing to physicians and consumers, to track the progression of disease, and to conduct clinical trials and post-marketing research. See id. at 268. This personal data is also used by the state of Vermont, researchers, the Food and Drug Administration, the Center for Disease Control, the Drug Enforcement Administration, and insurance companies. See id.
In 2007, Vermont passed the Prescription Confidentiality Law, or Act 80, which prohibits the sale, license, or exchange for value of personal information data for the purpose of selling or marketing a prescription drug. See IMS Health, Inc., 630 F.3d at 267. Act 80 also precludes pharmaceutical manufacturers and marketers from using such data for marketing or promoting of a prescription drug without the prescriber’s consent. See id. However, the statute allows physicians to opt in to allow the use of their patients’ personal information for marketing purposes. See id. at 269. The statute also allows the use of patient information data for other purposes, such as health care research, patient education, review by a health care professional or insurance company, and recall or safety notices. See id. at 270.
On August 29, 2007, pharmaceutical companies sued the Vermont Attorney General in the United States District Court for the District of Vermont, seeking an injunction prohibiting the enforcement of Act 80. See IMS Health, Inc., 630 F.3d at 270. The pharmaceutical companies claimed that Act 80 violated the First Amendment because it controlled the messages pharmaceutical marketers conveyed to physicians. See IMS Health Inc. v. Sorrell, 631 F. Supp.2d 434, 445–46 (Dist. Ct. Vt. 2009). In November 2007, the case was consolidated to include an action by PhRMA against Vermont, and an amended complaint was filed on May 14, 2008. See IMS Health, 630 F.3d at 271. The District Court found that Act 80 was constitutional, holding that the statute was reasonably related to Vermont’s interests because it specifically targeted detailing and allowed prescribers to opt in to allow use of patient information data. See IMS Health, 631 F. Supp.2d at 455.
The pharmaceutical companies appealed to the United States Court of Appeals for the Second Circuit. See IMS Health, 630 F.3d at 271. The Second Circuit examined the constitutionality of Act 80 using the intermediate scrutiny standard, and held that the Act was unconstitutional because the statute did not directly advance the state’s interests of promoting public health and reducing health care costs. See id. at 277. The Second Circuit also struck down Act 80 on the ground that Vermont could have advanced its stated interests by using a less restrictive statute. See id. at 279. The Supreme Court granted certiorari on January 7, 2011. See Sorrell v. IMS Health, Inc., 131 S. Ct. 857 (2011).
In this case, the Supreme Court will decide whether Act 80 is an unconstitutional restriction of commercial speech under the First Amendment. The Court’s decision on the constitutionality of the law could affect privacy rights, the costs of the health care, and consumer protection.
The New England Journal of Medicine argues that data mining invades patient privacy because it gives pharmaceutical and insurance companies access to information about patients’ prescription history and medical conditions. See Brief of Amicus Curiae The New England Journal of Medicine, et al. in Support of Petitioners at 7–8. The Vermont Medical Society contends that data mining compromises the confidentiality of the doctor-patient relationship because it gives a third party access to the patient’s personal information. See Brief of Amicus Curiae Vermont Medical Society, et al. in Support of Petitioners at 22–23. The Vermont Medical Society also argues that Act 80 would protect patients’ privacy by preventing nonconsensual disclosure of patients’ personal information and removing identifying information from prescription records. See id. at 27.
The Pharmaceutical Research and Manufacturers of America (“PhRMA”) responds to the concerns about patient privacy by pointing out that the law still allows the state of Vermont, insurance companies, and other interested parties to make recommendations to doctors about prescription drugs based upon patients’ personal information. See Brief for Respondent, Pharmaceutical Research and Manufacturers of America at 30. PhRMA further contends that Act 80 does not prevent intrusion into the doctor-patient relationship because it selectively precludes pharmaceutical companies—but not the state or insurance companies—from accessing patient information. See id.
Health Care Costs
The United States argues that allowing pharmaceutical companies unrestricted access to patients’ personal information will increase health care costs because detailing is generally used to promote new, expensive prescription drugs, which pharmaceutical companies have an incentive to sell to physicians. See Brief of Amicus Curiae United States of America in Support of Petitioners at 25–26. The American Federation of State, County, and Municipal Employees (“AFSCME”) contends that data mining increases health care costs because pharmaceutical companies use patient data to promote the prescription of drugs for conditions those drugs were not approved to treat. See Brief of Amicus Curiae American Federation of State, County, and Municipal Employees District Council 37, et al. in Support of Petitioners at 16.
The Pharmaceutical Research and Manufacturers of America (“PhRMA”) responds by arguing that the benefits of new prescription drugs outweigh the costs. See Brief for Respondent, Pharmaceutical Research and Manufacturers of America at 53. PhRMA further argues that new prescription drugs are more effective than older drugs, and may therefore reduce other health care costs, such as hospital visits. See id. at 52. Moreover, PhRMA argues that Vermont has other statutes that could serve its interests in reducing health care costs, such as requiring pharmacists to fill prescriptions with a generic drug unless the prescribing physician requests otherwise. See id. at 54.
Patient and Consumer Protection
The AARP argues that detailing misleads doctors about the costs and risks of prescription drugs, which causes harm to patients. See Brief of Amicus Curiae AARP, et al. in Support of Petitioners at 24–25. The AARP further asserts that detailers influence doctors into prescribing expensive new drugs that are not more effective than older drugs and present increased risks to the patient. See id. at 25. AFSCME argues that detailing harms patients because detailers often promote prescription drugs that were not designed to treat the patient’s condition, and pharmaceutical manufacturers have not proven that the drugs are safe to treat those ailments. See Brief of AFSCME District Council 37 at 16, 19.
PhRMA responds to these arguments by asserting that doctors will not necessarily make bad prescription decisions if they receive misleading information from drug manufacturers. See Brief for Respondent at 50. PhRMA further argues that not all new prescription drugs are too dangerous for manufacturers to promote to doctors. See id. at 49–50.
This case concerns a Vermont’s Prescription Confidentiality Law, or Act 80, which forbids the use of a physician’s drug-prescribing histories without the physician’s consent. See Vt. Stat. Ann. tit. 18, § 4631. Vermont argues that because legally required prescription records contain private information concerning patient treatment, doctors should be able to block the use of those records for commercial purposes. See Brief for Petitioners William H. Sorrell, et al. at 20–21. Respondents IMS Health and the PhRMA (“IMS”), on the other hand, believes Vermont’s law unfairly singles out pharmaceutical companies while leaving other potential users of the data unaffected, a result it claims impermissibly restrains the speech of those companies. See Brief for Respondent, Pharmaceutical Research and Manufacturers of America at 19–20. The Second Circuit agreed with IMS and ruled that the law's restriction on free speech was inappropriate and its purportedly beneficial effect on public health too immaterial. See id. at 18.
Is free speech unaffected because the prescription records are nonpublic?
Vermont’s primary argument relies on the essentially nonpublic nature of drug prescription records. Vermont emphasizes that the only reason pharmacies even have these medical records to begin with is that state law requires the pharmacies to collect them. See Brief for Petitioners at 28. Because the state has unquestioned regulatory authority in this area and these records are traditionally seen as confidential, Vermont claims that it may constitutionally require a prescribing physician’s consent before a third party may use such records for commercial purposes. See id. at 22–23. Therefore, the challenged statute is an example of a government requiring the release of information and then restricting its “use or further disclosure,” a practice that Vermont claims is compliant with the First Amendment. See id. at 23–24.
IMS challenges this conclusion on a number of grounds. First, IMS concedes that some regulation of government records is permissible, but urges a different standard for data that are “privately created, privately collected, and privately owned,” such as the prescription records in this case. See Brief for Respondent at 55–56. But even if this information were only in the government's hands, IMS objects to the Vermont law as favoring one viewpoint over another. See id. at 56–57. According to IMS, the motivation behind Vermont's law is not privacy at all, but rather an attempted subversion of pharmaceutical manufacturers' commercial speech in favor of alternative messages from health insurance companies and the government. See id. at 29, 57. Indeed, IMS claims, Vermont's law allows anyone but pharmaceutical firms to use the disputed information, even for commercial purposes, and such efforts to "pick and choose" violate the First Amendment. See id. at 29–30, 55. Finally, IMS also questions Vermont’s premise that pharmacies do not create records of prescriptions solely due to state regulation, pointing out that they already routinely collect these data for submission to insurance companies. See id. at 57–58.
In response, Vermont argues that its law does not restrict free speech so much as it seeks to regulate commercial activity. See Brief for Petitioners at 32–33. Accordingly, it believes a state may properly restrict the dissemination of certain information for one intended use, while leaving other possible uses unconstrained. See id. at 29–30. In this case, rather than intending to infringe on drug companies’ ability to speak, Vermont claims its challenged law is designed to afford physicians the right not to speak without their own consent. See id. at 31–32. Finally, given the traditional confidentiality that pharmacists normally exercise, Vermont sees as incredible the assertion of a First Amendment right to sell prescription records for commercial profit. See id. at 31.
If the First Amendment applies, is the Vermont law nonetheless constitutional because it properly advances an important government interest?
Although Vermont frames the challenged law as affecting ordinary commercial conduct and not speech, it argues alternatively that any restriction on speech that the law does cause is permissible under the Supreme Court’s intermediate scrutiny standard. See Brief for Petitioners at 41–42. Vermont first notes that regulation of commercial speech may sometimes be constitutional, and contends that its challenged law differs significantly from some of the sweeping restrictions on commercial speech the Court has invalidated in the past. See id. at 42–43. In fact, Vermont argues, its law does not restrict the speech of pharmaceutical companies whatsoever, but merely prevents them from using certain information as a marketing tool. See id. at 43–44. Although the Court has previously struck down regulations that adversely affected advertising, Vermont sees its own law as imposing a far less “onerous” burden on vendors than the others had. See id. at 44.
Intermediate scrutiny demands that a challenged law further a substantial government interest, and Vermont says that its statute advances at least three such interests. See Brief for Petitioners at 45–46. First, Vermont contends that the law strengthens medical privacy by protecting physicians from exploitative sales practices and the sanctity of doctor-patient relationships from unnecessary intrusion. See id. at 46–47. Vermont also claims that its law lowers health care costs by providing a check against overaggressive sales of expensive and often unnecessary new drugs. See id. at 49–50. Finally, Vermont maintains that the law promotes patients’ health by curbing “over-prescription” of new drugs that are sometimes harmful. See id. at 50. Concluding its intermediate scrutiny analysis, Vermont argues that the law is constitutional because it is no more restrictive than necessary to achieve these goals and it scarcely affects “core First Amendment values.” See id. at 54–55.
IMS argues that Vermont’s law unfairly discriminates against the content of pharmaceutical companies’ speech and this case therefore calls for strict, not intermediate, scrutiny. See Brief for Respondent at 27–28. Accordingly, IMS believes the Court should presume the law to be unconstitutional and compel Vermont to prove otherwise. See id. at 23–24. If, however, the Court deems intermediate scrutiny appropriate, IMS still sees the law as invalid under that less rigorous standard as well. See id. at 39–40. IMS contests Vermont's privacy argument by stressing that the statute does nothing to combat privacy threats from anyone other than pharmaceutical firms. See id. at 40–41. The only possible motivation for this law, IMS concludes, must therefore be to repress the speech of those companies. See id. at 41. IMS further suggests that restrictions on advertising have not survived judicial scrutiny in the past, and doctors can protect themselves from unwanted advertising tactics in any event. See id. at 44–45. Finally, IMS disputes that Vermont's other two rationales are substantial government interests capable of justifying the challenged statute. See id. at 49. IMS argues that Vermont's stated goals depend on the flawed assumptions that doctors will exercise bad judgment in prescribing new drugs, and the dangers those drugs pose to patients will necessarily outweigh their benefits See id. at 49–51.
In this case, the Supreme Court will decide whether Vermont’s Act 80 is an unconstitutional restriction of commercial speech under the First Amendment. Vermont argues that Act 80 does not regulate speech that is protected by the First Amendment. Vermont further asserts that Act 80 meets the intermediate scrutiny standard because it is related to Vermont’s interests of protecting medical privacy, controlling health care costs, and protecting public health. On the other hand, the pharmaceutical companies argue that Act 80 is unconstitutional because it discriminates against the speech of pharmaceutical manufacturers. The pharmaceutical companies further argue that Act 80 is not related to Vermont’s state interests. The Supreme Court’s decision will affect patients’ and physicians’ privacy, the marketing of prescription drugs, and the status of other laws protecting consumer privacy.
Edited by: Eric Johnson
· Wex: First Amendment
· Biotech Strategy Blog, Pieter Droppert: U.S. Supreme Court to Decide Whether Vermont Can Control the Use of Prescribing Data by IMS Health and Pharma Companies (Jan. 17, 2011)
· Daily Finance, Abigail Field: Is Data Mining Free Speech? The Supreme Court Agrees to Decide a Crucial Case (Jan. 11, 2011)