Last year, an opinion from the United States Court of Appeals for the First Circuit concluded that a Vermont law, which banned data mining companies from selling prescription information to pharmaceutical companies, was unconstitutional. The case was appealed to the United States Supreme Court, and the Court heard oral arguments in late April of this year.
Now the Supreme Court issued their opinion and voted 6-3 in favor of data mining companies such as IMS Health, Inc. and Wolters Kluwer’s. John Kamp, Executive Director of the Coalition for Healthcare Communication, asserted that the Court’s decision is “a victory for patients as well as industry.” He explained that, “although couched in terms of privacy and cost reduction, the Vermont law was a transparent attempt to censor industry speakers while enabling government and others to speak”.
Kamp further asserted that the Court’s decision was proper because “patients are not served by censorship and without good data, no one can make informed decisions, including doctors, patients, policy makers and industry.” For now, Vermont will have to go back to the drawing boards to craft a law that will not restrict speech.
Legal Background
When filling prescriptions, pharmacies collect information including the prescriber’s name and address, the name, dosage, and quantity of the drug, the date and place the prescription is filled, and the patient’s age and gender. Pharmacies sell this patient identifiable (PI) data to what are known as “data mining companies,” who aggregate the data to reveal individual physician prescribing patterns and sell it primarily to pharmaceutical manufacturers.
The PI data sold by the data-mining companies is stripped of patient information, to protect patient privacy. “Detailers” employed by pharmaceutical manufacturers then use the data to refine their marketing tactics and target sales to doctors.
The Vermont law was adopted in the wake of New Hampshire enacting their law, and shortly before another similar statute adopted in Maine. The Vermont legislature passed Act 80 in 2007, intending to protect public health, to protect prescriber privacy, and to reduce health care costs through the promotion of less costly drugs and ensuring prescribers receive unbiased information.
Section 17 of this Act prohibits the sale, license, or exchange for value of PI data for marketing or promoting a prescription drug, and prohibits pharmaceutical manufacturers and marketers from using PI data for marketing or promoting a prescription drug, unless the prescriber consents. Section 17 was effective on July 1, 2009. The statute adopts an opt-in approach, allowing prescribers to opt in to allow the use of their PI data for marketing purposes. The statute expressly permits the sale, transfer, or use of PI data for multiple other purposes (i.e. insurance, formular compliance).
What made Vermont’s law unique from New Hampshire and Maine are the findings from the legislature. Specifically, the legislature noted that “the goals of pharmaceutical marketing as “often in conflict with the goals of the state.” The legislature also expressed its concern that detailing “caused doctors to make decisions based on “incomplete and biased information” because doctors “are unable to take the time to research the quickly changing pharmaceutical market,” and thus, must “rely on information provided by pharmaceutical representatives.”
In addition, the legislature further found that “detailing increases the cost of healthcare and health insurance; encourages hasty and excessive reliance on brand-name drugs, before the profession has observed their effectiveness as compared with older and less expensive generic alternatives; and fosters disruptive and repeated marketing visits tantamount to harassment. The legislative findings further noted that use of prescriber-identifying information “increase[s] the effect of detailing programs” by allowing detailers to target their visits to particular doctors. Finally, the legislature noted that use of prescriber-identifying data also helps detailers shape their messages by “tailoring” their “presentations to individual prescriber styles, preferences, and attitudes.”
Essentially, Vermont’s law attempted to correct what it saw as an unbalanced marketplace of ideas that undermines the state’s interests in promoting public health, protecting prescriber privacy, and reducing health care costs.
When the Vermont law was first challenged in the U.S. District Court in Vermont, it was upheld, and found constitutional. As a result, the data mining companies IMS Health Inc., Verispan, LLC and Source Healthcare Analytics, Inc., along with the Pharmaceutical Manufacturers and Researchers Association (PhRMA) appealed to the First Circuit.
The First Circuit subsequently reversed the district court’s decision and concluded that the Vermont law was unconstitutional because it restricted commercial speech protected by the First Amendment.
Supreme Court Opinion
Writing for the Majority, Justice Anthony Kennedy reasoned that, “Speech in aid of pharmaceutical marketing…is a form of expression protected by the Free Speech Clause of the First Amendment,” and as “a consequence, Vermont’s statute must be subjected to heightened judicial scrutiny.” He concluded thus, that Vermont’s law cannot satisfy that standard.”
Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas, Samuel Alito and Sonia Sotomayor joined Justice Kennedy’s opinion.
The Court explained how on its face, the Vermont law enacts a content-and speaker-based restriction on the sale, disclosure, and use of prescriber-identifying information, a protected expression, that is sufficient to justify applying heightened scrutiny.
The statute thus disfavors marketing, i.e., speech with a particular content, as well as particular speakers, i.e., detailers engaged in marketing on behalf of pharmaceutical manufacturers. Yet the law allows prescriber-identifying information to be purchased, acquired, and usedfor other types of speech and by other speakers.
The Court recognized that the Vermont law “imposes a burden based on the content of speech and the identity of the speaker.” While Vermont argued that heightened judicial scrutiny is unwarranted because sales, transfer, and use of prescriber-identifying information are conduct, not speech, the Court concluded that, “the creation and dissemination of information are speech for First Amendment purposes.”
While Vermont argued that its broad content-based rule is necessary to avoid harassment, the Court rejected this argument because doctors can simply decline to meet with detailers. Vermont also argued that use of prescriber-identifying information undermines the doctor patient relationship by allowing detailers to influence treatment decisions. However, the Court rejected this argument as well, recognizing that even if pharmaceutical marketing affects treatment decisions, it can do so only because it is persuasive, and “fear that speech might persuade provides no lawful basis for quieting it.”
Consequently, Vermont’s law tried to achieve its objectives of protecting privacy and reducing health care costs through the indirect means of restraining certain speech by certain speakers—i.e., by diminishing detailers’ ability to influence prescription decisions. But as the Court recognized, “the fear that people would make bad decisions if given truthful information” cannot justify content-based burdens on speech.”
The Court explained that the instant law’s defect is made “clear by the fact that many listeners find detailing instructive.” While Vermont may be displeased that detailers with prescriber-indentifying information are effective in promoting brand name drugs, the Court asserted that “the State may not burden protected expression in order to tilt public debate in a preferred direction.” Additionally, the Court noted that the Vermont nowhere contends that its law will prevent false or misleading speech within the meaning of this Court’s First Amendment precedents and thus, the State’s interest in burdening “detailers’ speech thus turns on nothing more than a difference of opinion.”
The Court recognized that the Vermont law not only disfavors marketing, that is, speech with a particular content, but it also disfavors specific speakers, namely pharmaceutical manufacturers. As a result of these content- and speaker-based rules, detailers cannot obtain prescriber-identifying information, even though the information may be purchased or acquired by other speakers with diverse purposes and viewpoints.
Detailers are likewise barred from using the information for marketing, even though the information may be used by a wide range of other speakers. For example, it appears that Vermont could supply academic organizations with prescriber-identifying information to use in countering the messages of brand-name pharmaceutical manufacturers and in promoting the prescription of generic drugs. But the law leaves detailers no means of purchasing, acquiring, or using prescriber-identifying information. Accordingly, the Court concluded that the law on its face burdens disfavored speech by disfavored speakers, and thus has the effect of preventing detailers—and only detailers—from communicating with physicians in an effective and informative manner.
The Court also pointed to the formal legislative findings accompanying the law to confirm that the law’s “express purpose and practical effect are to diminish the effectiveness of marketing by manufacturers of brand-name drugs.” As a result, Vermont’s legislative findings go beyond mere content discrimination, to actual viewpoint discrimination and imposes burdens that are based on the content of speech and that are aimed at a particular viewpoint. Because of this, the Court reasoned that the First Amendment requires heightened scrutiny whenever the government creates “a regulation of speech because of disagreement with the message it conveys.”
Dissenting Opinion
Writing in dissent, Justice Breyer argued that the Vermont statute meets the First Amendment standard the Supreme Court had previously applied when the government is looking to regulate commercial speech. “The prohibition against pharmaceutical firms using this prescriber identifying information works no more than modest First Amendment harm; the prohibition is justified by the need to ensure unbiased sales presentations, prevent unnecessarily high drug costs, and protect the privacy of prescribing physicians…At best the Court opens a Pandora’s Box of First Amendment challenges to many ordinary regulatory practices that may only incidentally affect a commercial message,” Breyer writes.
Justices Ruth Bader Ginsburg and Elena Kagan joined Justice Bryer’s dissent.
Conclusion
The Court recognized that Vermont’s law created a case in which the government prohibited a speaker from conveying information that the speaker already possesses.” As a result, the Court noted that this law implicated an individual’s First Amendment right to speak because the law subjected individuals to “restraints on the way in which the information might be used” or disseminated.
Ultimately, the Court concluded that Vermont burdened a form of protected expression that it found too persuasive, and at the same time, left unburdened those speakers whose messages are in accord with its own views. The Court asserted that such regulations “the State cannot do.” Accordingly, Justice Kennedy affirmed the First Circuit’s decision, which invalidated the Vermont Law, and reason that, “privacy is a concept too integral to the person and a right too essential to freedom to allow its manipulation to support just those ideas the government prefers.”
In response to the opinion, Harvey Ashman, IMS Health senior VP and general counsel, noted that the Court’s ruling is a “clear and unmistakable decision that these types of laws violate the Constitution and do nothing to improve healthcare, reduce costs or protect privacy as proponents had claimed.” Moreover, Ashman asserted that, “the availability of information on the prescribing practices of physicians enables communications about new medicines, best practices and safety updates,” and “this information is essential to improved patient care and safety.”
Senate Judiciary Committee Chairman U.S. Senator Patrick Leahy, of Vermont, disagreed with the Court and argued that states “must be able to protect the privacy of sensitive information exchanged between a doctor and patient, and that the decision undermines that ability and risks unduly influencing doctors in their future prescription choices.”
Sharon Terry, president and CEO of Genetic Alliance, a nonprofit health advocacy organization networking more than 10,000 disease-specific advocacy organizations and healthcare entities was pleased with the decision. She recognized that “patients have a critical interest in ensuring that their doctors are fully informed about all current treatment options that could save or meaningfully improve their lives and that this decision helps get cutting-edge information to physicians and helps advance the research and development of new breakthroughs.”
Because of the decision, existing laws in Maine and New Hampshire could be declared unconstitutional or repealed. Thirty-five states and the Justice Department joined Vermont’s defense of the law, as USA Today notes.
With this decision the court has taken an important step in defending the rights of commercial free speech. The remaining states with data mining laws and all those calling for greater restrictions on speech should take this decision into serious consideration before further restricting speech.