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A Vermont statute that restricts the sale and use of information about prescribers of prescription drugs appeared to be vulnerable to data-miners' First Amendment attack in oral argument April 26 before the U.S. Supreme Court (Sorrell v. IMS Health Inc., U.S., No. 10-779, argued 4/26/11).
The state's attorney argued that the statute lets physicians decide whether drug manufacturers' sales representatives should have access to information that the state compels physicians to provide and pharmacies to maintain. A deputy U.S. solicitor general, arguing for the United States as amicus curiae supporting the state, told the court that the statute puts pharmacies and physicians on an “equal footing” with respect to dissemination of prescription information for drug marketing purposes, instead of leaving it to pharmacies' discretion as under prior law.
But the attorney for the data-miner plaintiffs, who purchase the data from pharmacies, aggregate it, and sell it to drug manufacturers for use in targeted marketing of their products, contended that the statute impermissibly tilts the “marketplace of ideas” by attempting to make it hard for drug companies to reach doctors, and easy for insurers and academic researchers to do so. That goal is “paternalistic,” and amounts to “censorship” and discrimination against a particular speaker that violates the First Amendment's free speech clause, he charged.
Justice Antonin Scalia appeared particularly skeptical of the statute's constitutionality. He repeatedly posited that its purpose is to pose an impediment to the use of information for marketing of drugs by shielding doctors from being bothered by drug sales representatives, and that its goal could be achieved more easily if doctors simply refused to talk to the salespeople.
Chief Justice John G. Roberts Jr. suggested that the state seeks to lower drug costs indirectly by “censoring” information available to doctors, because it cannot tell them to prescribe only cheaper generic drugs.
Justice Anthony M. Kennedy asked how the state could maintain that the statute does not restrict speech.
Justice Samuel A. Alito Jr. charged that the state, in agreeing before the U.S. Supreme Court with the U.S. solicitor general's interpretation of its statute, had shifted its position on an important point from the one it maintained in the Second Circuit below.
Justice Clarence Thomas kept his usual silence.
The court's more liberal wing did not appear particularly ardent in defending the statute. Justice Sonia Sotomayor suggested that the state interest at issue here is similar to the one that supports laws allowing consumers to restrict use of information about their online sales transactions.
Justice Stephen G. Breyer proposed that the state and physicians--rather than courts--should be able to decide whether “biased information” proffered by drug sales representatives should be restricted.
Justice Ruth Bader Ginsburg observed that, while most of the court's commercial speech cases have involved “commodities,” this one involves “records,” and she inquired whose records they are. While pharmacies maintain the records, they are compelled to do so by state law. The state argues that the case thus is similar to Los Angeles Police Dep't v. United Reporting Pub'g Corp., 528 U.S. 32 (1999), which held that a statute allowing journalists access to arrestee information maintained by the government, but barring use for solicitation or other commercial purposes, did not violate the First Amendment.
But plaintiffs' counsel Thomas C. Goldstein, Goldstein, Howe & Russell PC, Bethesda, Md., told the court that LAPD's “important lesson” was that nine justices agreed that if it had been private information at issue, the statute would have been unconstitutional.
Vermont law requires pharmacies filling prescriptions to collect and maintain 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 prescriber-identifiable data (PI data) to data-mining companies such as the plaintiffs in this case, which remove some patient-identifiable information and aggregate the PI data to disclose an individual physician's prescribing practices. The data-mining companies then sell the PI data to drug manufacturers and researchers. According to Vermont's brief, a data-miner representative testified at trial that “its 'linking codes' allow it to 'link up' any of what it calls the 'five P's'--the patient, product, prescriber, payer, and pharmacy”; he described its data products as a “scoreboard.”
Drug manufacturers market their products to physicians through face-to-face presentations by sales representatives--or “detailers”--who provide information about the use, side effects, and risks of particular drugs. Vermont's brief cites evidence that detailers use the PI data “to identify and target the 'most valuable' doctors with potential to drive market share.” According to the United States' amicus brief supporting Vermont, drug manufacturers spend nearly $8 billion a year on these marketing efforts.
The law at issue, Vt. Stat. Ann. tit. 18, § 4631, bars pharmacies, health insurers, self-insured employers, electronic transmission intermediaries, or “other similar entit[ies]” from selling records containing PI data, or permitting the use of such records for marketing or promoting a prescription drug, unless the prescriber consents. Section 4631 also bars drug manufacturers and marketers from using PI data for marketing or promoting a prescription drug without the prescriber's consent. The statute includes exceptions allowing sales or use of PI data for pharmacy reimbursement, patient care management, the patient's health insurer, or health care research, among other purposes.
The challenge to the statute was brought by IMS Health Inc., SDI (formerly Verispan LLC), and Wolters Kluwer Health. The data-miners challenged the statute as violating their First Amendment free speech rights as well as the commerce clause. The district court rejected both claims.
The Second Circuit reversed on the First Amendment claim. The appeals court rejected the view of the First Circuit, which, in upholding similar New Hampshire and Maine statutes, found that they regulated the “conduct” of marketing PI data like a commodity, rather than regulating speech. The Second Circuit cited the Vermont statute's finding that the “marketplace for ideas on medicine safety and effectiveness is frequently one-sided” in concluding that the statute “is clearly aimed at influencing the supply of information, a core First Amendment concern.”
The court applied the intermediate scrutiny prescribed for commercial speech regulations by Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n, 447 U.S. 557 (1980), under which the regulation must directly advance a substantial governmental interest in a way no more restrictive than necessary to achieve it. The court first found that the state's asserted interest in protecting prescriber privacy was “too speculative” to qualify as substantial.
The court then ruled that the statute does not directly advance the state's other two asserted interests in public health and cost containment. Instead of banning detailing, the cost of which the state asserted drives up the cost of drugs, it attempts to get doctors to prescribe lower-cost generic drugs by restricting the speech of data-miners and drugmakers, the court reasoned. This runs afoul of Supreme Court cases frowning on “government efforts to prevent the dissemination of information in order to affect conduct,” the court said, citing 44 Liquormart Inc. v. Rhode Island, 517 U.S. 484 (1996), which struck down liquor ad regulations.
The court also found that the statute was not narrowly tailored because it applies to all brand-name prescription drugs, regardless of whether a cheaper generic drug exists, and thus is a “poor fit” to the state's goal of regulating new and insufficiently tested brand-name drugs when cheaper generic alternatives are available. One judge dissented.
Arguing for the state before the Supreme Court, Vermont Assistant Attorney General Bridget C. Asay asserted that the important element of the statute is its mechanism that allows doctors to decide about the dissemination of PI data. Data-miners and drug companies can no more assert a First Amendment right of access to PI data contrary to physicians' wishes than they can to physicians' tax records, which also are maintained under state compulsion but are confidential, she submitted. Here the statute allows physicians to avoid “intrusive, invasive” detailing, she said.
When Scalia asserted that the statute only restricts information necessary “for really effective speech,” Asay responded that detailers' speech also would be more effective if they had access to patient information, too, but they are not entitled to that (the federal Health Insurance Portability and Accountability Act bars their access to that information).
Shouldn't the speaker get to decide what speech is most effective? Roberts queried.
The issue is whether the plaintiffs' speech rights trump doctors' rights, Asay answered.
Alito asked whether the state agrees with the U.S. solicitor general's interpretation of the Vermont statute as restricting the sale of PI data without limitation, and separately restricting the use of PI data for marketing or promoting a prescription drug. When Asay replied that the state does agree with that construction, Alito hammered her for shifting position on an important point in the case before the Second Circuit. She conceded that the state had not fully laid out its interpretation before the court of appeals, but maintained that its current position is consistent with what it argued below.
Asay rejected the plaintiffs' argument that the statute discriminates against drug manufacturers while favoring insurers. The two are not similarly situated because insurers have a relationship with patients, she pointed out. If distinguishing between insurers and drug manufacturers were illicitly discriminatory, HIPAA would be in trouble, she said.
Deputy Solicitor General Edwin S. Kneedler, on behalf of the United States as amicus curiae supporting the state, said that the statute protects important interests in “physician autonomy and control” over information entrusted to them. It is a “narrowly drawn” statute, and “of a piece” with other statutes restricting the dissemination of personal information, such as the federal Drivers Privacy Protection Act, he submitted.
Scalia rejoined that the Vermont statute does not actually protect privacy because it allows PI data to be given away, even if it cannot be sold. Kneedler replied that state pharmaceutical regulations guard against that.
Suppose doctors did not want PI data to be given to anyone; the statute does not protect that interest, Alito said.
Any statute has exceptions, including HIPAA, Kneedler replied.
Suppose the statute said that the data can be used for any purposes except those that increase the state's expenses, Roberts asked.
This statute puts the decision in the hands of doctors, and thus is different, Kneedler responded. It is similar to do-not-call and do-not-mail statutes, but more limited, he said.
In response to Ginsburg's question about whose records are at issue, Kneedler said that the records are in the possession of pharmacies, but that the state has recognized doctors' interest in the information contained in them, and in that sense is regulating the “commodity” aspect of those records.
For his part, Goldstein told the justices that HIPAA is constitutional and the plaintiffs are “emphatically in favor” of that statute. But the Vermont statute is not a comparable privacy statute, he submitted. Instead, it “distorts the marketplace of ideas,” he asserted. Like the Second Circuit, he cited the Vermont Legislature's statutory findings in support of that contention.
That drug companies have too much money is not a basis for restricting their speech, Goldstein declared, implicitly conjuring Citizens United v. FEC, 78 U.S.L.W. 4078 (U.S. 2010), which struck down limits on corporations' independent expenditures in election campaigns as violating the First Amendment.
When Sotomayor invoked states' interest in protecting citizens' privacy regarding online sales transactions, Goldstein observed that the proposed McCain-Kerry Consumer Protection Act in Congress would allow consumers to opt out of any unauthorized use of such data. But the Vermont law is different in targeting one particular speaker and use of PI data, and involving a “fundamentally different” privacy interest, he said.
When Sotomayor suggested that the Vermont statute gives patients some control over their data, Goldstein rejoined that it does not give them any. Ginsburg, however, pointed out that federal law already does that. Goldstein replied that the line drawn by the Vermont law is intended to discriminate against a speaker.
So you are hanging your argument on the statute's discriminatory aspect? Sotomayor asked.
That is part of it, Goldstein said. The plaintiffs also stress the greater public interest in detailers' speech providing information about life-saving drugs, and the lower business privacy interest of physicians in PI data compared with patients' or consumers' personal privacy interests, he said.
A transcript of the argument is on the Supreme Court's website at http://www.supremecourt.gov/oral_arguments/argument_transcripts/10-779.pdf.
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