Supreme Court strikes down law restricting sale of prescription drug info

In a closely-watched case affecting data mining and physicians' privacy, the Supreme Court ruled Thursday that Vermont cannot stop prescription drug companies from accessing doctors' prescription histories in order to market newer, more expensive drugs.

The US Supreme Court on Thursday struck down – as a violation of free speech – a statute that limited how drug companies could market their medications. The Vermont law blocked the use of prescription drug information in pharmaceutical company marketing campaigns designed to sell new drugs to doctors.

In a 6-to-3 vote, the high court said the law violated the First Amendment rights of drug manufacturers and data mining companies to speak about their products. Similar laws in Maine and New Hampshire are now likely in jeopardy.

State lawmakers in Vermont had justified the measure as a means to hold down health care costs and shield doctors from harassing marketing campaigns. But the high court rejected those justifications, saying the state’s restrictions on the use of the data specifically for marketing were “nothing more than a difference of opinion.”

“Vermont may be displeased that [marketers] who use prescriber-identifying information are effective in promoting brand-name drugs. The state can express that view,” Justice Anthony Kennedy said in the majority opinion. “But a state’s failure to persuade does not allow it to hamstring the opposition.”

Justice Kennedy said Vermont’s law was a content-based and speaker-based restriction on the availability and use of prescriber-identifying information. Under most cases such targeted censorship violates the First Amendment unless it is shown to be drawn to achieve a substantial governmental interest.

Kennedy said the Vermont law fails that test.

Under the Vermont law, many speakers could obtain and use the prescription drug information, Kennedy said. The only speakers barred from obtaining and using the data were drug companies or anyone seeking to use the information for marketing.

“Vermont’s statute could be compared to a law prohibiting trade magazines from purchasing or using ink,” Kennedy said.

In a dissent, Justice Stephen Breyer said the Vermont law restricted the use of data that was collected pursuant to government regulation of the prescription drug industry. The pharmaceutical companies want the data to create better sales messages, he said.

“In my view, this effect on expression is inextricably related to a lawful government effort to regulate a commercial enterprise,” Justice Breyer wrote. “The First Amendment does not require courts to apply a special ‘heightened’ standard of review when reviewing such an effort.”

He added: “The speech-related consequences here are indirect, incidental, and entirely commercial.”

Justices Ruth Bader Ginsburg and Elena Kagan joined Breyer’s dissent.

The Vermont law allowed physicians to decide for themselves whether their prescription information collected by pharmacies could be sold to data mining operations and to drug companies for marketing purposes. The records document a physician’s history of prescribing drugs to his or her patients.

The law did not restrict the use of the prescription information by researchers, law enforcement, or insurance companies.

The pharmaceutical industry spends an estimated $8 billion a year using such doctor-specific prescription data to target sales pitches to individual physicians. The practice is called detailing. Information identifying patients is excluded from the data, but the companies are able to study each physician’s prescribing trends and the type of patient population served by the doctor.

Drug manufacturers use the information to assemble a focused sales campaign to convince each doctor to advise his or her patients to use newer, more expensive drugs rather than less expensive generic medications.

Vermont lawmakers found that, in addition to being more expensive, some of the newer drugs carried a higher risk of side effects than established medications. In addition, state legislators sought to protect the privacy of certain medical records.

The pharmaceutical industry argued that drug companies have a constitutionally-protected right to discuss new drugs with physicians. The Vermont law infringed that right by restricting access to prescription data being used to engage in truthful speech about potentially life-saving medications, argued the industry’s lawyers.

Similar laws were passed in 2007 in New Hampshire and Maine. Both laws were struck down by federal judges, but both were later upheld by the First US Circuit Court of Appeals in Boston.

In the Vermont case, a federal judge upheld the law as an acceptable regulation of commercial speech. That decision was reversed by a divided three-judge panel of the Second US Circuit Court of Appeals in New York.

The Second Circuit ruled that the Vermont law was an overbroad restriction on the commercial speech of drug companies in violation of the First Amendment. The divided panel said the measure did not directly advance the state’s interest in protecting the privacy of medical records, controlling health care costs, and promoting public health.

Instead, the court said Vermont lawmakers were attempting to correct what the state viewed as “an unbalanced marketplace of ideas that undermines the state’s interests in promoting public health, protecting prescriber privacy, and reducing health care costs.”

In affirming that decision, the high court said: “While Vermont’s stated policy goals may be proper, [this law] does not advance them in a permissible way.”

Kennedy added: “The state seeks to achieve its policy objectives through the indirect means of restraining certain speech by certain speakers – that is, by diminishing detailers’ ability to influence prescription decisions.”

“Those who seek to censor or burden free expression often assert that disfavored speech has adverse effects,” he said. “But the fear that people would make bad decisions if given truthful information cannot justify content-based burdens on speech.”

In his dissent, Breyer warned that the court’s decision may be a signal that the court is moving back toward the jurisprudence of the justices who served prior to the New Deal.

“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 wrote. “At worst, it reawakens Lochner’s pre-New Deal threat of substituting judicial for democratic decisionmaking where ordinary economic regulation is at issue.”

The case is Sorrell v. IMS Health Inc. (10-779).