Supreme Court strikes down state drug data-mining law

WASHINGTON Thu Jun 23, 2011 1:48pm EDT

Security guards walk the steps of the Supreme Court in Washington, October 1, 2010. REUTERS/Larry Downing

Security guards walk the steps of the Supreme Court in Washington, October 1, 2010.

Credit: Reuters/Larry Downing

WASHINGTON (Reuters) - The Supreme Court struck down a law that prohibits the use of prescription drug records for marketing, ruling for free-speech rights over a state government's medical privacy concerns.

The high court handed a victory to data-mining companies IMS Health, Verispan and Source Healthcare Analytics, a unit of Dutch publisher Wolters Kluwer, which had challenged the law. The companies collect and sell such information.

By a 6-3 vote, the justices on Thursday upheld a ruling by a U.S. appeals court that Vermont's law infringed on commercial free-speech rights in violation of the First Amendment of the U.S. Constitution.

The law, adopted in 2007, prohibited the sale, transmission or use of prescriber-identifiable information for marketing a prescription drug unless the prescribing doctor had consented.

Vermont, Maine and New Hampshire are the only states to have adopted such laws, although similar measures have been proposed in about 25 states in the last three years.

Pharmaceutical manufacturers use data about a doctor's prescribing habits to better inform their drug salespeople when they visit physician offices to market certain products.

According to evidence presented in the case, pharmaceutical manufacturers spend nearly $8 billion annually on marketing efforts directed at doctors.

"Speech in aid of pharmaceutical marketing, however, is a form of expression protected by the Free Speech Clause of the First Amendment," Justice Anthony Kennedy wrote in the court's majority opinion.

PRIVACY OF DOCTORS AT ISSUE

The case did not involve the privacy rights of patients, as that already is protected under federal law. But Vermont said its law was aimed at protecting the privacy of doctors.

Companies that collect the data have said the information about doctors' prescribing patterns can be used to help monitor safety issues of new medications, to reduce costs, and for research purposes like studying treatment outcomes.

The law's supporters, including the Obama administration, said it helped protect medical privacy and control escalating healthcare costs by promoting cheaper generic drugs over more expensive brand-name drugs.

Vermont pharmacies must collect prescription drug information. The law bars pharmacies from disclosing the data and gives prescribing doctors the right to consent before any information is sold or used in marketing.

Attorneys for the drug companies said the law discriminated against the companies, making it harder for them to get their message to doctors. They argued the law unfairly favored views espoused by the state and insurance companies that favor generic drugs.

Kennedy agreed and said the law imposed content-based and speaker-based burdens on protected free-speech expression.

While Vermont's goals of lowering the costs of medical services and promoting public health may be proper, the state does not achieve those goals in a permissible way, he said.

"The state may not burden the speech of others in order to tilt public debate in a preferred direction," Kennedy concluded in the 25-page opinion.

"We're extremely pleased with the outcome," said Thomas Goldstein, an attorney who represented the data companies.

"It validates what the companies have been saying about the implications of information for healthcare," Goldstein told reporters in a press briefing. "The court agrees with us that the use of information here like in other contexts is a public good and that it will help healthcare."

"The court says here that information is extremely valuable for good decision-making in our society and that's true in medicine as well," Goldstein said. "And that if doctors want to hear from detailers, they need to be able to hear from them without the government getting in the way."

Justices Stephen Breyer, Ruth Bader Ginsburg and Elena Kagan dissented. Breyer called it a lawful governmental effort to regulate a commercial enterprise.

Vermont Attorney General Bill Sorrell expressed disappointment with the ruling. "We knew going in that this Supreme Court has frequently sided with large corporations," he said. He called the decision "a step back, but not the end of the story."

Senator Patrick Leahy, a Vermont Democrat who chairs the judiciary committee, denounced the ruling. "This decision is another example of this court using the First Amendment as a tool to bolster the rights of big business at the expense of individual Americans," he said.

The Supreme Court case is Sorrell v. IMS Health, No. 10-779.

(additional reporting by Lewis Krauskopf in New York; editing by Gerald E. McCormick, Maureen Bavdek, John Wallace and Gunna Dickson)

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