Prescription Privacy Laws Get U.S. High Court Scrutiny

The U.S. Supreme Court accepted a case that pits medical privacy interests against speech rights, agreeing to consider whether states can limit how drugmakers use data about the prescription-writing practices of doctors.

The justices today said they will review a Vermont law being challenged by a pharmaceutical industry trade group and three “data-mining” companies that help drugmakers target individual doctors with sales pitches. The 2007 Vermont law, struck down by a federal appeals court, bars use of prescription information for marketing without the doctor’s consent.

The case gives the high court a chance to shape the burgeoning debate over the extent of privacy rights in the digital age. Vermont is one of three New England states that restrict the use of prescription records for marketing, and similar legislation has been introduced in two dozen other states, according to Vermont’s appeal.

“Information technology has created new and unprecedented opportunities for data-mining companies to obtain, monitor, transfer and use personal information,” Vermont argued.

Opponents of the law joined Vermont in urging the Supreme Court to hear the appeal and clear up lower court disagreement. The Pharmaceutical Research and Manufacturers of America, which represents the drug industry, is banding together with data- mining companies including IMS Health Inc. to challenge the measure.

Marketplace of Ideas

The trade group said the law “bans the speech of one set of disfavored participants in the marketplace of ideas, pharmaceutical companies.”

Data-mining units of SDI Health Holdings LLC and Wolters Kluwer NV are also challenging the law. IMS is a unit of Healthcare Technology Holdings Inc.

The Vermont law targets “detailing,” the industry practice of one-on-one marketing to doctors to persuade them to prescribe particular drugs. Pharmaceutical companies spend more than $8 billion a year on detailing, according to trial testimony in the case.

The data-mining companies buy the prescription information from pharmacies, which are required by state law to collect information about the types of drugs and dosages prescribed by individual doctors. The data-mining companies package the data for sale to drug companies.

Restricting Speech

The 2nd U.S. Circuit Court of Appeals in New York struck down the Vermont law in a 2-1 ruling. The majority said the measure violates the First Amendment because it restricts the speech rights of data miners without directly advancing legitimate state interests.

Vermont contends that detailing drives up health-care costs by making it less likely that doctors will prescribe generic medicines. The state also says its law protects physician privacy.

“Restrictions on the dissemination of nonpublic information held by private persons have long coexisted with the First Amendment,” Vermont argued.

IMS and the other data miners argued that “the statute does not directly advance Vermont’s interests in protecting public health and reducing health-care costs because it seeks to alter prescribers’ behavior through the indirect route of hampering detailers’ marketing messages.”

IMS said in a statement, “We believe the justices will agree with the court of appeals that laws like this one violate the First Amendment right of free speech.”

The 2nd Circuit’s ruling put it in conflict with the Boston-based 1st Circuit. That court upheld a similar New Hampshire law in 2008, saying it regulates conduct, not speech. The Supreme Court refused to review that ruling in 2009. Maine also has a similar law.

The court probably will hear arguments in April and issue a ruling by July. The case is Sorrell v. IMS Health, 10-779.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.