Drug-Marketing Limits May Be Voided by U.S. Supreme Court in Vermont Case

U.S. Supreme Court justices signaled they are poised to overturn a Vermont law that would limit the ability of brand-name drugmakers to target individual doctors with sales pitches.

Hearing arguments in a case that pits speech rights against privacy interests, the justices today questioned a Vermont law governing use of prescription information collected by pharmacies. The measure bars the use of that data for marketing without the doctor’s consent.

Several justices questioned whether the law effectively protected the privacy of doctors, saying the measure would allow use of the information for other purposes. Chief Justice John Roberts and Justices Anthony Kennedy and Antonin Scalia all said the law was aimed at promoting lower-cost generic drugs by undermining “detailing,” the brand-name industry practice of one-on-one marketing to doctors.

“What you’re saying is that the state can prohibit the most efficient sort of speech,” Kennedy told the state’s lawyer.

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. Pharmaceutical companies spend more than $8 billion a year on detailing, according to trial testimony in the case.

Pitch to Doctors

The data-mining companies buy the prescription information from pharmacies, which are required by state law to collect data about the types of drugs and dosages prescribed by individual doctors. The data-mining companies then package the information for sale to drug companies, which can use it to pitch their products to doctors who have been prescribing something else.

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.

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.

The Obama administration is joining Vermont in defending the measure. The state’s lawyer, Bridget Asay, told the justices that drug companies “do not have a right to demand access to information about the doctor’s prescribing practices without his consent.”

The Same Objective

Scalia said the law didn’t accomplish anything doctors couldn’t do on their own. “He could achieve the same objective, could he not, by simply refusing to talk to the marketer?” Scalia asked.

The lawyer representing the challengers to the law, Thomas Goldstein, pointed to a provision in the measure that says the “marketplace for ideas on medicine safety” was “in conflict with the goals of the state.”

“This is truthful and accurate speech, and the state only wants one side of the debate to get out,” Goldstein said.

That argument resonated with several justices, including Roberts. He said the state was “censoring” the information received by doctors “so they will do what you want them to do when it comes to prescribing drugs.”

‘Decibel Level’

Justice Ruth Bader Ginsburg made a similar point. “Why doesn’t that run up against what this court has said: that you can’t lower the decibel level of one speaker so that another speaker, in this case the generics, can be heard better?” she asked Asay.

Several news organizations, including Bloomberg LP, the parent of Bloomberg News, are urging the court to overturn the law. They say a ruling upholding the law might jeopardize news gathering.

None of the justices directly came to the law’s defense today, although several asked whether states could take other steps to protect physician privacy. Justice Sonia Sotomayor asked whether a state could adopt an “opt out” rule so that doctors could prevent their information from being used by marketers. Goldstein said states could.

Justice Elena Kagan later asked whether a state could bar a pharmacy from selling the data to anybody. Goldstein said such a rule would protect against commercialization without protecting privacy.

The justices will likely rule by the end of June in the case, 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.