Vermont Prescriber Privacy Law Violates First Amendment

This posting was written by Thomas A. Long, Editor of CCH Privacy Law in Marketing.

A Vermont statute regulating the collection and use of data identifying health care providers’ prescribing patterns impermissibly restricted commercial speech in violation of the First Amendment, the U.S. Court of Appeals in New York City has held.

A district court decision (CCH Privacy Law in Marketing¶60,330) denying declaratory and injunctive relief from enforcement of the statute, sought by three data-mining companies, was reversed and remanded.

The statute banned the sale, transmission, or use of prescriber-identifiable data (“PI data”) for marketing or promoting a prescription drug unless the prescriber gave consent. The law restricted speech and did not regulate merely non-expressive conduct, the court said. Restricting the sale of prescription information was a restriction on disclosure of information, which was a regulation of speech.

Substantial State Interests

Vermont alleged that the law advanced three substantial state interests: (1) protecting the public health, (2) protecting the privacy of prescribers and prescribing information, and (3) containing health care costs.

Vermont purportedly sought to discourage marketing practices regarding new brand-name prescription drugs that may not be efficacious or which may not be more effective than generic alternatives.

The state’s asserted interest in medical privacy was too speculative to qualify as a substantial state interest, in the court’s view. Vermont had not shown any effect on the integrity of the prescribing process or the trust patients have in their doctors from the use of PI data in marketing.

Lowering Costs, Protecting Public Health

Vermont did have a substantial interest in both lowering health care costs and protecting public health, but the court held that Vermont failed to show that the statute directly and materially advanced those interests.
The statute did not directly restrict the prescribing practices of doctors or the marketing practices of pharmaceutical companies. Rather, it restricted the information available to marketers so that their practices will be less effective and less likely to influence the prescribing practices of physicians.

This indirect approach was antithetical to a long line of Supreme Court cases stressing that courts must be very skeptical of government efforts to prevent the dissemination of information in order to affect conduct.

More Limited Restriction

In addition, Vermont's interests could be served as well by a more limited restriction on commercial speech, according to the court. The statute targeted the use of PI data to market all brand-name prescription drugs, not merely new brand-name drugs or those brand-name medications for which there were no generic alternatives. Thus, the statute banned speech beyond what the state’s evidence purportedly addressed.

There were alternative means to promote its interests, such as mandating the use of generic drugs as a first course of treatment, absent a physician’s determination otherwise, for all those patients receiving Medicare Part D funds.

The decision is IMS Health Inc. v. Sorrell, CCH Privacy Law in Marketing ¶60,558.