On April 26, the Supreme Court heard oral arguments in Sorrell v. IMS Health – the first case heard by the Court that considers the limitations that a state may put on mining health data for commercial purposes. Specifically, this case raises the issue of how the government regulation of data mining practices impacts both the privacy rights of individuals and the speech rights of companies – both data mining companies and their customers.
When a consumer goes to a pharmacy to have a prescription filled, the pharmacy is required by law to collect certain information about the transaction, including the name and dosing details of the prescribed drug and the physician’s name. After the prescription is filled, the pharmacies sell the prescriber identifiable data to companies like IMS Health. Information identifying specific patients is removed. This data is then sold by data aggregators for a variety of purposes, such as research and, the purpose at issue in Sorrell, marketing by pharmaceutical companies. Armed with data about particular prescribers and their prescribing habits, a pharmaceutical sales representative can more effectively target physician marketing and education efforts through a process known as “detailing.”
In 2007, Vermont passed a law restricting the use by pharmaceutical companies of data gathered by pharmacies about physician prescribing habits for marketing purposes without the affirmative consent of the physician. The Vermont legislature made clear that the purpose of the statute was to both protect the privacy of doctors and to change the way the pharmaceutical companies market to physicians. Vermont hoped that changing the way that pharmaceutical companies could “detail” would lower health care costs and improve health care outcomes by encouraging doctors to prescribe generic drugs and making pharmaceutical marketing efforts more focused on objective medical issues rather than on targeting specific doctors.
Vermont is currently one of four states that have laws or regulations restricting the use of prescriber-identifiable data. New Hampshire’s law similarly restricts the use of prescriber data for any commercial purpose (without a mechanism for a prescriber to consent to allowing her information to be used for commercial purposes). After this law was passed, it was challenged by the same data mining companies currently litigating Sorrell. Eventually, the First Circuit held that the law regulated conduct, not speech, and did not violate the First Amendment. The Supreme Court declined to hear an appeal of the New Hampshire decision.
In Sorrell, the Second Circuit held that the Vermont statute was unconstitutional as failing to provide prescriber-identifiable data to pharmaceutical companies constituted commercial speech, and Vermont did not advance a substantial interest sufficient to survive intermediate scrutiny, which is given to regulation of commercial speech. This decision created a circuit split between the First and Second Circuits, and the Supreme Court granted a writ of certiorari to hear the case. The Supreme Court has agreed to hear the case to resolve the specific question of whether a law that restricts access to information in nonpublic prescription drug records and affords prescribers the right to consent before their identifying information in prescription drug records is sold or used in marketing runs afoul of the First Amendment.
The Justice Department joined Vermont assistant state attorney general, Bridget Asay, in arguing to uphold the law in front of the Supreme Court. Both Vermont and the Solicitor General argued that this case is about access to non-public information, and the First Amendment regulates speech and not access. In making this argument, Vermont points to the fact that the prescriber-identifiable data exists by virtue of government regulation (namely the regulation of prescription drugs), and that if this data were in the government’s hands the government could deny access to the data. During the oral arguments, this argument did not appear to be persuading the Justices as several Justices seemed to assume in their questioning that the Vermont law stood as a barrier to the commercial speech of pharmaceutical companies. Many of the Justices – including Chief Justice Roberts, Justice Alito, and Justice Scalia – also questioned whether the statute did anything to protect the privacy of physicians. The Justices kept asking how the statute protected privacy if the data could continue to be used for all other purposes except pharmaceutical detailing. Justice Scalia inferred that a physician could obtain a similar level of privacy protection by merely “shutting the door” on pharmaceutical representatives. Ms. Asay had trouble during her argument countering the aggressive questioning of the Justices regarding how the Vermont statute protected the privacy of physicians.
The other side of the case was argued by Tom Goldstein on behalf of IMS Health, several other data mining companies and the Pharmaceutical Manufacturers Association. IMS Health argued that the Vermont law prohibited only one use of the information – use by pharmaceutical companies for detailing purposed. They argued that this discrimination is intended to restrict truthful information presented by pharmaceutical companies to physicians. In the oral argument, IMS Health attempted to downplay the privacy issues involved with the case, by distinguishing the Vermont law from the recently introduced Kerry/McCain privacy legislation. Mr. Goldstein argued that privacy legislation could most certainly be constitutional, but that the Vermont statute was not typical privacy legislation. He made the following points about the differences between typical privacy legislation (e.g., the Kerry/McCain bill) and the Vermont statute:
- The structure of the Vermont statute is fundamentally different as it allows all uses except one, whereas typical privacy legislation would apply more broadly to a set of uses of an individual’s data that the individual might not expect.
- The Vermont statute prohibits the use of information to further the efficient delivery of speech that has great public importance, namely information about life-saving drugs that is transmitted from pharmaceutical companies to doctors.
- The nature of the privacy interests in general privacy legislation are very different from the nature of the privacy interests in the Vermont statute. A doctor’s prescribing practices are not “private” in the same way a person’s home address is private. A doctor is in the market trying to sell clinical services. Mr. Goldstein suggested you should be able to call up a physician and ask about her prescribing practices.
Ultimately, this case may turn on whether the Court believes that Vermont’s law merely prohibits access to information regulated by the government or whether the law censors the speech of the pharmaceutical companies. It is doubtful that the Supreme Court will issue an opinion that speaks broadly to the constitutional status of data mining and whether all data collections or uses would qualify as speech (commercial or otherwise). However, this decision will certainly have an impact on the practices of pharmaceutical manufacturers and data minders dealing with prescriber-identifiable data. If the law is upheld, many states may attempt to pass similar laws regulating the use of prescriber-identifiable data. Further, states may try to regulate data mining more broadly, perhaps even outside of the commercial context. If the law if deemed unconstitutional, companies that access data for data mining purposes may have an additional arrow in their quiver when it comes to litigating against government regulation that inhibits their access to or use of certain data.
The Court is expected to issue a decision in this case by the end of June.