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The Supreme Court’s Decision in Sorrell v. IMS Health and Public Health

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This post authored by O’Neill Institute Research Assistant and rising Georgetown Law 2L, Dinesh Kumar.

In a 6-3 decision on June 23, the Supreme Court ruled unconstitutional a Vermont law prohibiting pharmacies from selling prescriber-identifiable drug information to “data mining” companies.  These companies aggregate and sell this data (which doesn’t identify patients) to pharmaceutical companies, which promote sales through targeted “detailing” of doctors’ offices.  The plaintiffs-respondents (which included PhRMA as well as major data miners IMS Health, SDI, and Source Healthcare Analytics) argued that the law curtailed their First Amendment commercial speech rights by impeding the ability of drug companies to interface with doctors, and the Court agreed.  

Noting that the law particularly targeted industry detailing (i.e., the law did not prevent healthcare research organizations or journalists from using the data), Justice Kennedy in the majority opinion said the law discriminated on the basis of the speaker and content of the speech—a fundamental First Amendment violation.  Kennedy was also disturbed by Vermont’s contention that detailing should be curbed because it was too effective in influencing doctors’ treatment decisions: “[F]ear that speech might persuade provides no lawful basis for quieting it.”

The Court upheld the opinion of the Second Circuit, which had previously overturned a district court ruling that the law was constitutional.  Two other laws banning data-mining that predate Vermont’s, in Maine and New Hampshire, had been upheld by the First Circuit in recent years, but the Supreme Court had not taken up the issue until Sorrell.  The Maine and New Hampshire laws are virtually identical to Vermont’s in regards to the scope and purpose of their restrictions on the sale of prescriber-identifiable date.

In dissent, Justice Breyer said the Court overreached in overturning the Vermont legislature’s exercise of economic regulation.  Justice Breyer warned that the decision “at worst, reawakens Lochner’s pre-New Deal threat of substituting judicial for democratic decision-making where ordinary economic regulation is at issue.”  Vermont had argued that the sale of the data invades physicians’ privacy and would contribute to the rising cost of pharmaceutical spending (by leading companies to dissuade doctors from prescribing generics in favor of their own brands).  In the Legislative Findings portion of the law, the Vermont legislature had expressed concern that detailing represented an undue influence on physician decision-making: “the public health is ill served by the massive imbalance in information presented to doctors and other prescribers.”  Justice Breyer, joined by Justices Ginsburg and Kagan in dissent, thought these to be valid governmental interests for the Vermont legislature to protect, and following Central Hudson Gas & Electric Co. v. Public Service Commission (1980), believed the law advanced those interests.

The Court’s decision is a major victory for the pharmaceutical industry and the many firms that specialize in analyzing and selling healthcare data.  Information on prescribing patterns contained within pharmacy datasets is a valuable commercial resource for industry.  But it remains to be seen what the ramifications will be on public health generally.  As noted by amici curiae in support of the law, studies have raised concerns about the conflicts of interest that arise when the pharmaceutical industry becomes entrenched in doctors’ offices (here is a link to the AARP brief).  Professional organizations such as the American College of Physicians and the National Physicians Alliance have called for an end to targeted detailing because of its effect on prescription costs and ethical concerns.  But the data miners and drug companies insist that detailing informs doctors about their prescribing patterns and improves the public health by keeping abreast of safety and efficacy of new medicines.  IMS Health vice president Randy Frankel called the ruling “a great benefit in terms of improving patient care.”

The consensus in the medical community and federal government appears to be that pharmaceutical detailing does more harm than good, and that countering it is a valid governmental interest.  In 1983, Dr. Jerry Avorn of Harvard Medical School introduced the concept of “academic detailing” – employing clinical pharmacists to educate clinicians about drugs in order to counter the potentially biased efforts by pharmaceutical companies’ sales forces.  In the years since, the idea (also known as “counterdetailing”) has been employed by insurance companies and advocacy groups.  In 2010, the U.S. Department of Health and Human Services (HHS) devoted $11.7 million of its American Recovery and Reinvestment Act (ARRA) appropriation to an academic detailing program to help clinicians understand the comparative effectiveness of various treatment options. 

The implications of the Court’s reasoning also may have effects on other prominent areas that are at the intersection of public health regulation and commercial speech.  As Justice Breyer noted in his dissent, the Court’s insistence on protecting commercial speech on the basis of content or speaker discrimination threatens regulatory action that, by its very nature, is specifically content- or speaker-based.  For example, the FDA bans off-label promotion of drugs by pharmaceutical companies.  That regulation, like many others, specifically curbs the commercial speech of a particular speaker (drug companies) in regards to particular content (promoting off-label drug usage).  It would be unreasonable, Justice Breyer suggested, to leave such regulations open to attack in light of the Court’s decision.  He feared that the Central Hudson test, which had endured for 30 years, was compromised by the Court’s decision to employ heightened scrutiny on commercial speech regulation in this instance. 

The public health implications of the ruling may reach beyond regulating prescription drug promotion. For years before the Sorrell ruling, commentators have speculated on the boundaries of government’s ability to compel certain types of commercial speech in the interest of promoting public health.  Prominent recent examples include the FDA’s plan, beginning in September 2012, to require cigarette packets to display prominent, pictorial warning labels, and both state and federal laws requiring calorie labeling in some restaurants.  While the Vermont law overturned by the Court does not compel particular commercial speech (rather, it forbids speech), the ruling may have an impact on future challenges to compelled commercial speech.

It is worth noting that underlying these ramifications is the fact that Vermont recently became the first state to pass legislation to launch a single-payer healthcare system.  While the system, Green Mountain Care, will not be up and running until 2014, the legislative victory emerged largely due to concerns about rising costs of the current public-private system.  Governor Peter Shumlin noted that a tipping point in the debate was data presented to the legislature by Harvard economist William Hsiao, showing that a single-payer system would be 25% cheaper for consumers, businesses, and the government.  The state’s ability to garner enough votes and stakeholder support to enact such a sweeping change of its healthcare system indicates the pressing nature of curbing healthcare costs as a vital governmental interest.  When it comes to pharmaceutical spending, however, that interest failed to justify — in the eyes of the Court — a law targeting particular stakeholders’ First Amendment rights.

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