Drug Database Firms Have Much to be Thankful for this Past Thanksgiving as Second Circuit says “Good-Bye” to Vermont’s Drug Marketing Restrictions
On November 23, 2010, the Court of Appeals for the Second Circuit issued its ruling that Vermont’s drug-marketing restrictions were unconstitutional. The law banned the use, sale or transmission of prescriber-identifiable data for prescription drug marketing or promotional purposes without first obtaining the prescriber’s consent. Several data mining companies had brought the suit alleging that the statute impermissibly infringed upon their freedom of speech.
As the Court of Appeals noted, data mining companies typically collect aggregate data to determine prescribing patterns and sell the information to pharmaceutical companies which, allegedly without this information, would be prevented from more effective marketing efforts, directing important information to prescribers, tracking disease prevention, and conducting clinical trial programs and post-marketing surveillance programs. Researchers and insurance companies also use the data generated by data-mining companies, as do state law enforcement and other state agencies, and federal agencies such as the FDA, CDC and DEA.
Noting that the First Amendment protects “even dry information, devoid of advocacy, political relevance, or artistic expression,” the Court of Appeals found the Vermont statute was clearly aimed towards influencing “the supply of information,” central to First Amendment concerns, and that it restricted the data mining companies’ commercial speech. The Court held that the statute failed to satisfy the intermediate scrutiny test because it did not assert a substantial state interest that was “directly advanced” by the statute nor was it “narrowly tailored” to achieve that interest.
In doing so, the Court of Appeals rejected the substantial state interests alleged by Vermont – that the restrictions protected the public health and the privacy of prescribers and prescribing information (medical privacy) and the state’s interest in containing health care costs in the private and public sectors. The Court noted that data-mining and the use of the data generated from such activities was still permitted in other contexts and found the state’s concerns for medical privacy too “speculative” under the circumstances to qualify as a substantial state interest. Although the Court did agree that Vermont had a substantial interest in lowering health care costs and protecting public health, it found that the statute did not advance these interests in a ”direct and material way.” The Court also found that the statute was not narrowly tailored and that Vermont had more direct and less restrictive methods available that it failed to utilize that would better serve its asserted interests.
The Vermont decision could have paramount implications for HIEs. Secondary uses of de-identified information are often touted as a potential solution to the elusive long-term financial sustainability issue faced by all HIEs. The fact that the Second Circuit struck down as “unconstitutional” a state law enacting restrictions on data mining will most certainly give database firms and HIE stakeholders confidence that similar uses of information in other contexts could be similarly protected under the First Amendment.
The text of the court’s full decision may be found at http://courtlistener.com/ca2/VqT/ims-health-inc-v-sorrell/
