Supreme Ct. hears oral arguments in pharmacy data case

The Supreme Court heard oral arguments today in Sorrell v. IMS Health Inc., a case about whether a Vermont statute restricting the commercial dissemination of pharmacy records places unconstitutional restrictions on commercial speech.

Vermont’s legislature passed the Prescription Confidentiality Law in 2007, giving physicians the ability to allow or deny pharmacies the option of selling information about doctors’ prescribing habits to data-collection companies. Those companies would use that information for commercial purposes and sell it to drug manufacturers, proponents of the law said.

A physician who testified during a legislative hearing for the law noted: "I don’t want my prescribing habits monitored so that organizations and corporations can profit by selling them and/or using that information for the goal of trying to subvert what I do.”

Connecticut-based pharmaceutical data-collection company IMS Health, two other data-collection companies and PhRMA, a pharmaceutical industry association, challenged the constitutionality of the law. They argued that the statute placed too great of a restriction on commercial speech.

A district court upheld the statute, finding that it falls within the boundaries on regulation of commercial speech. The U.S. Court of Appeals in New York (2nd Cir.) reversed that decision. The appellate court said the statute did not directly advance Vermont's asserted interests in public health, medical privacy and pharmaceutical cost containment, and was not narrowly tailored enough to justify the restriction on commercial speech.

The U.S. Supreme Court agreed to review the appeals court's decision in January.

Vermont’s Assistant Attorney General Bridget C. Asay argued today: “Drug companies would certainly like to have this information for marketing, but they have no First Amendment right to demand it, just as they have no right to demand access to the doctor's tax returns, his patient files or to their competitors' business records.”

Asay faced pointed questions from the bench, including from Chief Justice John Roberts, Justice Samuel Alito and Justice Antonin Scalia. Pressed to clarify the objectives of the statute, Asay argued that one purpose was to protect privacy for the prescribing doctors.

“I think the legislature here was using privacy to refer to the autonomy interest that everyone has to some degree in controlling the flow or the use of information about them," Asay said in response to a question from Scalia.

Asay split her oral argument time with U.S. Deputy Solicitor General Edwin S. Kneedler, who argued in support of Vermont's law on behalf of the United States. Kneedler argued that the Vermont statute was narrowly drawn to allow physicians more control over the use of their prescription information for marketing purposes.

Kneedler also sought to distinguish the statute from other commercial speech cases. "It's also important to recognize that this is very different from the general advertising cases this Court has had under the commercial speech doctrine. This is not public advertising," Kneedler said. "It's one-on-one advertising in which the public interest is much more limited."

Thomas C. Goldstein represented IMS Health and responded to Asay’s claim by noting that the law is too specific regarding what type of speech it attempts to restrict and that it did not succeed in protecting privacy.

“At the same time, we know that the government can use controls over information to really distort speech,” Goldstein said. “So the question is: what happens in this statute? And this statute has a structure that's not intended to protect privacy.”

When Roberts asked what a statute that does protect privacy would look like, Goldstein said such a statute would prohibit disclosure to anyone, rather than simply to paying data collectors.

Goldstein noted that the state enacted the law to limit pharmaceutical advertising in order to lower health care costs.

“You have to decide this case in the middle about what Vermont actually did, and it was unbelievably candid about what it was trying to do,” he said. “It said the marketplace of ideas doesn't work for us, and so it designed a statute — and you can decide this case very narrowly on the ground that what Vermont did is it went too far in just saying 'we're not actually trying to protect privacy; what we're trying to do is give the doctors control when it suits our own best interests.'”

The Reporters Committee for Freedom of the Press joined a friend-of-the-court brief filed by media organizations in support of IMS Health. The brief emphasizes the role that data gathering, analysis and publication plays in journalism today.

The Court is expected to rule by this summer.