Second Circuit Strikes Down Law Prohibiting Sale of Doctors’ Prescribing Histories

In a decision with far-reaching implications for the pharmaceutical industry and, more broadly, for restrictions on data, the U.S. Court of Appeals for the 2^nd Circuit recently found a Vermont law prohibiting the sale of truthful information about doctors’ prescribing histories for marketing purposes to be unconstitutional.  In IMS Health Inc. v. Sorrell, IMS Health and Source Healthcare Analytics[1] (publishers of reports on physicians’ prescribing histories) and Pharmaceutical Research and Manufacturers of America (PhRMA) (a trade association of pharmaceutical companies) argued that Vermont’s ban on the publication and use of such information violates the First Amendment. 

Pharmaceutical companies use the information in reports to facilitate “detailing”—voluntary discussions between drug company representatives and prescribers that are intended to communicate the benefits of particular medications.  On the theory that detailing drives up health care costs by encouraging doctors to prescribe name brand drugs over generics, Vermont enacted a law prohibiting the transfer and use of prescriber-identifiable information if the transaction is for the purpose of “marketing or promoting a prescription drug.”  The legislature’s stated purpose was to correct a perceived “imbalance” in the “marketplace for ideas on medicine safety and effectiveness.”

The 2^nd Circuit held that the law is an unconstitutional restraint on commercial speech.  Vermont’s asserted interest in “medical privacy,” the court found, was “too speculative to qualify as a substantial state interest” under Supreme Court precedent.  The prescription history data in the reports contain no information that would identify patients, and there was no evidence that the use of such information in marketing affected the integrity of the prescribing process.  Further, the statute did not directly advance Vermont’s interest in protecting public health and reducing health care costs because it sought to alter prescribers’ behavior through the indirect route of hampering detailers’ marketing messages.  Finally, the court held that the law was not narrowly tailored because there were less-speech-restrictive means available to Vermont that would more directly advance its public health goals.

The decision is particularly significant because it sets up a direct circuit conflict with the 1^st Circuit, which has upheld the constitutionality of similar statutes in New Hampshire and Maine on the ground that they regulate conduct, not speech.  Thus, there is a strong likelihood that the Supreme Court will take up the issue.  The state of Vermont filed a petition for certiorari on December 13, 2010.  The plaintiffs filed briefs in support of certiorari, arguing that the case warrants the Court’s attention, given the uncertainty in the state of the law and the importance of the constitutional issue presented.

[1]Akin Gump Strauss Hauer & Feld LLP represented IMS Health and Source Healthcare Analytics in this matter and is representing those companies before the U.S. Supreme Court.

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