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Wednesday, September 21, 2011

Sorrell v. IMS Health, Inc.: The Constitutionality of Restrictions on the Use of Data for Commercial Purposes

Kathleen Ann Ruane
Legislative Attorney

Health related data can be very valuable to researchers, scientists, and other academics. It can be just as valuable to participants in the market for the provision of health care. For example, pharmaceutical manufacturers use a process known as detailing to market prescription drugs. Detailing involves sending representatives of the pharmaceutical manufacturers to individual doctors’ offices with information about prescription drugs and their various uses. The more information a detailer has about the doctor (or medication prescriber) that he or she is planning to market to, the better targeted, and more effective, the detailing becomes. Consequently, information about the past prescribing practices of doctors can be valuable to detailers in designing their marketing strategies.

An industry has developed to collect, aggregate, and analyze these prescriber data. These data gatherers sell the information they collect from pharmacies and hospitals about prescriber practices to pharmaceutical manufacturers for use in marketing. They also sell the data to researchers and others that might use the data, but this market is far smaller than the market consisting of pharmaceutical manufacturers and marketers. Some doctors find better-targeted detailing to be useful. Other doctors find the sharing of their prescriber history without their consent, and its subsequent use as a marketing tool, to be an invasion of privacy.

Three states—Maine, New Hampshire, and Vermont—have enacted statutes to restrict the sale and use of prescriber history data for the purposes of marketing (though not for any other purpose) without the consent of the doctor. The states claimed to be protecting the privacy interest of the doctors. Also, the states were interested in lowering the costs of health care. Because detailing effectively encourages the prescription of more expensive, brand-name drugs, data suggest that health care costs are measurably increased by detailing. The states reasoned that if detailing were less effective, then doctors might be more likely to prescribe generic drugs, which are cheaper than brand-name drugs, and health care costs overall would go down.

The companies that collect, analyze, and sell these data challenged the laws, claiming that they were an unconstitutional restriction of their free speech rights under the First Amendment. The First Circuit Court of Appeals upheld the laws enacted by Maine and New Hampshire as restrictions on conduct rather than speech, and further found that even if the laws did restrict speech they were constitutional restrictions on commercial speech. The Second Circuit Court of Appeals struck down a functionally identical Vermont statute. The Second Circuit found that the Vermont law unconstitutionally restricted commercial speech. In order to resolve this split in the circuits, the Supreme Court granted certiorari in the Second Circuit Case. A divided Court affirmed the decision of the Second Circuit but applied a slightly different standard than the lower court.

Date of Report: September 1
5, 2011
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