Supreme Court Strikes Down Data Mining Law

In a 6-to-3 ruling, the US Supreme Court has struck down a highly controversial Vermont law that restricts the sale of prescription drug info identifying prescribers and patients for commercial marketing purposes. The practice is known in the pharma world as data mining and has been growing for the past two decades, ever since data was gathered by market research firms. However, data mining has also sparked heated arguments over free speech, health care costs and information privacy.

The decision is a setback for consumer advocates who maintained such laws can protect doctor-patient relationships and consumer privacy, promote patient safety and contain health care costs. Vermont, in fact, passed its law three years ago and then amended it in hopes of staving off court challenges. Similar bills have been introduced elsewhere, but the only other states that enacted legislation are New Hampshire and Maine, and both survived efforts to have them overturned.

However, the challenges to the Vermont laws were made by three healthcare research firms - IMS Health, SDI, Wolters Kluwer health - along with the PhRMA trade group, which have argued in various courts that the statutes hurt public access to healthcare info and violated commercial speech. Numerous other groups have lined up to support the challenge by filing briefs, including the US Chamber of Commerce; the National Association of Chain Drug Stores; the BIO trade group; and media companies, including the Associated Press and Bloomberg News.

The information at issue includes the name of a prescribing physician, patient age and sex, the type and strength of each drug prescribed, and the date and location of prescription. Pharmacies, of course, are required by law to collect and maintain data about each prescription that is filled, and are allowed can to sell the information, which the research firms gather and repackage. Patient names are encrypted, but drugmakers are able to track types of patients and prescribing patterns.

The former IMS exec who developed and launched the controversial database nearly 20 years cheered the ruling. "This is good news and not unexpected. I think now people need to focus on creating and applying the value in this data so everybody can get benefits. But there is no longer a question about such data should be collected," says Bob Merold, who is now a consultant with Knowledgent, a business information insights consulting firm. "Under health care reform, the Obama administration is using very similar data for analyzing best practices and pushing people toward reform, which is far more intrusive than anything done by the pharmaceutical industry, which only guarantees this type of information will be required to be collected in the future."

In delivering the majority opinion, Supreme Court Justice Anthony Kennedy writes that, "In practical operation, Vermont’s law 'goes even beyond mere content discrimination, to actual viewpoint discrimination.' Vermont errs in arguing that heightened scrutiny is unwarranted. The state contends that its law is a mere commercial regulation. Far from having only an incidental effect on speech, however, (the law) imposes a burden based on the content of speech and the identity of the speaker.

"Vermont also argues that heightened judicial scrutiny is unwarranted because sales, transfer and use of prescriber-identifying information are conduct, not speech. However, the creation and dissemination of information are speech for First Amendment purposes. There is no need to consider Vermont’s request for an exception to that rule. (The statute) imposes a speaker - and content-based burden on protected expression, and that circumstance is sufficient to justify applying heightened scrutiny, even assuming that prescriber-identifying information is a mere commodity.

"To sustain (the statute's) targeted, content-based burden on protected expression, Vermont must show at least that the statute directly advances a substantial governmental interest and that the measure is drawn to achieve that interest...Assuming that physicians have an interest in keeping their prescription decisions confidential, (the statute) is not drawn to serve that interest.

"...Pharmacies may share prescriber-identifying information with anyone for any reason except for marketing. Vermont might have addressed physician confidentiality through 'a more coherent policy,' such as allowing the information’s sale or disclosure in only a few narrow and well-justified circumstances. But it did not. Given the information’s widespread availability and many permissible uses, Vermont’s asserted interest in physician confidentiality cannot justify the burdens that (the statute) imposes on protected expression.

"It is true that doctors can forgo the law’s advantages by consenting to the sale, disclosure, and use of their prescriber-identifying information. But the state has offered only a contrived choice: Either consent, which will allow the doctor’s prescriber-identifying information to be disseminated and used without constraint; or, withhold consent, which will allow the information to be used by those speakers whose message the state supports.

The market research firms "suggest a further defect lies in presumption of applicability absent an individual election to the contrary. Reliance on a prior election, however, would not save a privacy measure that imposed an unjustified burden on protected expression. Vermont also asserts that its broad content-based rule is necessary to avoid harassment, but doctors can simply decline to meet with detailers. Vermont further argues that detailers’ use of prescriber-identifying information undermines the doctor-patient relationship by allowing detailers to influence treatment decisions. But if pharmaceutical marketing affects treatment decisions,it can do so only because it is persuasive. Fear that speech might persuade provides no lawful basis for quieting it.

"While Vermont’s goals of lowering the costs of medical services and promoting public health may be proper, (the statute) does not advance them in a permissible way. Vermont seeks to achieve those objectives through the indirect means of restraining certain speech by certain speakers - i.e., by diminishing detailers’ ability to influence prescription decisions. But 'the fear that people would make bad de-cisions if given truthful information' cannot justify content-based burdens on speech.

"That precept applies with full force when the audience - here, prescribing physicians - consists of 'sophisticated and experienced' consumers. The instant law’s defect is made clear by the fact that many listeners find detailing instructive. Vermont may be displeased that detailers with prescriber-indentifying information are effective in promoting brand-name drugs, but the state may not burden protected expression in order to tilt public debate in a preferred direction. Vermont nowhere contends that its law will prevent false or misleading speech within the meaning of this court’s First Amendment precedents. The state’s interest in burdening detailers’ speech thus turns on nothing more than a difference of opinion."

In a statement, IMS Health senior vp and general counsel says: "Today’s ruling is clear and unmistakable – these types of laws violate the Constitution and do nothing to improve healthcare, reduce costs or protect privacy as proponents had claimed. Transparency is vitally important to advancing healthcare. The availability of information on the prescribing practices of physicians enables communications about new medicines, best practices and safety updates. This information is essential to improved patient care and safety.”

In offering the minority opinion, Supreme Court Justice Stephen Breyer countered by writing "the Vermont statute before us adversely affects expression in one, and only one, way. It deprives pharmaceutical and data-mining companies of data, collected pursuant to the government’s regulatory mandate, that could help pharmaceutical companies create better sales messages. In my view, this effect on expression is inextricably related to a lawful governmental effort to regulate a commercial enterprise. The First Amendment does not require courts to apply a special 'heightened' standard of review when reviewing such an effort. And, in any event, the statute meets the First Amendment standard this court has previously applied when the government seeks to regulate commercial speech. For any or all of these reasons, the court should uphold the statute as constitutional."

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