The Secure Times

An online forum of the ABA Section of Antitrust Law's Privacy and Information Security Committee

Supreme Court Strikes Down Vermont Prescription Privacy Law

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In Sorrell v. IMS the U.S. Supreme Court stroke down yesterday (by a vote of 6-3) Vermont’s 2007 Prescription Confidentiality Law, which had made it illegal for pharmacies and similar entities to sell prescriber-identifying information, without the prescriber’s consent. The court had heard oral arguments in April.

Subject to certain exceptions, such as health care research, this information could not have been be sold or disclosed by pharmacies for marketing purposes. The law, Vt. Stat. Ann., Tit. 18, §4631 (Supp. 2010), states that:

“A health insurer, a self-insured employer, an electronic transmission intermediary, a pharmacy, or other similar entity shall not sell, license, or exchange for value regulated records containing prescriber-identifiable information, nor permit the use of regulated records containing prescriber-identifiable information for marketing or promoting a prescription drug, unless the prescriber consents . . . . Pharmaceutical manufacturers and pharmaceutical marketers shall not use prescriber-identifiable information for marketing or promoting a prescription drug unless the prescriber consents . . . .”

Pharmacies receive prescriber-identifying information when processing prescriptions, and many of them then sell this information to data-mining companies, which use this information to write marketing reports. These reports are leased to pharmaceutical manufacturers, and used for marketing research, leading to increased sales.

The case involved two consolidated suits, one brought by Vermont data-miners, the other by an association of pharmaceutical manufacturers, all contending that the Vermont law violated their First Amendment rights, as speech helping pharmaceutical marketing is speech protected by the First Amendment. The United States District Court for the District of Vermont had denied them relief, but the Second Circuit reversed, holding that the Vermont law violated the First Amendment by burdening the speech of pharmaceutical marketers and data mining companies without an adequate justification.

The state of Vermont had argued that the law is merely a commercial regulation, and thus heightened judicial scrutiny is unwarranted. But the Supreme Court was not convinced, noting that the law “imposes more than an incidental burden on protected expression. Both on its face and in its practical operation, Vermont’s law imposes a burden based on the content of speech and the identity of the speaker.” Since Vermont’s law enacts content- and speaker-based restrictions on the sale, disclosure, and use of prescriber-identifying information, this statute…

disfavors marketing, that is, speech with a particular content. More than that, the statute disfavors specific speakers, namely pharmaceutical manufacturers. As a result of these content- and speaker-based rules, detailers cannot obtain prescriber-identifying information, even though the information may be purchased or acquired by other speakers with diverse purposes and viewpoints.”

The state of Vermont had also argued that physicians have a “reasonable expectation” that their prescriber-identifying information “will not be used for purposes other than . . . filling and processing” prescriptions. The Supreme Court was not convinced by this argument either as the Vermont law does not completely serve that interest. The Vermont law allows pharmacies to share prescriber-identifying information with anyone unless this person then allows the information to be used for marketing. However, researchers, journalists, even the State itself, may use the information, and this “does not in itself advance confidentiality interests” remarked the Supreme Court, noting that…

[p]erhaps the State could have addressed physician confidentiality through “a more coherent policy.” For instance, the State might have advanced its asserted privacy interest by allowing the information’s sale or disclosure in only a few narrow and well-justified circumstances.. A statute of that type would present quite a different case than the one presented here. But the State did not enact a statute with that purpose or design. Instead, Vermont made prescriber-identifying information available to almost limitless audience. The explicit structure of the statute allows the information to be studied and used by all but a narrow class of disfavored speakers….

Vermont has given its doctors a contrived choice: Either consent, which will allow your prescriber-identifying information to be disseminated and used without constraint; or, withhold consent, which will allow your information to be used by those speakers whose message the State supports. [The Vermont law] may offer a limited degree of privacy, but only on terms favorable to the speech the State prefers.”

Justice Breyer wrote a dissenting opinion, with whom Justice Ginsburg and Justice Kagan joined. In his view, the Vermont statute only adversely affects speech in one way, as it prevents pharmaceutical and data-mining companies to access data that could help pharmaceutical companies create better sales messages. Justice Breyer wrote: ”In my view, this effect on expression is inextricably related to a lawful governmental effort to regulate a commercial enterprise.”

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Author: marieandreeweiss

Marie-Andrée was educated in France and in the United States, and holds law degrees from both countries. She is fully bilingual English-French, and writes articles regularly in these two languages on various privacy-related topics. Marie-Andrée is a member of the Bar of the State of New York. As an attorney in solo practice, she focuses on intellectual property, First Amendment, privacy, and Internet-related issues. Before becoming an attorney, she worked several years in the fashion retail industry, as a buyer then a director of marketing. She is a member of the New York State Bar Association (Intellectual Property Section and International Section), and of the American Bar Association (Business Law Section, Section of Antitrust Law, and Section of Intellectual Property Law)

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