S.Ct.: Vermont’s Prescription Confidentiality Law Vioalates 1st Am.

The Supreme Court ruled that Vermont’s Prescription Confidentiality Law, which prohibits pharmacies from selling prescriber-identifying information to pharmaceutical manufacturers for marketing purposes, violates the First Amendment. Sorrel v. IMS Health, Inc., No. 10-779, 2011 WL 2472796 (June 23, 2011). Justice Kennedy wrote the opinion of the Court and was joined by Justices Roberts, Scalia, Thomas, Alito, and Sotomayor. Justice Breyer filed a dissent, which Justices Ginsburg and Kagan joined.

Vermont passed the Prescription Confidentiality Law in 2007. Among other provisions, it prohibits pharmacies and other entities from selling information about which doctors prescribe which medications, prevents them from allowing this information to be used for marketing purposes, and bars pharmaceutical manufacturers and marketers from using this information marketing; all except if the prescriber consents. The prohibition on the sale of prescriber-identifying information has exceptions for health-care research, education communications, and other purposes. The law is designed to combat the practice of detailing, by which pharmaceutical marketers use data from pharmacies to tailor their marketing of products to particular physicians.

Three Vermont data miners and an association of brand-name pharmaceutical manufacturers sued for declaratory and injunctive relief, asserting that their First Amendment rights had been violated. The District Court for the District of Vermont denied relief, but the Second Circuit reversed. Recognizing a split with the First Circuit, which affirmed a similar law in New Hampshire, the Supreme Court granted certiorari.

The Court applied a two-step test, considering whether the speech in question warranted heightened judicial scrutiny and, if so, whether Vermont law satisfied that scrutiny. The majority determined that heightened scrutiny was needed, because the law imposes content- and speaker-based restrictions on the sale of prescriber-identifying information. Specifically, Kennedy found that the exceptions in the law were based on content, and that the statute disfavors particular speakers, namely brand-name pharmaceutical manufacturers.

Turning to Vermont’s counterarguments, the Court first characterized the effect on speech as “more than an incidental burden” and rejected the notion that the law is only a commercial regulation. The Court also distinguished Los Angeles Police Dept. v. United Reporting Publishing Corp., 528 U.S. 32 (1999), which Vermont used to support its case by arguing that the information was “generated in compliance with a legal mandate…and so could be considered a kind of governmental information.” First, it observed that the information is actually in private hands. “More important[ly],” unlike in United Reporting, the respondents have claimed burdens on their own speech.” In addition, the majority dismissed the argument that conduct, not speech, was regulated, relying on Bartnicki v. Vopper, 532 U.S. 514, 527 (2001), to say that creating and disseminating information are speech acts protected by the First Amendment.

The Court proceeded to apply a “commercial speech inquiry” to the law, while suggesting that greater scrutiny might have been warranted, remarking that the outcome was the same. It noted that Vermont had the burden to justify the content-based law and tested the fit between the law and the stated purposes. First, along with other reasons, it found that the law does not properly protect physicians’ privacy since it allows pharmacies freely to sell information for purposes other than marketing. Following Greater New Orleans Broadcasting Assn., Inc. v. United States, 527 U.S. 173, 195 (1999), it suggested “more coherent polic[ies]” were available to accomplish this purpose. Second, the majority found the law’s method of reducing health care costs, “diminishing detailers’ ability to influence prescription decisions,” to be “incompatible with the First Amendment.” Comparing this case to Thompson v. Western States Medical Center, 535 U. S. 357, 373 (2002), Kennedy also noted that Vermont had not claimed that the detailing that the law presents is “false or misleading.”

The dissent, following Glickman v. Wileman Brothers & Elliott, Inc., 521 U.S. 457 (1997), sought to balance the burden on First Amendment rights against the “furtherance of legitimate regulatory objectives.” Its test for commercial speech was whether the law “also ‘directly advance[s]’ a ‘substantial’ government interest that could not ‘be served as well by a more limited restriction’ (Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N. Y., 447 U.S. 557, 564 (1980).) The dissent claimed support for an even lower review standard for economic regulation, noting that “until today, this Court has never found that the First Amendment prohibits the government from restricting the use of information gathered pursuant to a regulatory mandate.”

Turning to the merits, the dissent found that, even under the higher commercial speech standard, the law does not violate the First Amendment. Breyer noted that, in practice, the disclosure of prescriber-identifying information to entities other than pharmaceutical companies is rare and cast doubt on the existence of a discriminatory effect. Then the dissent applied Central Hudson to find that (1) a substantial interest is involved, since detailing “divert[s] attention from scientific research about a drug’s safety and effectiveness, as well as its cost…expense of public health,” which falls under a state’s police powers; and (2) the majority could not point to any more limited restrictions that would advance this interest.

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