On June 23, 2011, the Supreme Court decided Sorrell vs. IMS, Inc.,1 holding that Vermont’s prohibition of the sale of prescribing data for marketing purposes violated the First Amendment.

Although the Court’s 6-3 decision2 benefits pharmaceutical manufacturers that rely on prescription data for a variety of purposes — including in-person promotional activities, preparation of call lists, bonus calculations and performance evaluations — the Court’s opinion may have a much broader impact, potentially limiting Food & Drug Administration (FDA) efforts to ban off-label promotion of approved pharmaceutical products.


In 2007, Vermont joined New Hampshire and Maine in passing laws that prohibited the sale of prescription data for commercial purposes.3 Although labeled the Vermont Prescription Confidentiality Law, the legislature made it clear that the purpose was to impede the ability of pharmaceutical manufacturers to promote their branded products. As the Supreme Court noted, the “[f]ormal legislative findings accompanying [the statute] confirm that the law’s express purpose and practical effect are to diminish the effectiveness of marketing by manufacturers of brand-name drugs.” Slip Opinion at 9. By making “detailing” more difficult, Vermont’s legislature reasoned that doctors would be more likely to write prescriptions for generic products, which would lessen the state’s health care expenses.

Three companies that sell prescription data (without any patient identifiable information), as well as Pharmaceutical Research and Manufacturers of America (PhRMA), challenged the statute in federal district court. The district court denied the constitutional challenge to Vermont’s statute, citing a decision by the First Circuit Court of Appeals in which a similar statute in New Hampshire was upheld.4

On appeal to the Second Circuit Court of Appeals, the Second Circuit reversed the District Court decision in November 2010, holding that Vermont’s statute unconstitutionally regulated commercial speech because it was not narrowly tailored to advance the substantial state interests asserted by Vermont.5 Vermont Attorney General William Sorrell petitioned the Supreme Court to review the case to resolve the split between the First and Second Circuits.

Supreme Court’s Decision

As expected, the Supreme Court’s decision largely turned on whether justices viewed the case as a commercial speech or data privacy issue. Vermont argued that its statute merely regulated commercial activity — the sale of data — and was an effort to preserve confidentiality about prescription decisions. Thirty-five states and the United States joined in supporting Vermont, which asserted that any impact on free speech rights was secondary and not subject to the Central Hudson analysis that the Court has used for commercial speech cases.

The Supreme Court’s six-justice majority disagreed, finding that pharmaceutical marketing “is a form of expression protected by the Free Speech Clause of the First Amendment.” Id. at 1. Indeed, the Court noted, pharmaceutical marketing may be “beneficial speech,” and “[i]f pharmaceutical marketing affects treatment decisions, it does so because doctors find it persuasive.” Id. at 21. And there is a “strong argument that prescriber-identifying information” is itself speech entitled to First Amendment protection. Id. at 15. Because Vermont had imposed content- and speaker-based burdens on protected expression, the statute could not withstand the “heightened scrutiny” required by Cincinnati v. Discovery Network, Inc., 507 U.S. 410 (1993).

In reaching this decision, the Court firmly rejected Vermont’s attempts to characterize its statue as furthering privacy rights of doctors and protecting the doctor-patient relationship:

The capacity of technology to find and publish personal information, including records required by the government, presents serious and unresolved issues with respect to personal privacy and the dignity it seeks to secure. In considering how to protect those interests, however, the State cannot engage in content-based discrimination to advance its own side of a debate.... Privacy is a concept too integral to the person and a right too essential to freedom to allow its manipulation to support just those ideas the government prefers.

Slip Op. at 24, 25.

In short, the Court concluded that Vermont “burdened a form of protected expression that it found too persuasive. At the same time, the State has left unburdened those speakers whose messages are in accord with its own views. This the State cannot do.” Id. at 25.

Potential Implications of the Court’s Ruling

As always, the full impact of this decision will not be known until it is applied by lower courts. But Justice Breyer’s dissent foreshadows the next battleground in the ongoing dispute about pharmaceutical marketing: “[T]he same First Amendment standards that apply to Vermont here would apply to similar regulatory actions taken by other States or by the Federal Government, acting, for example, through Food and Drug Administration (FDA) regulations.” Dissent, p. 6.

Indeed, Sorrell seems likely to affect future court decisions about FDA’s ability to bar manufacturers from providing truthful information to physicians regarding off-label uses of approved pharmaceutical products.

The FDA “has consistently prohibited the promotion of… unapproved uses of approved products….” See Final Guidance on Industry-Supported Scientific and Educational Activities, 62 Fed. Reg. 64074, 64081 (Dec. 3, 1997). But such efforts to restrict truthful speech about off-label uses of pharmaceutical products have been on questionable constitutional ground for years. In 1998, the Court of Appeals for the District of Columbia held that FDA’s guidance restricting dissemination of reprints and medical articles about off-label uses of drugs unconstitutionally restricted commercial speech. See Washington Legal Found. v. Friedman, 13 F. Supp. 2d 51 (D.D.C. 1998), appeal dism’d, 202 F.3d 331 (D.C. Cir. 2000). And in Thompson v. Western States Med. Ctr., 535 U.S. 357 (2002), the Supreme Court rejected as unconstitutional a ban of advertising compounded drugs. In fact, Sorrell cites Thompson favorably for the rule that “the ‘fear that people would make bad decisions if given truthful information’ cannot justify content-based burdens on speech.” Slip Op. at 22.

Despite such rulings, the government has aggressively sought to punish companies and individuals for allegedly promoting branded pharmaceutical products for off-label uses. In the last five years alone, billions of dollars have been paid by pharmaceutical companies to resolve such allegations.

Given this, close attention must be paid to a Second Circuit case awaiting decision. In United States v. Caronia, a sales representative is appealing a felony conviction stemming from a sting operation in which he and a doctor hired by his employer were charged with off-label promotion of the prescription drug Xyrem. See United States v. Caronia, 576 F. Supp. 2d 385, 396-402 (E.D.N.Y. 2008), appeal docketed No. 09-5006 (2d. Cir. Dec. 3, 2009). At oral argument in December 2010, the government urged the Second Circuit to affirm the conviction without reaching the First Amendment issue because “[p]romotion is not a crime” and “the crime isn’t the promotion.”6 Instead, the government asserted, the crime is when drugs are sold by manufacturers while the manufacturer or its agents are promoting them for unapproved uses, such that the sales representative is guilty of conspiracy to commit misbranding. Id. at 8.

It remains to be seen whether the Second Circuit, whose Sorrell decision was just affirmed by the Supreme Court, accepts this analysis or extends Sorrell to find a violation of Caronia’s First Amendment rights. But clearly the Sorrell decision has bolstered such arguments.