On June 23, 2011, the United States Supreme Court issued its decision in Sorrell v. IMS Health, Inc. (“Sorrell”) striking down a Vermont law that restricted the sale or use of “prescriber-identifiable information.” In a 6-3 decision, the Court held that the law constituted an impermissible restriction on the free speech rights of pharmacies, pharmaceutical manufacturers, and pharmaceutical detailers that distribute or use the information.
This case represents a significant victory for the pharmaceutical industry, which had been facing threats from states like Vermont that sought to restrict the ability of pharmacies to distribute prescriber information for marketing purposes. Quarles & Brady was honored to represent the interests of the National Association of Chain Drug Stores and the American Society for Automation in Pharmacy as Amici Curiae in this important case that protects the flow of provider identifiable information in the pharmaceutical marketplace.
The law at issue in Sorrell prohibited pharmaceutical manufacturers and pharmaceutical marketers from using information about a physician’s prescribing practices (called “prescriber-identifiable information”) for marketing purposes unless the prescriber consents to the use. The law also prohibited pharmacies and other similar entities from selling such records for marketing purposes without the prescriber’s consent. IMS Health, among other entities, challenged this law as an impermissible restriction on the right to free expression under the First Amendment.
While conceding that prescriber-identifiable information is commercial in nature, the Court recognized that “[s]peech in aid of pharmaceutical marketing…is a form of expression protected by the Free Speech Clause of the First Amendment.” Furthermore, unlike other laws that deal with commercial speech, the Court noted that the Vermont law “imposes more than an incidental burden on protected expression.” Indeed, the Vermont law specifically targeted speech based on its content and on the identity of the speaker. The Court noted that, under the law, a pharmacy would be permitted to sell prescriber-identifiable information for research purposes but would be forbidden from doing so for marketing. Likewise, pharmaceutical manufacturers and detailers were prohibited from using prescriber-identifiable information for marketing, but no other individuals or entities were subject to the same restriction.
The fact that the Vermont law specifically targets speech based on its content and the identity of the speaker was significant to the Court’s decision. The Court held that such content-based and speaker-based restrictions on speech are subject to “heightened” scrutiny, which means that the state must show that the law furthers a substantial government interest, and that the law is drafted to further that interest. In this case, Vermont asserted two general justifications for the law, neither of which withstood the Court’s scrutiny. First, Vermont argued that the law was necessary to protect medical privacy — specifically the confidentiality of a physician’s prescribing habits. The Court rejected this justification by pointing out that the law was not tailored to protect the confidentiality of information. Indeed, “[t]he explicit structure of the statute allows information to be studied and used by all but a narrow class of disfavored speakers.” The law permitted prescriber-identifiable information to be freely disclosed to any party as long as the purpose for the disclosure is unrelated to marketing. Therefore, it was clear to the Court that the Vermont law was not drafted to protect the confidentiality of prescriber-identifiable information.
The second justification that Vermont proffered for the law was that it was necessary to improve public health and lower health care costs. According to the State, the use of prescriber information for marketing purposes drives up the cost of health care by directing physicians toward higher cost brand name drugs, rather than lower cost generic alternatives. While the Court recognized that controlling health care costs and safeguarding public health may be permissible state goals, Vermont cannot advance those goals by restraining speech based on its content or the identity of the speaker. The State cannot restrict pharmaceutical marketing solely because it is successful at influencing physicians. According to the Court, “[t]hat the State finds expression too persuasive does not permit it to quiet the speech or to burden its messengers.”
What Does it Mean?
While Sorrell addressed the constitutionality of a Vermont statute, the Court’s ruling is likely to have an impact on pharmacies and pharmaceutical manufacturers beyond the State’s borders. Of particular importance is the Court’s recognition that the sale of prescriber information by pharmacies is a form of expression protected by the First Amendment. As a result, future attempts by states to regulate the sale of such information will be subject to a high level of scrutiny by the courts. States will have to show a substantial state interest that is furthered by the restriction. The majority opinion in Sorrell makes it clear that the potential of pharmaceutical marketing to impact prescribing decisions will not, by itself, justify restricting the use of prescriber information for marketing purposes.
However, while it rejected Vermont’s law, the Court left open the possibility that a state law drafted without content or speaker-based restrictions could be constitutionally permissible. The central fact to the Court’s decision in Sorrell was that the law was targeted specifically at pharmaceutical marketing and not at other uses of prescriber information. According to the Court, the State may not “[burden] a form of protected expression that it [finds] too persuasive,” yet at the same time leave “unburdened those speakers whose messages are in accord with its own views.” This reasoning leaves open the possibility that a state law drafted to restrict the sale of prescriber information, regardless of the purpose, could withstand scrutiny. Nevertheless, the Court’s recognition in Sorrell that pharmacies are entitled to First Amendment protection relating to the sale of prescriber information is a strong sign that other state laws that restrict such conduct will be viewed skeptically by the courts.