In a closely watched case concerning use of prescriber data and privacy, the U.S. Supreme Court ruled that the state of Vermont violated the First Amendment when it passed a law requiring the consent of drug prescribers before their nonpublic, identifying information could be sold.

Vermont passed the law in 2007, arguing that it was necessary to safeguard medical privacy and decrease the likelihood that drug marketing would lead to prescription decisions not in the best interests of patients or the state. It expressed concern with the practice of “detailing,” where pharmaceutical salespersons purchase information from pharmacies about what medications doctors have prescribed. The Prescription Confidentiality Law prohibited entities from selling, licensing, or exchanging for value prescriber-identifiable information for use in marketing or promoting a prescription drug, absent consent by a prescriber.

A group of Vermont companies that compile prescriber data and an association of pharmaceutical manufacturers brought suit, claiming that the law was unconstitutional because it violated their First Amendment rights.

The U.S. Supreme Court agreed, ruling that the law, because it imposed content and speaker-based burdens on speech, was subject to heightened judicial scrutiny. And the state’s reasoning failed to withstand such scrutiny, Justice Anthony Kennedy wrote in a 6-3 opinion.  

Although Vermont argued the law was an attempt to advance privacy interests, it contained multiple exceptions for entities other than marketers, like those conducting health research, the Court noted.

“The explicit structure of the statute allows the information to be studied and used by all but a narrow class of disfavored speakers. Given the information’s widespread availability and many permissible uses, the State’s asserted interest in physical confidentiality does not justify the burden that [the Act] places on protected expression,” the justices wrote.

Further, the state could not regulate certain speech that it disapproved of, the Court said. “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,” the Court said.

If the law had established that information couldn’t be sold except in more narrow circumstances, Vermont might have had a stronger case, the Court said. “The State has 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,” the justices determined.

Justice Stephen Breyer authored a dissenting opinion, joined by Justices Ruth Bader Ginsburg and Elena Kagan.

To read the Court’s decision in Sorrell v. IMS Health, click here.

Why it matters: The Court noted that it granted certiorari to resolve a split in the federal appellate courts. By affirming the 2nd Circuit decision below and finding Vermont’s law unconstitutional, the Court also made clear that a 1st Circuit case – which had reached an opposite result, upholding similar legislation in Maine and New Hampshire – places an impermissible burden on Constitutionally-protected expression. Indeed, while the decision focused primarily on the Vermont law at issue, the justices also addressed both privacy issues and the regulation of commercial speech more generally. For example, the Court noted that “the State may not seek to remove a popular but disfavored product from the marketplace by prohibiting truthful, nonmisleading advertisements that contain impressive endorsements or catchy jingles. That the State finds expression too persuasive does not permit it to quiet the speech or to burden its messengers.”