From Medscape Medical News

Ban on Use of Prescriber Data for Marketing Ruled Unconstitutional

Robert Lowes

November 29, 2010 — A Vermont law that prevents pharmaceutical companies and their sales forces from obtaining data on a physician's prescribing behavior without his or her approval is "an impermissible restriction on commercial speech" and therefore unconstitutional, a federal appeals court ruled last week.

That court, the US Court of Appeals for the Second Circuit in New York City, reached a conclusion opposite from the one a federal appeals court in Boston, Massachusetts, reached when it declared similar laws in Maine and New Hampshire to be constitutional. These clashing appellate decisions increase the odds that the Supreme Court will eventually put the matter to rest.

For years, pharmaceutical representatives — also known as drug reps or detailers — have had an intimate knowledge of physicians' prescribing habits thanks to so-called data-mining companies such as IMS Health, SDI, and Source Healthcare Analytics. These companies buy prescription data from pharmacies, aggregate them on a physician-by-physician basis, strip out anything identifying individual patients, and then sell the information to pharmaceutical companies.

Pharmaceutical companies use the data for a variety of purposes, such as conducting clinical trials and postmarketing surveillance. The litigation, though, centers on just one use — marketing brand-name drugs to physicians. On the basis of the intelligence they get from data-miners, pharmaceutical representatives can identify heavy prescribers, customize sales pitches to what these clinicians order for patients, and if they persuade a physician to use their product, monitor his or her scripts from month to month — tactics some physicians view as intrusive.

In 2007, the Vermont legislature passed a law banning the sale, transmission, and use of such prescriber-specific data for marketing purposes unless physicians give their assent. Besides wanting to protect physician privacy, state lawmakers cited a public health rationale; they view pharmaceutical marketing as a source of "incomplete and biased information" on the safety and effectiveness of medicines.

In addition, there was a money angle. By depriving pharmaceutical representatives of valuable prescription data, lawmakers hoped that physicians would be less persuaded to order expensive, brand-name drugs for their patients, and instead resort to low-cost generics when appropriate. Such drugs would be less of a drain on the state's Medicaid program.

Among the backers of the Vermont legislation are the Vermont Medical Society, which favors more widespread use of generic drugs and questions the accuracy and completeness of drug-rep communications.

Vermont Law Takes Ill-Advised Shotgun Approach, Court Rules

Data-miners IMS Health, SDI, and Source Healthcare Analytics sued the state of Vermont in a federal district court in Brattleboro to overturn the 2007 law, contending that it violates their First Amendment right to free speech — specifically, commercial speech. They also maintained that the law jeopardizes patient safety because the prescription data help pharmaceutical companies educate physicians on how best to use their products.

The federal district court upheld the law in early 2009, so the data-mining companies turned to the appellate court in New York. On November 23, a 3-judge panel overturned the district-court ruling in a 2-to-1 decision.

The appellate court stated that the law fails to satisfy a legal standard for limiting commercial speech. Under that standard, a statute like the one in Vermont must directly advance a major state interest (such as public health and cost control). Another requirement is that less restrictive limits on commercial speech will not achieve the desired goal.

The court stated that the Vermont law can have only an indirect effect on public health and cost control, because cutting off the flow of prescription data to pharmaceutical companies is several steps removed from physicians prescribing more generic drugs. In addition, the law takes an ill-advised shotgun approach because it targets every brand-name medication, "regardless of whether it is a less tested version of an existing medication or a breakthrough drug with no reasonable alternative," according to the court. Finally, Vermont can rely on other, "less speech-restrictive means" to encourage generic prescribing, such as academic detailing.

In a dissenting opinion, US Circuit Court Judge Debra Ann Livingston wrote that she is unwilling to agree with the court majority that companies trafficking in prescription data "have an inherent right to invoke the First Amendment as a shield against reasonable regulation simply because their business deals in 'dry information' rather than 'dry goods'."

Pathways to the Supreme Court

In a press release, IMS Health senior vice president and general counsel Harvey Ashman said his company is pleased with last week's decision. "Patients will benefit from a more transparent, safer, and more competitive healthcare system as a result of this ruling," stated Mr. Ashman.

Bridget Asay, an assistant attorney general for Vermont, told Medscape Medical News that she is disappointed with the outcome, and that her office will review its legal options. These include asking the 3-judge panel to reconsider its decision, requesting that all 10 active judges in this appellate court hear the case, and appealing to the Supreme Court.

The Supreme Court declined to consider an appeal of the decision reached by the US Court of Appeals for the First Circuit in Boston that affirmed the constitutionality of New Hampshire's 4-year-old law banning the use of prescription data for most commercial purposes. However, the next move in the court battle over Maine's law, passed in 2007, is not clear. That law, which withholds prescription data from pharmaceutical companies only if a prescriber signs a special form, was upheld in August by the federal appeals court in Boston.

A spokesperson for IMS Health told Medscape Medical News that the company is still considering the option of appealing the decision on the Maine law to the Supreme Court.

On a similar note, a spokesperson for SDI said that as the company digests the implications of last week's appellate ruling on the Vermont law, it is "considering all legal options available to us in other jurisdictions."

Legal experts say that the Supreme Court is more likely to tackle an issue such as the use of physician-specific prescription data if appellate courts issue conflicting opinions on it.

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