Privacy & Cybersecurity Law Blog

On June 23, 2011, in a 6-3 decision, the United States Supreme Court ruled in IMS Health Inc. v. Sorrell that a Vermont law prohibiting the sale of prescriber-identifiable data to drug companies was an unconstitutional violation of the First Amendment right to free speech.  Thomas Julin, a partner at Hunton & Williams LLP, represented IMS Health in this case.  The Supreme Court’s ruling affirmed the holding of the U.S. Court of Appeals for the Second Circuit, resolving a split with the First Circuit (which upheld a similar law in New Hampshire), and likely preventing the enactment of similar restrictive laws across the country.

Vermont’s law was intended to limit the process of “detailing” whereby pharmaceutical manufacturers use prescriber-identifiable information to “ascertain which doctors are likely to be interested in a particular drug and how best to present a particular sales message.”  The law states that health insurers, pharmacies and other entities “shall not sell, license, or exchange for value regulated records containing prescriber-identifiable information, nor permit the use of regulated records containing prescriber-identifiable information for marketing or promoting a prescription drug, unless the prescriber consents.”  The law also mandates that “[p]harmaceutical manufacturers and pharmaceutical marketers shall not use prescriber-identifiable information for marketing or promoting a prescription drug unless the prescriber consents.”

In analyzing the First Amendment issue, the Supreme Court held that heightened judicial scrutiny applied because the Vermont law “imposes a speaker- and content-based burden on protected expression.”  Accordingly, Vermont was required to show “that the statute directly advances a substantial governmental interest and that the measure is drawn to achieve that interest.”  The two substantial government interests set forth by Vermont were to (1) “protect medical privacy, including physician confidentiality, avoidance of harassment, and the integrity of the doctor-patient relationship” and (2) improve public health and reduce healthcare costs.

The Court held that the first interest was not justified because Vermont “has conditioned privacy on acceptance of a content-based rule that is not drawn to serve the State’s asserted interest.”  In other words, the “limited privacy” the statute affords prescribers requires them “to acquiesce in the State’s goal of burdening disfavored speech by disfavored speakers” such as pharmaceutical marketing companies.  With respect to the second point, the Court held that Vermont does have a substantial interest in promoting public health and reducing costs, but the law’s “indirect means of restraining certain speech by certain speakers” to reduce the influence of pharmaceutical companies did not directly advance that interest.

Read our previous coverage of the IMS Health case.