Sorrell v. IMS Health

Pharmacies, “as a matter of business routine and federal law, receive prescriber-identifying information when processing prescriptions.” This “[k]nowledge of a physician’s prescription practices—called prescriber-identifying information,’” enables marketers representing pharmaceutical drug manufacturers (Detailers) to better “ascertain which doctors are likely to be interested in a particular drug and how best to present a particular sales message.” Many pharmacies therefore “sell this information to ‘data miners,’ firms that analyze prescriber-identifying information and produce reports on prescriber behavior.” Data miners in turn lease these reports to pharmaceutical manufacturers subject to nondisclosure agreements; Detailers then use the reports to refine their marketing tactics and help increase sales.

Vermont Stat. Ann., Tit. 18, §4631 (Supp. 2010) (§4631(d)) restricted the sale, disclosure, and use of pharmacy records that revealed the prescribing practices of individual doctors. Its purpose was to “safeguard medical privacy and diminish the likelihood that marketing [would] lead to prescription decisions not in the best interests of patients or the State.” The law states that such “information may not be sold, disclosed by pharmacies for marketing purposes, or used for marketing by pharmaceutical manufacturers,” subject to certain exceptions.

The Respondents, three Vermont data miners and an association of pharmaceutical manufacturers that produce brand-name drugs, brought suits which were then consolidated. They contended that §4631(d) violated their First Amendment rights and sought declaratory and injunctive relief against the Petitioners—the Attorney General and other officials of the State of Vermont. The District Court denied relief,” having found that “‘[p]harmaceutical manufacturers [were] essentially the only paying customers of the data vendor industry’” and that, because detailing unpatented generic drugs [was] not ‘cost-effective,’ pharmaceutical sales representatives ‘detail[ed] only branded drugs.’” The United States Court of Appeals for the Second Circuit reversed and remanded, holding that §4631(d) violated the First Amendment by “burdening the speech of pharmaceutical marketers and data miners without an adequate justification.”

The Court first examined whether the case review of §4631(d) required heightened judicial scrutiny. This section of the statue prohibited the sale of information “subject to exceptions based in large part on the content of a purchaser’s speech,” and barred “any disclosure when recipient speakers [would] use the information for marketing.” The statute thus disfavoured marketing, “that is, speech with a particular content.  More than that, the statute disfav[oured] specific speakers, namely pharmaceutical manufacturers.” As those manufacturers were “essentially the only paying customers of the data vendor industry,” and detailing by pharmaceutical manufacturers was almost invariably in support of brand-name drugs, Vermont’s law had “the effect of preventing detailers—and only detailers—from communicating with physicians in an effective and informative manner.” And because the law potentially allowed third parties to use the same information to counter pharmaceutical marketing by promoting generic drugs, the “law on its face burden[ed] disfavored speech by disfavored speakers.”

The First Amendment required heightened scrutiny whenever the government created “a regulation of speech because of disagreement with the message it convey[ed].” Commercial speech was no exception. The Court found that the “legislature designed §4631(d) to target those speakers and their messages for disfavored treatment.” And just as the “‘inevitable effect of a statute on its face [might] render it unconstitutional,’ a statute’s stated purposes [could] also be considered.” Taking this into consideration, Vermont’s law went “beyond mere content discrimination, to actual viewpoint discrimination.” It therefore followed that heightened judicial scrutiny was warranted.

The Court then examined whether the §4631(d) was limiting the sale of usage information exempt commercial regulation. The Court held that §4631(d) was not limiting the sale. The State argued “that heightened judicial scrutiny [was] unwarranted because its law [was] a mere commercial regulation.”  The Court noted that it was “true that restrictions on protected expression are distinct from restrictions on economic activity or, more generally, on nonexpressive conduct.” However, “§4631(d) impose[d] more than an incidental burden on protected expression.  Both on its face and in its practical operation, Vermont’s law impose[d] a burden based on the content of speech and the identity of the speaker.” Vermont’s contention that heightened judicial scrutiny was unwarranted “because sales, transfer, and use of prescriber-identifying information [were] conduct, not speech” also failed because the Court had previously held that “the creation and dissemination of information [was] speech within the meaning of the First Amendment.” This resulted in “a strong argument that prescriber-identifying information” was speech for First Amendment purposes.

The Court then examined whether, based on the aforementioned determinations, §4631(d) violate Respondents’ freedom of speech. The Court held that §4631(d) did in fact violate the Respondents’ freedom of speech. “Under a commercial speech inquiry, it is the State’s burden to justify its content-based law as consistent with the First Amendment…To sustain the targeted, content-based burden §4631(d) impose[d] on protected expression, the  State must show at least that the statute directly advance[d] a substantial governmental interest and that the  measure  [was] drawn  to achieve that interest.”

Vermont’s “asserted justifications for §4631(d) come under two general headings.  First, the State contend[ed] that its law [was] necessary to protect medical privacy, including physician confidentiality, avoidance of harassment, and the integrity of the doctor-patient relationship. Second, the State argue[d] that §4631(d) [was] integral to the achievement of policy objectives—namely, improved public health and reduced healthcare costs.” 

The Court noted the possibility of a coherent policy that “asserted privacy interest by allowing the information’s sale or disclosure in only a few narrow and well-justified circumstances.” Yet the actual “explicit structure of the statute allow[ed] 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 physician confidentiality” did not justify the burden that §4631(d) placed on protected expression.

Lastly the Court examined whether content-based restrictions on commercial speech are permissible. The Court indicated that, “[C]ontent-based restrictions on protected expression are sometimes permissible, and that principle applie[d] to commercial speech.”  The government has a legitimate interest in protecting consumers from commercial harms, which explains “why commercial speech can be subject to greater governmental regulation than noncommercial speech.” However, “Vermont ha[d] not shown that its law ha[d] a neutral justification.” In this case Vermont never contended that detailing was false or misleading within the meaning of the Court’s First Amendment precedents, or “that the provision… [would] prevent false or misleading speech” from occurring.

“On its face, Vermont’s law enacts content- and speaker-based restrictions on the sale, disclosure, and use of prescriber-identifying information. The provision first forbids sale subject to exceptions based in large part on the content of a purchaser’s speech. For example, those who wish to engage in certain “educational communications,” §4631(e)(4), may purchase the information. The measure then bars any disclosure when recipient speakers will use the information for marketing. Finally, the provision’s second sentence prohibits pharmaceutical manufacturers from using the information for marketing. The statute thus disfavors marketing, that is, speech with a particular content. More than that, the statute disfavors specific speakers, namely pharmaceutical manufacturers. As a result of these content- and speaker-based rules, detailers cannot obtain prescriber-identifying information, even though the information may be purchased or acquired by other speakers with diverse purposes and viewpoints.” 131 S.Ct., p. 2663.

“The First Amendment requires heightened scrutiny whenever the government creates ‘a regulation of speech because of disagreement with the message it conveys.’ Ward v. Rock Against Racism, 491 U. S. 781, 791 (1989); see also Renton v. Playtime Theatres, Inc., 475 U. S. 41, 48 (1986) (explaining that ‘ ‘content-neutral’ speech regulations’ are ‘those that are justified without reference to the content of the regulated speech’ (internal quotation marks omitted)). A government bent on frustrating an impending demonstration might pass a law demanding two years’ notice before the issuance of parade permits. Even if the hypothetical measure on its face appeared neutral as to content and speaker, its purpose to suppress speech and its unjustified burdens on expression would render it unconstitutional. Ibid. Commercial speech is no exception. See Discovery Network, supra, at 429–430 (commercial speech restriction lacking a ‘neutral justification’ was not content neutral). A ‘consumer’s concern for the free flow of commercial speech often may be far keener than his concern for urgent political dialogue.’ Bates v. State Bar of Ariz., 433 U. S. 350, 364 (1977). That reality has great relevance in the fields of medicine and public health, where information can save lives.” 131 S.Ct., p. 2664.

“Instead, Vermont made prescriber-identifying information available to an almost limitless audience. 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 physician confidentiality does not justify the burden that §4631(d) places on protected expression.” 131 S.Ct., p. 2668.

“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.” 131 S.Ct., p. 2673.