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Supreme Court Rules in IMS Data Mining Case

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On June 23, 2011, the Supreme Court in Sorrell, Attorney General of Vermont, et al. v. IMS Health Inc. et al1, struck down a Vermont law2 that bans the sale of physicians’ prescribing information to pharmaceutical companies and further bans pharmaceutical companies from using such data to market their products. The Supreme Court’s 6-3 opinion by Justice Kennedy found that the Vermont law unconstitutionally restricted the pharmaceutical companies’ right to free speech.

Vermont’s Prescription Confidentiality Law provides that absent the prescriber’s consent, pharmacies and other related entities are prohibited from selling prescriber identifiable information for marketing purposes and that such information cannot be used by pharmaceutical manufacturers to market their products. The statue permits other uses of the data, e.g., healthcare research.

The Court found that speech in the process of pharmaceutical marketing is a form of expression protected by the free speech clause of the first amendment. Therefore, the Vermont statue must be subjected to heightened judicial scrutiny of the reasons for the restrictions on speech.  

Vermont’s justification was that the law was necessary to protect medical privacy, avoid physician harassment by drug company representatives, and to preserve the integrity of the doctor-patient relationship. Vermont further argued that the statute is integral to its efforts to control healthcare costs and improve public health.  

The Court said that because only some uses of the data were prohibited and because the prescriber could consent to the release of the data for any purpose, the argument regarding privacy and confidentiality was not persuasive. The Court further found that physicians could simply refuse to see drug reps and avoid any perceived harassment. As for controlling costs and improving public health, the Court found the Vermont law seemed to be unduly concerned that the drug companies would persuade physicians to prescribe high cost drugs. Justice Kennedy described prescribing physicians as “sophisticated and experienced” consumers and wrote that the mere fact that the pharmaceutical companies’ speech might be persuasive was not reason enough to impose Vermont’s restrictions on their right to free speech.  

Justice Breyer, joined by Justices Ginsburg and Kagan, dissented. The dissent argued that the Vermont law is “inextricably related to a lawful effort to regulate a commercial enterprise” and thus, should not be subject to heightened scrutiny and that it is a permissible restriction on commercial speech.

Lower courts had disagreed on whether laws like Vermont’s were constitutional.  A federal appeals court had ruled against the Vermont law, while a different federal appeals court upheld somewhat similar laws in Maine and New Hampshire.  A number of states, including Massachusetts, have been considering imposing a ban similar to Vermont’s.  It will be interesting to see if those states can fashion with bans that they believe will square with the Supreme Court’s ruling in the Vermont case.

It is worth noting that prescribers across the United States have been able to opt out of having their prescriber-identifiable information shared with IMS and other data mining companies. The Vermont case has no impact on that opt-out provision. Moreover, the Massachusetts Pharmaceutical and Medical Device Manufacturer Conduct regulations specifically require manufacturers to comply with a prescriber’s request not to make his or her information available to sales representatives, and to give prescribers the opportunity to request that their data be withheld from sales representatives and not be used for marketing before the manufacturer uses the information for marketing purposes.  

1 Sorrell v. IMS Health, 10-779

2 18 V.S.A. § 4631.

3 105 CMR 960.005 Sections 2(f) and (g)

This advisory was prepared by the Life Sciences practice group at Nutter McClennen & Fish LLP. For more information, please contact your Nutter attorney at 617.439.2000.

This advisory is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.  

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