Earlier this week, on November 18, the U.S. Court of Appeals for the First Circuit issued an excellent opinion confirming that the First Amendment’s guarantee of free speech—even its bastard stepchild commercial speech—did not allow “data miners” to sell data on billions of drug prescriptions. IMS Health, Inc. v. Ayotte.
These data miners persuade compliant pharmacies to sell them data on filled prescriptions, including the name of the patient, the identity of the prescribing physician, the drug, its dosage, and the quantity dispensed.
Demonstrating a modicum of respect for patient privacy (as well as complying with federal law), the data miners encrypt the names of patients, but then generate lists that show the names of the doctors and the drugs they prescribed.
They sell these lists to drug company sales reps (called “detailers”), who arm themselves with the information in order to approach individual doctors to persuade them to prescribe their companies’ drugs over those of competitors, and certainly instead of generic drugs.
Recognizing that the effect of this practice is to raise the cost of health care by persuading doctors to prescribe costly brand-name drugs over cheap generics, the New Hampshire legislature enacted a law that prohibited the sale for commercial purposes of prescription data that identified either the patient or the doctor.
The trial court ruled in favor of the data miners and detailers, holding that the law regulated speech and did not pass Central Hudson muster for control of commercial speech.
An appeal naturally ensued, attracting many amici, including AARP, Community Catalyst, National Legislative Association on Prescription Drug Prices, National Physicians Alliance, New Hampshire Medical Society, and Prescription Policy Choices, Electronic Privacy Information Center and “16 Experts in Privacy Law and Technology,” National Alliance for Health Information Technology, Surescripts, LLC, National Association of Chain Drug Stores, Washington Legal Foundation, and Coalition for Healthcare Communications. (I’ll let you guess who sided with whom. I’ll start you off—the Washington Legal Foundation served in its accustomed role of unthinking lapdog for industry. But you knew that, didn’t you?)
The First Circuit reversed, recognizing that there ain’t no First Amendment right to sell stuff. “While the plaintiffs lip-synch the mantra of promoting the free flow of information, the lyrics do not fit the tune. The Prescription Information Law simply does not prevent any information generating activities. The plaintiffs may still gather and analyze this information; and may publish, transfer, and sell this information to whomever they choose so long as that person does not use the information for detailing.”
The Court also conducted its own Central Hudson analysis and found that the State of New Hampshire had a legitimate interest in containing the cost of prescription drugs: “Fiscal problems have caused entire civilizations to crumble, so cost containment is most assuredly a substantial governmental interest.” The Court further found that the law properly advanced that interest and was no broader than need be.
There is a lengthy dissent, which ultimately agrees with the majority on the commercial speech issue.
I’ve just scratched the surface of this lengthy (148 double-spaced pages) opinion, and did not even go into the Court’s rejection of the silly Commerce Clause argument, but Public Citizen has asked me to curb my prolixity, so I’ll stop here. Read the thing yourself—it’s also nicely written.
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