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In 2006, New Hampshire became th ...

Posted Oct 30 2008 3:21pm

In 2006, New Hampshire became the first state to prohibit pharmacies from selling information about what drugs doctors prescribe. Pharmacies routinely collect and sell information on what drugs individual doctors write prescriptions for, and sell it to companies like IMS Health and Verispan. Those companies then sell that data to drug companies. Drug company salespeople use that information to tailor the sales pitch that they make to doctors during visits to doctors’ offices. IMS Health sued the state of New Hampshire, arguing that the new law violated the company’s “free speech” rights.

Prescription Access Litigation’s parent organization, Community Catalyst joined AARP, AFL-CIO, AFSCME, Center for Medical Consumers, Community Catalyst, National Women’s Health Network, and New Hampshire Citizens Alliance in submitting a “friend of the Court” (amicus curiae) brief in support of the law. Unfortunately, the U.S. District Court for the District of New Hampshire struck down the law. The state of New Hampshire appealed, and last week, there was a hearing at the U.S. Court of Appeals for the First Circuit, in Boston, MA.

Sean Flynn, Associate Director of the Program on Intellectual Property at Washington College of Law at American University, was there and argued on behalf of a number of “amici curiae.” Sean reports on that hearing, in the PAL Blog’s first-ever “guest blogger” post. Here’s his dispatch from the hearing:

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On Wednesday, the First Circuit heard arguments in IMS v. Ayotte, involving New Hampshire’s appeal of a district court ruling striking down a first-in-the-nation law prohibiting prescription data mining.

Prescription data mining occurs through “health information companies” like IMS purchasing information from pharmacies on what drugs were prescribed by whom. This information, which is provided without the consent of either the doctor or the patient, is sold to pharmaceutical companies who use it to tailor the marketing of drugs to physicians. Using prescription information identifying prescribers enables drug companies to send a salesperson into a doctor’s office with an individually tailored pitch as well as to identify and reward their best prescribers with gifts, paid consultancies, prestigious board appointments, expense paid “educational” trips and other perks.

According to some estimates, drug companies spend as much as $34 billion a year marketing to doctors. Evidence in the case showed that the average physician sees at least five drug company reps a day.

In 2006, New Hampshire became the first state to outlaw prescription data mining for marketing, and was immediately challenged in court by the major drug information companies. Last May, the law was overturned by the a U.S. District Court, which agreed with the companies that the law violated the First Amendment guarantee of free speech because it “limits both the use and disclosure of prescriber-identifiable data for commercial purposes.”

At the hearing before the First Circuit on Wednesday, the judges appeared very critical of the data mining industry’s assertion that collecting and selling prescription records amounted to protected speech under the First Amendment. Judge Selya, who wrote an important opinion holding that advertising consulting services between companies are not 1st Amendment speech, asked the New Hampshire attorney “if there is any effect on commercial speech, isn’t it just incidental?”

All of the Judge’s questions were focused on the degree to which states can regulate economic conduct with an ‘incidental effect’ on commercial speech rather than whether the law itself was narrowly tailored. The court never asked either side for detailed arguments on whether the law was ‘narrowly tailored’ to meet its objectives, a possible indication that they believe that the law does not regulate protected speech.

The judges were much more critical of IMS’s argument. Judge Lipez asked skeptically whether NH had to have a “Turner record” (three years of congressional hearings used to justify regulating cable speech) for this law. The IMS attorney seemed not to take the hint, responding that NH needed more because this law was akin to regulating the core of the 1st Amendment and therefore required strict scrutiny.

I gave the rebuttal argument on behalf of the public interest amici in the case. The core of my argument was that the First Amendment’s commercial speech doctrine is about protecting the rights of companies to speak to consumers about their products. It does not protect any right of companies to monitor their consumers to see whether their pitches are successful. This law, like many others, regulates the latter by cutting off access to identifying information rather than regulating the substance of what marketers say. It is thus similar in particulars to

• Driver Privacy Protection Act (upheld by Reno v. Condon)

• Video Privacy Protection Act (video rental information)

• Stored Communications Act (internet)

• Electronic Communications Privacy Act

• Fair Credit Reporting Act (upheld by Trans Union v. FTC)

The DPPA is particularly relevant since that law was passed in part to cut down on harassing sales tactics by lawyers searching accident records for potential clients.

We argued that a gift ban would not meet the state’s interests because the monitoring of prescriptions is used to target a host of reinforcements of favored prescribing behavior — including consultancies, educational seminar invitations, prestigious board appointments and even targeted expressions of appreciation — that are difficult or impossible to regulate under gift bans.

I am optimistic about the chances for a favorable ruling. If the First Circuit overturns the ruling striking down New Hampshire’s first in the nation law regulating prescription data mining, several states and the District of Columbia are expected to quickly enact similar laws. Washington State and New York look primed to move soon, possibly without waiting for the ruling. The First Circuit’s ruling will also affect current litigation in Vermont and Maine that passed data mining restrictions soon after New Hampshire.

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