E-Alert Case Updates

Fear that Speech Might Persuade Provides No Lawful Basis for Quieting It

Sorrell v. IMS Health Inc.
No: 10-779 (Supreme Court of the United States, June 23, 2011)
by Lindsey N. Lanzendorfer, Summer Associate
Semmes, Bowen & Semmes (www.semmes.com)

In this recent opinion, the United States Supreme Court held that a Vermont law, which restricted the sale, disclosure, and use of pharmacy records that revealed prescribing practices of individual doctors, was unconstitutional. Justice Kennedy, writing for the Court, found that the law violated the First Amendment because it was viewpoint-based and did not pass a heightened standard of judicial scrutiny.

As a matter of business, pharmacies receive physician information when processing prescriptions. They sell this information to firms that analyze it, called data miners. The information is then sold to pharmaceutical companies who use it to target sales. The Vermont law prohibited this practice. The Appellees in this case, three Vermont data miners and an association of pharmaceutical manufacturers, brought two separate suits against Vermont, alleging that the law was unconstitutional.

Specifically, the Vermont law allowed pharmacies to share their prescriber-identifying information with educators but prohibited pharmacies from sharing the information for marketing purposes, unless they had physician consent. Justice Kennedy first explained that Vermont’s law did not merely regulate commerce and incidentally effect speech; the law was directed at certain speech and speakers. Indeed, the law disfavored marketing (a particular content) and pharmaceutical manufacturers (a particular speaker). Further, the creation and dissemination of information has been determined to be speech, not conduct. As such, the Court looked at the law with heightened scrutiny, requiring Vermont to show: (1) that the law directly advanced a substantial government interest, and (2) that the law was drawn to achieve that interest.

The Court determined that Vermont’s law failed heightened scrutiny, focusing on the reasons Vermont advanced for the law. Justice Kennedy pointed out that the law was not narrow enough to protect medical privacy because it allowed educators to access the information. The law also was not narrow enough to protect doctors from “harassing sales behavior” because physicians could simply decline to meet with pharmaceutical companies. Finally, prohibiting the dissemination of truthful information based on a fear that physicians would make bad decisions—be influenced by pharmaceutical companies—was not a substantial government interest because it inevitably was based on Vermont’s view of what constituted a bad decision. In sum, the Court determined that Vermont may be displeased that retailers are effective in promoting brand-name drugs, but the failure of the State to persuade others does not allow it to “hamstring the opposition.”