CT Drug Data Mining Firm Faces Free Speech Test

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Two years ago, on an unseasonably warm April day, a coalition of consumer health advocates, union members, doctors, medical students, and the AARP converged on the State Capitol in Hartford. They had come from throughout the Northeast to urge legislators to pass, among other measures, a bill that would prevent information about doctors’ prescribing habits from being sold and used for commercial means.

For years, pharmacies have sold electronic prescription records, with patients’ names encrypted, to medical data providers. These companies in turn sell them to pharmaceutical firms, which use them as a potent tool for marketing drugs to doctors. Among the world’s leading data providers—sometimes known as “data miners”—is Norwalk-based IMS Health, Inc.

With doctors’ identifying information and prescribing patterns in hand, drug detailers can precisely tailor their pitch and efficiently drive sales. Data mining also drives up health care costs, according to patient advocates and state officials, and many were looking to legislation to set things right.

But around the country, a cloud of legal uncertainty had stalled data mining bills in their tracks. Laws enacted in New Hampshire, Maine, and Vermont had been promptly challenged, and judicial decisions were still unfolding. And what had started as a consumer protection matter had grown into a question of First Amendment rights.

According to the groups challenging the laws, the data mining companies and PhRMA, a drug industry trade group based on Washington, D.C., restrictions on the use of prescriber data violate their Constitutional right to free speech.

“It was unclear at the time how things would turn out judicially for those laws,” said Rep. Elizabeth Ritter, who as Public Health Committee co-chair had fought for Connecticut’s data mining bill and watched it drop off the calendar at the end of the 2009 legislative session. When the constitutionality of a statute is in question, she added, “states tend to wait for direction from the courts.”

Their wait may soon be over. On April 26 the Supreme Court will hear arguments in Sorrell v. IMS Health, Inc. et. al, on the constitutionality of Vermont’s data mining law.  A decision is expected in June.

Vermont Docs Take A Stand

In the fall of 2006, Vermont’s largest physician organization brought its concern about data mining to the state legislature. Having recently become aware of the practice, the Vermont Medical Society condemned it as “an intrusion into the way physicians practice medicine.” Individual doctors complained of being spied on.

Vermont legislators examining the issue found additional reasons to be concerned. The drug industry’s success with prescriber profiles had clearly taken a toll on the state’s cost-containment efforts. As drug companies increased their sales force and marketing budgets—the industry now spends $8 billion a year on direct marketing to doctors—spending on prescription drugs in Vermont nearly doubled between 2000 and 2005, according to legal briefs filed in court.

A sizable portion of the spending increase could be attributed to marketing induced shifts in prescribing—from existing, lower-cost treatments to newer, more expensive drugs. The same shift toward newer drugs raised safety concerns as well, since a drug’s harmful side effects can take several years to become known, the documents say.

Vermont’s data mining law takes aim at pharmacies and drug companies, restricting them from selling or using prescribers’ personal information for promoting prescription drugs. And it carries a provision for doctors who do want their data used that allows them to indicate their consent at any time.

The law doesn’t regulate data vendors, but as middlemen they are clearly affected. Before the statute could take effect, IMS and the others filed suit. The law was upheld in the U.S. District Court in Vermont but later overturned by the Second Circuit Court of Appeals,  setting the stage for a U.S. Supreme Court decision.

Defining “Speech”

In asserting that data mining is entitled to First Amendment protection, IMS must convince the court that the data it collects and packages is “speech.”

“The Supreme Court has repeatedly ruled that when you give facts from one person to another, you’re speaking,” said Thomas C. Goldstein, lead attorney for respondents IMS, Verispan (now SDI, Inc.), and Source Healthcare Analytic. He argues that data information companies deserve the highest level of First Amendment protection in that they provide “truthful information on matters of public concern.”

The judge in an earlier court battle didn’t see it that way. In upholding New Hampshire’s data mining law, the U.S. Court of Appeals for the First Circuit ruled that data and speech are not the same. The sale of prescription information is commercial conduct, said Circuit Judge Bruce M. Selya, much like the sale of beef jerky. The First Amendment protects neither from regulation.

But other courts have ruled differently, and the outcome is by no means certain. Robert C. Post, dean of Yale Law School and a First Amendment scholar, notes that the Supreme Court has become increasingly active in protecting commercial speech, reflecting a “pro-business interest in striking down government regulation.”

What’s At Stake

Judging from the diverse interests of groups that have filed a friend of the court (amicus) brief, the outcome of next week’s data mining case could have something for everyone.

Among those lining up in support of Vermont are physician groups and state medical societies representing more than 100,000 doctors. High on their list of concerns is the health of the doctor/patient relationship—and the expectation of medical privacy on which it rests.

Another brief, joined by 35 states and the District of Columbia, outlines the threat to consumer protection laws should the data vendors prevail. If the decision increases First Amendment protection of commercial speech, the brief proposes, state and federal laws that prevent unauthorized disclosure of medical, financial, insurance, credit and other personal information could be jeopardized.

Connecticut did not join this brief as amicus. In a statement, Attorney General George Jepsen noted that doing so “was not directly relevant to Connecticut” as the state doesn’t have a law similar to Vermont’s.

Briefs filed in support of IMS and its fellow respondents included several from disparate professions with a common concern. Representing news publishers, research scientists, survey research companies, biotechnology firms and others, the briefs argue that a judgment against the data vendors would reduce their economic incentive to collect the data at all.  Affected would be a host of enterprises that depend on such data to develop new medicines, conduct clinical trials, design survey instruments, and engage in data-driven journalism.

Randall Frankel, IMS vice president for external affairs, confirmed that pharmaceutical companies would not purchase IMS data if laws in Vermont and other states prohibit its use for marketing. Sales to pharmaceutical companies account for 85 percent of IMS revenue, which in 2009 was approximately $2.2 billion. Data sold to other sectors, such as government and academia, are markedly discounted. Although the databases in question would continue to exist, said Frankel, the “quality and reliability of the data is more than likely to be degraded.”

To what extent any of this comes to pass will depend largely on whether the Court’s ruling is broad or narrow; whether questions are left open or foreclosed.

In law, Post, Yale’s law dean observes, “the way the court writes its decision is everything.’’



One thought on “CT Drug Data Mining Firm Faces Free Speech Test

  1. This is an excellent story.  The encroachments on our rights to privacy—whether doctor or patient—in the name of marketing are awful.  I knew nothing about this before, but now I am keenly interested in following it.  Thank you.