Today, the 1st Circuit Court of Appeals issued a decision in IMS v. Ayotte, the case challenging New Hampshire’s Prescription Confidentiality Act, which prohibits the commercial use of prescriber data, including for pharmaceutical detailing. The Court unanimously upheld the law, finding that it did not violate the First Amendment. The opinion weighed in at a hefty 148 pages.

The Act sought to prohibit the practice of “datamining” for the purpose of pharmaceutical marketing: pharmacies sell doctors’ individual prescribing data (what drugs the doctors prescribed, when, and how often) to companies that aggregate such data. Those companies then sell prescribing “profiles” of individual physicians to drug companies, whose salespeople can then use that information to tailor the “pitch” that they use in marketing their drugs to those doctors. For instance, if a doctor has been prescribing a competitor’s drug, they might tailor the sales pitch to talk about why their drug is allegedly superior.

IMS Health, a company that collects and sells pharmacy data on doctors’ prescribing practices, sued the state of New Hampshire before the ink was barely dry on the law. They alleged that it violated their First Amendment rights. In April 2007, the U.S. District Court for the District of New Hampshire agreed, and struck down the law. The State of New Hampshire appealed the decision to the 1st Circuit Court of Appeals, which heard the appeal in January 2008.

Sean Fiil-Flynn, who represented PAL’s parent organization Community Catalyst, as well as AARP, National Legislative Association on Prescription Drug Prices, National Physicians Alliance, New Hampshire Medical Society, and Prescription Policy Choices in filing an amicus brief before the 1st Circuit, gave an excellent analysis of the decision and its ramifications:

The court unanimously upheld the New Hampshire law. The majority found that the act does not regulate speech, but rather regulates only the conduct of health information companies that aggregate and sell prescription records. The concurrence concluded that the Act does affect speech of pharmaceutical marketers, but the regulation is nonetheless justified by the state’s overriding interest in promoting cost containment in the pharmaceutical sector.

This is an important decision for data privacy advocates. The ramifications of giving companies a First Amendment right to sell data on all of our purchases, travel and activities would be staggering. The First Circuit ruled on the side of consumer privacy, admonishing that the First Amendment does not protect every exchange of information from traditional social and economic regulation. It refused to apply the First Amendment to the trading of prescription records for marketing purposes where “information itself has become a commodity.” The court explained that applying the First Amendment to such trade in prescription data “stretches the fabric of the First Amendment beyond any rational measure.”

The 148 pages of analysis exhaustively analyses the voluminous evidence amassed by New Hampshire demonstrating the negative effects on our health care system of allowing pharmaceutical marketers to use prescription record tracking to target their marketing efforts.

The court affirmed that states have a valid interest in regulating the use of prescription records to target marketing to doctors. The court found that the use of such information to identify doctors who prescribe lower cost drugs and target marketing campaigns at them has a demonstrable impact on pharmaceutical spending that states are not disempowered to respond to. Access to individualized prescription data also allows companies to target gifts, consultancies and other perks to their most favored physicians, in effect incorporating prescribers into the commission structure of their sales forces. These practices debase the medical profession and, the more the practices become public, break the chain of trust between doctor and patient.

Other resources:

• The 1st Circuit’s decision is here
• An Associated Press article on the decision is here: NH prescription privacy law upheld
• The 1st Circuit Amicus Curiae brief of Community Catalyst and others is here.
• The District Court Amicus Curiae brief of Prescription Access Litigation and others is here.
• See also what PostScript, the blog of our colleagues at The Prescription Project, had to say about the decision.

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.