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Last Words: Data Mining Is Legal

Jesse C. Vivian, RPh, JD
Professor, Department of Pharmacy Practice
College of Pharmacy and Health Sciences
Wayne State University

Detroit, Michigan



8/19/2011

US Pharm
. 2011;36(8):68-74. 

Data mining is the process where companies collect data about practitioners’ prescribing habits by contracting with pharmacy organizations to search their patient computer records to find prescriber-identifiable (PI) data.1 This procedure also involves removing patient-identifiable information from the collected data to avoid committing any violations of the Health Insurance Portability and Accountability Act (HIPAA). 

The practice has been controversial for several years, and a few states have attempted to ban data mining on the notion that it invades the privacy rights of prescribers. The data miners have argued that the process is protected as a form of constitutional free speech. To put this practice into perspective, IMS Health and Verispan together monitor over one billion prescriptions per year. Approximately 51,000 pharmacies in the United States are wired to facilitate data mining, resulting in revenues to the data miners in excess of $2 billion annually.2 

Supreme Court Decision

Some of the lower courts have held opposing views on the legality of the practice. New Hampshire and Maine statutes banning data mining were found constitutional,3,4 while a Vermont law was ruled unconstitutional.5,6 The Vermont case was appealed to the U.S. Supreme Court. On June 23, 2011, the Supreme Court issued its decision in a 6-3 split vote, with the majority deciding data mining is constitutional.7 

This case is particularly important because it effectively reversed two earlier circuit court opinions that had upheld similar state laws.8 The Supreme Court is the last court of refuge, and its decisions set precedents that all lower courts, in both the federal and state systems of government, must follow. Thus, data mining is legal, and state attempts to curb the practice under confidentiality notions are unconstitutional. 

Another way of looking at the case recognizes the fact that the aim of the states that tried to ban data mining was to save the costs of more expensive brand-name prescription drugs favored by the pharmaceutical companies when less expensive generics in the same therapeutic class were available. The crux of this logic is that when manufacturers have access to PI data, they can send “detail representatives” to the prescriber’s office for the purpose of encouraging the prescribing of a favored brand-name drug. Viewing the case this way suggests that the Supreme Court is more interested in protecting the wealth of the big pharmaceutical companies than the well-being of the many cash-strapped states stuck with the bill for higher-cost drugs (primarily in Medicaid or Medicare drug benefit costs borne by the states) or of the generic manufacturers of the lower-cost medications. 

It is probably difficult for many professional pharmacists to follow the logic of the decision and even harder to understand how or why selling data constitutes a form of free speech. Not to worry though, there are just as many attorneys who also do not understand the concepts articulated in the majority opinion. 

Commercial Speech

The key legal point in this case is that the First Amendment to the U.S. Constitution forbids restrictions on free speech and that the Supreme Court has long recognized that this freedom extends to commercial speech. The next point is that commercial speech applies to marketing efforts, like advertising.9 In this case, the purchasers of the PI data have the right to “speak,” meaning the companies involved have the right to sell the data to other parties. The state laws that attempted to bar the practice of data mining imposed content restrictions that were found to be interfering with the marketing of information. 

What is more difficult to understand is that commercial speech can be regulated by reasonable statutes that do not interfere with an industry’s rights to distribute and market some forms of data. In other words, commercial speech does not enjoy the practically unfettered freedom of individual speech. But even individual speech is subject to some restrictions. Running into a crowded theater and yelling “Fire” when there is none, just to see the reaction of the audience, is not allowed. But burning the American flag or publishing pornographic materials are forms of individual speech protected by the Constitution. 

Put another way, commercial speech has been subject to a higher level of scrutiny compared to individual speech. This case, however, may change the principal legal differences between the two types of speech. The majority opinion is full of examples of both individual and commercial speech and does not seem to make the distinctions that heretofore formed Supreme Court precedence. Only time will tell if this case is shifting the boundaries of commercial speech towards the standards traditionally used in individual speech cases. 

The real difficulty in regulating commercial speech is to delineate what content can or cannot be restricted. Courts in nearly every jurisdiction have wrestled for decades, if not centuries, with deciding where the line of demarcation should be drawn. Making things even more complicated, the Supreme Court itself has not always been consistent with what commercial speech is allowed and what can be restricted.10 In this case, the majority decision began with the concept that the creation and dissemination of information is subject to First Amendment commercial speech scrutiny. The opinion goes on to state that information gathering is a factual effort and that “facts, after all, are the beginning point for much of the speech that is most essential to advance human knowledge and to conduct human affairs.”11 

Disputing the Vermont Law

The Vermont law had multiple restrictions on the use of marketing data by manufacturers, but it had several exceptions that allowed the dissemination of PI data for other purposes. Perhaps it was those permissible use exceptions that the Supreme Court majority had the most trouble with. As described in a legal analysis, “Vermont’s Prescription Confidentiality Law targeted pharmaceutical manufacturers’ promotion of drugs through ‘detailing,’ i.e., in-person marketing to doctors that is aided by receipt and use of prescriber-identifying information. The law provided that, absent physician consent, such data may not be sold by pharmacies and similar entities, or disclosed by them for marketing, or used by pharmaceutical manufacturers for marketing, subject to a number of exemptions that allowed disclosure and/or use of the data for various nonmarketing purposes.”12 In the Supreme Court decision, Justice Anthony M. Kennedy, author of the majority opinion, wrote: 

The State asks for an exception to the rule that information is speech, but there is no need to consider that request in this case. The State has imposed content- and speaker-based restrictions on the availability and use of prescriber-identifying information. So long as they do not engage in marketing, many speakers can obtain and use the information. But detailers cannot. Vermont’s statute could be compared with a law prohibiting trade magazines from purchasing or using ink. [Minneapolis Star, 460 U.S. 575] Like that hypothetical law, §4631(d) [of the Vermont law] imposes a speaker- and content-based burden on protected expression, and that circumstance is sufficient to justify application of heightened scrutiny. As a consequence, this case can be resolved even assuming, as the State argues, that prescriber-identifying information is a mere commodity.13 

Simply put, the Supreme Court found that “the law erects content- and speaker-based restrictions on the sale, disclosure, and use of prescriber-identifying information.” Additionally, said the majority, “the Vermont law disfavors speech with a particular content—marketing—as well as specific speakers, pharmaceutical manufacturers, and those marketing on their behalf.” Accordingly, Justice Kennedy wrote that the purpose and effect of the Vermont law was “to restrict the use of prescriber-identifying data by those who would use it for marketing but not other purposes, and that the state’s acknowledged objective was to correct what it believed to be an ‘imbalance’ in the marketplace of ideas.” However, the Supreme Court found that “Vermont’s asserted purpose of putting its thumb on the scale of public discourse is incompatible with the First Amendment.”14 Justice Kennedy wrote: 

In an attempt to reverse a disfavored trend in public opinion, a State could not ban campaigning with slogans, picketing with signs, or marching during the daytime. Likewise, the State may not seek to remove a popular but disfavored product from the marketplace by prohibiting truthful, nonmisleading [sic] advertisements that contain impressive endorsements or catchy jingles. That the State finds expression too persuasive does not permit it to quiet the speech or to burden its messengers.…The fear that people would make bad decisions if given truthful information cannot justify content-based burdens on speech.15 

Citing an earlier case, Justice Kennedy wrote that a “consumer’s concern for the free flow of commercial speech often may be far keener than his concern for urgent political dialogue.”16 Curiously, he then added: “That reality has great relevance in the fields of medicine and public health, where information can save lives.” On its face, the statement rings true. However, Justice Kennedy did not explain why the free exchange of PI data is relevant to saving lives. It is difficult, if not impossible, to imagine a scenario where a pharmaceutical sales representative with detailed information about a physician’s prescribing habits would be in a position to give that individual information on how a particular drug could actually save someone’s life, especially where the putative need for PI data is to influence prescribing practices favoring a brand-name drug manufactured by the representative’s company. If a generic version of that brand-name drug is available, how could the detailer claim its brand could save lives better or more frequently than the generic? 

In order to put the majority’s opinion in perspective, it is noteworthy how the three dissenting judges reasoned that the Vermont law is constitutional and does not violate free speech standards. Writing the dissenting opinion, Justice Stephen G. Breyer summarized the case: 

The Vermont statute before us adversely affects expression in one, and only one, way. It deprives pharmaceutical and data-mining companies of data, collected pursuant to the government’s regulatory mandate, that could help pharmaceutical companies create better sales messages. In my view, this effect on expression is inextricably related to a lawful governmental effort to regulate a commercial enterprise. The First Amendment does not require courts to apply a special “heightened” standard of review when reviewing such an effort. And, in any event, the statute meets the First Amendment standard this Court has previously applied when the government seeks to regulate commercial speech. For any or all of these reasons, the Court should uphold the statute as constitutional.17 

Justice Breyer also took issue with the majority’s liberalizing of the commercial speech doctrines to be less restrictive and moving the standard for constitutional judgment more toward the process of adjudicating individual free speech. He is claiming that what the majority did amounted to determining the wisdom of a legitimate legislative statute and returning the Supreme Court to an era “in which it was common practice for this Court to strike down economic regulations adopted by a State based on the Court’s own notions of the most appropriate means for the State to implement its considered policies.”18 Demonstrating his explicit disagreement with what the majority opinion did to change the standards of judging the constitutionality of a statute affecting commercial speech, he wrote: 

[I]t is not surprising that, until today, this Court has never found that the First Amendment prohibits the government from restricting the use of information gathered pursuant to a regulatory mandate—whether the information rests in government files or has remained in the hands of the private firms that gathered it. Nor has this Court ever previously applied any form of “heightened” scrutiny in any even roughly similar case.19… If the [majority of the] Court means to create constitutional barriers to regulatory rules that might affect the content of a commercial message, it has embarked upon an unprecedented task—a task that threatens significant judicial interference with widely accepted regulatory activity.20 

Analysis

What is the impact of the Supreme Court decision? To pharmacies, it means that they can legally sell PI data to the data miners without restrictions. To prescribers, it means that how and what they prescribe is not confidential, and they will have little or nothing to say about the practice. To the states that would attempt the ban of data mining in an effort to save the money they spend on prescription drugs by encouraging the wider use of generics, the case means they will have to abandon the bans on the practice or find some other way to accomplish this goal. Right now, the only way to overturn the majority’s decision would require federal legislation to allow states to adopt the ban. Getting that to happen very soon is probably not high on the priority list of most congressional members. 

REFERENCES

1. Vivian JC. Pharmacists beware: data mining unconstitutional. US Pharm. 2009;34(6):48-49. www.uspharmacist.com/content/ d/pharmacy_law/c/13856/. Accessed July 11, 2011.
2. See Note 1, supra.
3. Vivian JC. Mining ban unconstitutional: freedom of speech wins. US Pharm. 2007;32(6):67-70. www.uspharmacist.com/content/
d/pharmacy_law/c/10315/. Accessed July 11, 2011.
4. IMS Health Inc. v. Mills, 616 F 3d 7 (CA1 2010) (Maine).
5. Vivian JC. Data mining revisited—again and again. US Pharm. 2011;36(1):68-70. www.uspharmacist.com/content/
d/pharmacy_law/c/26253/. Accessed July 11, 2011.
6. Vt Acts No. 80 §17 (2007), Vt Stat Ann 18 §4631.
7. Sorrell v. IMS Health Inc., (Slip Op No. 10-779, June 23, 2011). www.supremecourt.gov/opinions/
10pdf/10-779.pdf. Accessed July 11, 2011.
8. Corn-Revere R, London RG. Supreme Court invalidates Vermont law limiting data mining for pharmaceutical “detailing.” Davis Wright Tremaine LLP. June 23, 2011. www.dwt.com/LearningCenter/
Advisories?find=423927. Accessed July 11, 2011.
9. Cincinnati v. Discovery Network, 507 U.S. 410, 426 (1993) and TBS v. FCC, 512 U.S. 622, 658 (1994).
10. Los Angeles Police Dept v. United Reporting Publishing Corp, 528 U.S. 32, (1999).
11. See Note 7, supra.
12. See Note 8, supra.
13. See Note 7, supra.
14. See Note 8, supra.
15. See Note 7, supra.
16. Bates v. State Bar of Ariz, 433 U.S. 350, 364 (1977).
17. See Note 6, supra.
18. Lochner v. New York, 198 U.S. 45 (1905).
19. Citations omitted.
20. See Note 7, supra. 

To comment on this article, contact rdavidson@uspharmacist.com.

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