Sorrell v. IMS Health, Inc.

This case concerns a Vermont’s Prescription Confidentiality Law, or Act 80, which forbids the use of a physician’s drug-prescribing histories without the physician’s consent. Vermont argues that because legally required prescription records contain private information concerning patient treatment, doctors should be able to block the use of those records for commercial purposes. Respondents IMS Health and the PhRMA (“IMS”), on the other hand, believes Vermont’s law unfairly singles out pharmaceutical companies while leaving other potential users of the data unaffected, a result it claims impermissibly restrains the speech of those companies. The Second Circuit agreed with IMS and ruled that the law's restriction on free speech was inappropriate and its purportedly beneficial effect on public health too immaterial.

Is free speech unaffected because the prescription records are nonpublic?

Vermont’s primary argument relies on the essentially nonpublic nature of drug prescription records. Vermont emphasizes that the only reason pharmacies even have these medical records to begin with is that state law requires the pharmacies to collect them. Because the state has unquestioned regulatory authority in this area and these records are traditionally seen as confidential, Vermont claims that it may constitutionally require a prescribing physician’s consent before a third party may use such records for commercial purposes. Therefore, the challenged statute is an example of a government requiring the release of information and then restricting its “use or further disclosure,” a practice that Vermont claims is compliant with the First Amendment.

IMS challenges this conclusion on a number of grounds. First, IMS concedes that some regulation of government records is permissible, but urges a different standard for data that are “privately created, privately collected, and privately owned,” such as the prescription records in this case. But even if this information were only in the government's hands, IMS objects to the Vermont law as favoring one viewpoint over another. According to IMS, the motivation behind Vermont's law is not privacy at all, but rather an attempted subversion of pharmaceutical manufacturers' commercial speech in favor of alternative messages from health insurance companies and the government. Indeed, IMS claims, Vermont's law allows anyone but pharmaceutical firms to use the disputed information, even for commercial purposes, and such efforts to "pick and choose" violate the First Amendment. Finally, IMS also questions Vermont’s premise that pharmacies do not create records of prescriptions solely due to state regulation, pointing out that they already routinely collect these data for submission to insurance companies.

In response, Vermont argues that its law does not restrict free speech so much as it seeks to regulate commercial activity.Accordingly, it believes a state may properly restrict the dissemination of certain information for one intended use, while leaving other possible uses unconstrained. In this case, rather than intending to infringe on drug companies’ ability to speak, Vermont claims its challenged law is designed to afford physicians the right not to speak without their own consent. Finally, given the traditional confidentiality that pharmacists normally exercise, Vermont sees as incredible the assertion of a First Amendment right to sell prescription records for commercial profit.

If the First Amendment applies, is the Vermont law nonetheless constitutional because it properly advances an important government interest?

Although Vermont frames the challenged law as affecting ordinary commercial conduct and not speech, it argues alternatively that any restriction on speech that the law does cause is permissible under the Supreme Court’s intermediate scrutiny standard. Vermont first notes that regulation of commercial speech may sometimes be constitutional, and contends that its challenged law differs significantly from some of the sweeping restrictions on commercial speech the Court has invalidated in the past. In fact, Vermont argues, its law does not restrict the speech of pharmaceutical companies whatsoever, but merely prevents them from using certain information as a marketing tool. Although the Court has previously struck down regulations that adversely affected advertising, Vermont sees its own law as imposing a far less “onerous” burden on vendors than the others had.

Intermediate scrutiny demands that a challenged law further a substantial government interest, and Vermont says that its statute advances at least three such interests. First, Vermont contends that the law strengthens medical privacy by protecting physicians from exploitative sales practices and the sanctity of doctor-patient relationships from unnecessary intrusion. Vermont also claims that its law lowers health care costs by providing a check against overaggressive sales of expensive and often unnecessary new drugs. Finally, Vermont maintains that the law promotes patients’ health by curbing “over-prescription” of new drugs that are sometimes harmful. Concluding its intermediate scrutiny analysis, Vermont argues that the law is constitutional because it is no more restrictive than necessary to achieve these goals and it scarcely affects “core First Amendment values.”

IMS argues that Vermont’s law unfairly discriminates against the content of pharmaceutical companies’ speech and this case therefore calls for strict, not intermediate, scrutiny. Accordingly, IMS believes the Court should presume the law to be unconstitutional and compel Vermont to prove otherwise. If, however, the Court deems intermediate scrutiny appropriate, IMS still sees the law as invalid under that less rigorous standard as well. IMS contests Vermont's privacy argument by stressing that the statute does nothing to combat privacy threats from anyone other than pharmaceutical firms. The only possible motivation for this law, IMS concludes, must therefore be to repress the speech of those companies. IMS further suggests that restrictions on advertising have not survived judicial scrutiny in the past, and doctors can protect themselves from unwanted advertising tactics in any event. Finally, IMS disputes that Vermont's other two rationales are substantial government interests capable of justifying the challenged statute. IMS argues that Vermont's stated goals depend on the flawed assumptions that doctors will exercise bad judgment in prescribing new drugs, and the dangers those drugs pose to patients will necessarily outweigh their benefits.